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In the ‘Market environment’ chapter, we describe the Fund-specific trends. In this appendix, we discuss a number of megatrends that are affecting and will continue to affect markets at national, European and global levels. We deal with the effects of these megatrends in the same order as in the above-mentioned chapter: economy, public policies, sustainability and climate change, demographics and social change, technology and innovation.


Positive global economic growth with corresponding challenges

We have recently seen a gradual decline in global economic growth. This came in at 3.8% in 2017, but had dipped to 3.6% in 2018 and the IMF expects global economic growth to have declined further to 2.9% for the full year 2019. The IMF does expect growth to pick up to 3.3% in 2020 and to 3.4% in 2021. The IMF recently downgraded economic growth forecasts for 70% of countries, and went as far as to halve 2019 growth forecasts for Latin America midway through the year.

The main reasons for these downgrades are the growing uncertainty prompted by trade restrictions, political tensions, government debt levels, the pension reforms required in various countries and the high share prices on the world’s financial markets. At the same time, expansionist monetary policies continue to act as an economic driver.

ECB interest rate hikes fail to materialise

The ECB’s expected interest rate hikes, which markets assumed in the baseline scenario last year, failed to materialise. On the contrary, interbank rates have actually fallen into negative territory, the ECB cuts rates again in September and resumed its bond buy-back programme. The main goal of the ECB measures is to keep economic growth at a reasonable level and increase inflation to around 2%.

Public policies

In 2019, the political agenda was dominated by the Brexit negotiations in Europe, geopolitical tensions, trade barriers, including those between the US and China, and the prolonged protests in Hong Kong against China’s political interference. These are all still major challenges and they are having a negative impact on economic growth.

On top of this, we have seen a sharp rise in populist (and nationalist) sentiments in many European countries, although there are certainly countries in which this trend has petered out or even been reversed. However, populist sentiments can result in more closed economies, which could have a negative impact on the European economy.

Sustainability and climate change

There is an increased awareness of negative social and environmental externalities, evidenced by newly introduced legislation, standards and governmental action on sustainability-related topics such as energy, biodiversity, the circular economy and ESG risks. Challenges for the construction and real estate sector that still need to be overcome include: the environmental impact strain of materials used and urbanisation, the availability of skilled workers and safety in the construction process, cutting the cost of measures, the development of new technologies, the digitalisation of the building process, the availability of proven solutions and resources.

Paris proof living environment

There is growing global awareness that we urgently need to stop global warming and rising greenhouse gas (GHG) emissions. Although the timing, scope and magnitude of the consequences remain uncertain, the potential risks are significant. With urgency and awareness increasing, the World Economic Forum has earmarked extreme weather events and climate-change mitigation and adaption failures as the top risks the world economy is currently facing ( In the aftermath of the Paris Climate Agreement, an increasing number of countries are introducing legislation aimed at a carbon free future. The Dutch government has joined these country initiatives through the implementation of the Dutch Climate Agreement to reduce carbon emissions by 49% in 2030, from 1990 levels, and by 95% in 2050. The European Union is also working on tightened legislation to achieve its 2050 climate goals. Legislation is expected to be effective in 2-3 years and could be even more stringent than the Dutch climate agreement.

On the built environment front: before 2050, the seven million homes and one million other buildings in the Netherlands will have to be made sustainable one way or another to convert them to low (or even net-zero) carbon emissions. This pertains largely to existing buildings, as any new development projects will have to be close to energy neutral from 2020 onwards. The building industry is currently developing a standardised norm for all asset classes, taking into account a threshold for building-related energy usage. Depending on progress made by the building industry in the period to 2050, the Dutch government will introduce legislative measures to speed up the transition if needed.

The Dutch policy position on transitioning towards a circular economy in 2050, with the focus on the use of resources, is supplementary to the government’s climate agreement. The real estate industry will need to be transformed into a circular ecosystem.

ESG risk, transparency and accountability

The European Commission is also taking the lead in the areas of responsible investment and increasing transparency by companies and investors. For example, the European Occupational Retirement Provision Directive II (IORP II), which requires pension funds to take environmental, social and governance (ESG) factors and risks into account in their investment policy, overall risk management system and reporting. This will also have an impact on institutional real estate investors when they serve pension funds. In addition to environmental transition risks, they will also have to take physical risks into account. In addition to IORP, the European Union is developing a framework for sustainable finance, which will define which activities will be labelled as 'green', which could result in legislative changes in the future.

On the corporate responsibility front, there is an increasing demand for businesses to be transparent and accountable, not only towards employees or direct stakeholders, but towards their entire supply-chain and society as a whole. The real estate industry is increasingly using the UN’s Sustainable Development Goals (UN SDGs) to demonstrate its commitment to making a positive contribution to society, but making this contribution needs to be taken seriously if the sector is to avoid accusations of ‘green washing’.


The dominant global long-term trends, which we also see reflected in the Netherlands, are population growth, the ageing of the population, urbanisation and polarisation (at every level). While the global population is set to increase by around two billion people to a total of 9.7 billion people, at the same time a growing number of countries will actually see their populations decline. This will have a significant impact on the relationships between countries, in terms of size, demographic composition and relative distribution on a global level.

On top of this, population concentrations will also change within countries, driven by the ongoing urbanisation trend. This urbanisation is driving strong demand for real estate, but is also creating challenges in terms of liveability, accessibility and affordability in constantly growing cities. Bouwinvest firmly believes that cities that manage to achieve a balance between demographic growth and a safe, affordable and sustainable urban environment will remain the most successful.

Another major trend is the ageing of the global population, driven by ever-rising life expectancy and declining birth numbers. This ageing will drive a shift in preferences in terms of living, working, shopping and leisure time, which will in turn result in a shift in the use of real estate. On top of this, we will see a major change in the ratios of the working and non-working sections of the population, with a strong decline in the former and a sharp rise in the latter. This will in turn demand a different kind of focus from governments, as pressure increases on fiscal resources, on investments in healthcare, pensions, education, new technologies and maintaining economic growth.

Technology and innovation

Venture capital investor interest in technology solutions for the real estate sector (PropTech) is at an all-time high. In the US, Fifth Wall Ventures recently raised almost US$ 500 million for a second proptech fund. More than five European VC funds are fundraising and big Asian funds, like the SoftBank Vision Fund, are setting targets for PropTech. In addition to indirect funding, an increasing number of corporates are investing directly in PropTech start-ups.

Emerging technologies which will affect real estate are for example:

  1. Artificial intelligence (Swarm intelligence, neural networks, machine learning, affective computing)

  2. Digital manufacturing (3D printing, 4D printing)

  3. Robotics (Autonomous vehicles, unmanned aerial vehicles, service robots)

  4. Networks & computing systems (Big data analytics, Virtual reality, Augmented reality, Smart fabrics, Sensors, Perceptual UIs, Modular electronics, Digital transactions)

As technology prices drop and the speed of adoption grows, the speed at which new solutions enter the market will also accelerate. For the real estate industry, new solutions or services fall in to the following categories: digitalising processes, flexible spaces, healthy places, new construction methods & materials, collaboration platforms, sustainability, virtual reality, digital asset mapping and new ways of funding.

The communications gap between corporates and start-ups seems to be narrowing, with corporates increasing their focus on conducting experiments and hiring data experts to get more out of new solutions. The additional challenge for the corporates will be to integrate new solutions into their existing IT landscapes, while keeping them secure and guaranteeing data privacy. Other industries will transform their businesses more easily by integrating new digital business models that compete with existing markets.

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