The character of a city is always changing. The last decade has in many ways, seen the rebirth of great cities. There has been a flowering of innovative architecture from Bjarke Ingels, David Adjaye, Frank Gehry, and many other talents doing some of their most inspired work.
The renewed interest in cities has also meant a resurgence in demand for the benefits that come from urban living, specifically a desire to live in vibrant areas with walkable neighborhoods like those that have transformed both large and small cities. The coming decades will see increased population in urban areas. The United Nations forecasts that 68 percent of the world’s population is projected to live in urban areas by 2050. Building cities that are vibrant, sustainable, and full of opportunity is an important goal for all countries. From massive projects like Malaysia’s Forest City and the East Cairo development in Egypt to smaller individual developments, private enterprise and cities are increasing collaborating to use the best of both private and public thought leadership to take cities into the future.
For the high-end real estate purchaser, the list of opportunities have widened. Buyers feel free to explore beyond traditional boundaries and have shown interest in a wide variety of types of properties. From penthouses that are high-tech estates in the sky to agrihoods that prioritize greenspace and nature experiences, the types of properties available are shifting. Four trends that Luxury Portfolio International® has identified as shaping cities and neighborhoods now and in the years to come, include:
Trend 1: Gentrification As Exploration
In the last 20 years, we’ve seen gentrification have a dramatic impact on how cities change. It has caused controversy from Portland, Oregon to Berlin, Germany. Many affluent consumers want to live in cities and that movement has changed the ways people think about particular neighborhoods. Developers have expanded their viewpoints.
Younger buyers want the latest smart home technology and updated amenities, but they also seek out the unusual and different. Adaptive reuse has turned industrial neighborhoods into charming enclaves with new retail shops and restaurants. The earlier movement in gentrification was often about seeking more affordable housing and while that can still be a factor, gentrification has also increasingly become about exploration. That is, the desire to “pioneer” or “discover” a new neighborhood, street or community before their peers.
Gentrifying neighborhoods offer other things too, including history, often a bohemian atmosphere, and generally high quality at a good value. They are also changing the value proposition in many cities. Areas that were once considered less interesting to luxury buyers such as Manhattan’s Lower East Side and Quartier Des Pâquis, Geneva are seeing renewed interest. Of course, this is not an entirely new trend. The inspiration for this kind of transformation can be found for example, in London’s Notting Hill in the 1970s.
Trend 2: The Impact of Bargain Hunting
Real estate investors are also value hunters. As one area or city becomes popular and expensive, the money starts to shift. In London, established areas like Mayfair have now become more affordable. In Paris, cosmopolitan areas like the 10th Arrondissement are gaining popularity with creative industries.
Incentives often play a role in the development of urban areas. In South Africa, hip inner city areas such as Woodstock, Cape Town began offering an Urban Development Tax Incentive and as a result, saw property prices sharply rise. All across the United States, cities and towns have incentivized developers in particular areas by allowing zoning exemptions and tax breaks to spur the creation of new mixed-use projects.
Buyers are also more open-minded when it comes to discovering different locations. Buyers looking for beachfront now consider “unexpected” locations such as the South Coast of Barbados and the beautiful beaches of Vietnam as the perfect place to fulfill that waterfront home dream.
Trend 3: Technology and Remote Work
All across the world, high-tech sectors are shaping the residential and cultural landscape. Technology has fueled the creation of two opposite trends. The first is the creation of tech hubs where people live close to where they work. Zhangjiang, Shanghai, which was previously a manufacturing/industrial area has been transformed into a major residential community/IT hub.
Where jobs are created, development follows. Mumbai’s tech firms began setting up offices in overlooked areas like Majiwada-Kasarvadavali, resulting in an influx of tech high net-worth individuals and rapid improvement to social infrastructure. Major companies have the power to change the skyline too. This can be seen in the Mediaspree area in Berlin, where hip clubs sit alongside Coca-Cola and Mercedes Benz. This area will see its first high-rise skyline (need to confirm the progress as this was a year ago) due to a surge in housing demand. In Northern California and around the United States, tech companies aren’t just building office space, they are creating neighborhoods. Google’s plans in Mountain View, California include housing, green space and restaurants.
The other side of this trend is the potential for remote work. Some companies have chosen to go fully remote, allowing employees to live wherever they like. Multiple home offices are now being created in many new luxury homes to meet the needs of people who are as productive at home as they are in the office. Remote work frees up individuals to choose places that appeal to them. Warm climates like Hawaii, Florida and Texas have seen an increase in buyers who plan to spend at least some of the year working from a second home.
Cities who haven’t been able to attract a major technology employer are still able to take advantage of the remote work phenomenon. Tulsa, Oklahoma is attracting remote workers through a program that offers discounts on rent and free membership to co-working facilities. Some programs arrange for remote workers to travel the world, experiencing different cities in order to determine where they want to settle.
Trend 4: Infrastructure
The world of transportation is undergoing a major shift. Larger trends including a focus on driverless cars, an increase in ridesharing, and the rise of ecommerce are changing the ways in which people travel and commute.
The regeneration and expansion of public works, major train lines, roads, airports and hospitals, are attracting developers and residents alike to urban and suburban areas. Transportation hubs are often the site of mixed-use development. Development infrastructure cemented Dubai South as the emirate’s flagship urban project, with the highly anticipated first two residential communities due to complete in 2019. South Main, Vancouver, seen as a gateway to downtown has seen recent land banking as developers anticipate growth alongside transit improvements.
The future of infrastructure will also be fueled by technology as urban planners are able to access hundreds of data points that show traffic patterns and details on how public services are used. The Sidewalk Labs Quayside project in Toronto, Canada which is a collaboration between the city and the Alphabet subsidiary gives a glimpse of the future of how smart technology can be used to help cities make more sustainable decisions.
With so many options at their fingertips, luxury consumers have the opportunity to find the properties that most suit their goals and lifestyle. Today’s high-net-worth class is fueled by a desire for goodness-based living and meaning, fusing together design and sustainability to create a better life.