The real estate market is always evolving. The beginning of the year is a good time to take stock of the current market and look toward the future. Every investor knows there are factors, seen and unforeseen, that can affect the value of current properties and the cost of investing in new real estate. What might be some of the issues for investors 2019?
Here are three trends to watch this year.
There isn’t a single industry technology doesn’t touch, and real estate is no exception. Artificial intelligence continues to gain momentum and 2019 may bring an onslaught of new technologies in building management, organization and design. Redesigned work spaces and smart technology are changing working environments, with focuses on better building efficiency and security.
Smart technology may change smart investing, as well. One estimate has tech investment topping $5.2 billion in 2018, and new platforms and technology for how real estate transactions are done are likely to emerge.
The effect of e-commerce on retail space
E-commerce has no doubt disrupted the retail model. However, it has yet to kill off physical stores. Instead, online shopping has made real estate for service-based industries more attractive. Traditional retail focused on services may be better equipped to handle the shift to e-commerce in 2019. This includes businesses like salons, entertainment venues, restaurants and health or fitness facilities.
Rising interest rates and construction costs
The new year is likely to bring higher interest rates, which can mean a lower return for investors. The Federal Reserve raised rates at the end of 2018, with more projected raises in 2019. In addition, new construction is getting more expensive. Both labor and material costs were on the rise to end 2018, and it will be important for investors to monitor this trend in 2019.