What challenges are facing the real estate development sector in 2020?

There has been a significant shift in what real estate development businesses need to prioritise, in order to evolve alongside the growing demands of the industry in order to remain competitive long term.

Real Estate Development

To capitalise on emerging trends and to venture into new markets in which to thrive, it is imperative that corporations of all sizes are aware and able to react to any disruption, at any given time.

In 2018, the commercial real estate sector was reported to be worth an estimated $16 trillion in the U.S alone. This, of course, highlights the fact that this can be a very lucrative industry, but also reaffirms the fact that competition is rife.

So, what exactly are the challenges that lie ahead for businesses in this industry? I’ve outlined four below:

1) Macroeconomic factors

There is no doubt that macroeconomic factors are continuing to disrupt operations in most professional sectors, and real estate development is no exemption. In particular, the uncertainty surrounding Brexit, the Trump impeachment inquiry and the ongoing trade war between China and the U.S is directly affecting the funding, planning and implementation of real estate projects around the world.

As these issues are inherently linked to delays and failures in securing capital to finalise projects of all sizes, it is imperative that leaders in this sector are planning ahead for all possibilities, particularly in regards to major projects they have in the pipeline.

Failure to do this can result in wild misconceptions of what is required to complete a project, which in turn can cost businesses a significant amount of time and money.

2) Changes in consumer mindsets

The modern real estate market is obsessed with the needs and requirements of the everyday homeowner. While this is typically a challenge for those involved in selling properties, it also needs to be considered by those in charge of development.

Particularly, when it comes to managing REITs and other major investment funds, the specific use of every property within a project will come into play when mitigating risk and creating a portfolio to follow.

Without careful consideration of the foundations of successful real estate development projects, such as affordable housing or infrastructure, and how this will affect the end consumer, the project is likely to fail.

3) Technology and innovation

Technology is affecting pretty much every professional sector in the modern-day, meaning it is easy to include it as something that will shape real estate development next year.

This, of course, doesn’t mean that it should be ignored.

For real estate development, and the wider construction industry for that matter, the rise of AI, virtual environments and eCommerce are all playing a huge part in how projects are envisioned, planned and even built.

From mitigating risk to addressing any skills gaps that are prevalent, there are always new innovations coming to the forefront. This is something I have previously discussed in my piece on technological innovation in the wider construction industry.

4) Developments in project communication

Linking back to technology and innovation, it is now easier than ever for project executives to communicate specific information both with each other and with an entire hierarchy. Project management software and advancements in virtual built environment have given executives more flexibility than ever to communicate with their peers.

This is something that is particularly important in real estate, as the best corporations will inherently look to improve their communication networks both internally and externally in order to meet budget expectations, work to specific deadlines and ultimately secure projects in the future.

As communication networks improve across the industry, business leaders have a responsibility to ensure that their processes are as effective as possible to avoid falling behind.


Of the three areas listed, one common theme of leadership rings true, as it becomes evident that effective and transparent guidance is required to ensure that a business is able to manoeuvre through the various challenges that promise to shape the industry.

Finding the right leaders to ensure that significant projects are adequately planned and executed to meet specific deadlines and expectations can be the difference between long term success and failure in this competitive sector, meaning it should be prioritised.

At Imperium Global, our dedicated consultants have conducted hundreds of search and selection campaigns globally for a variety of clients in the real estate sector, from entrepreneurial firms to multinational institutions. For more information, please do not hesitate to contact us or email me today.


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