MIPIM 2016: Aging population to spur RE activity

JLL predicts real estate transactions will increase to $1 trillion by 2020, driven by more people saving for retirement.

The world’s aging population will help drive real estate transaction volumes up more than $300 billion between 2015 and 2020, according to a report released Monday by real estate services firm JLL.

The firm predicts total volume in real estate activity will surpass $1 trillion globally by 2020, spurred by an older population.

“By 2050 there will be more people over the age of 55 than the entire population of the world in 1950,” said David Green-Morgan, JLL’s global capital markets research director, in a statement Tuesday. “This demographic impact will have a profound effect on real estate investment strategies with the amount of private equity capital targeting direct real estate set to increase by over 500 percent. Much of this will be driven by increasing institutional allocations looking at higher yielding opportunities.”

A greying population forces more people to save for retirement. Increased inflows to public and private funds come as the systems allocate more capital to real estate investment, a trend JLL does not predict reversing. Institutional investors will increasingly use this capital on a more global basis, with cross-border activity predicted to exceed 50 percent of all investments by 2020, according to JLL’s research.

“We anticipate that in the absence of significant new stock becoming available, capital will target many different avenues to achieve its desired direct real estate exposure, including joint ventures, partnerships, M&A and other alternative sectors such as healthcare, retirement living and, increasingly, residential,” Green-Morgan said.