Private Markets

The Real Estate Implications of an Aging Population

It’s rare that demographic changes are so big that they upend the outlook for real estate – but we’re currently undergoing just such a shift. The developed world is getting is older. Millennials and Baby Boomers are moving into new life phases which will likely have a significant effect on commercial and residential real estate.

Key takeaways

  • 01

    Getting older

    Most developed economies and some developing economies are experiencing aging demographics and will likely exhibit higher median ages over the next 10-20 years. This can drastically alter the real estate investment landscape.

  • 02

    New phases of life for two major generational cohorts

    Two major generational cohorts are moving into new life phases which will likely have a significant effect on commercial and residential real estate. Millennials are forming families and will have different needs. Baby Boomers are heading into later stage retirement and will likely seek a range of products and solutions for their lifecycle of care.

  • 03

    Certain property types will be beneficiaries

    We believe certain property types and geographies will likely benefit from the demographic shift, including apartments, healthcare real estate, and necessity retail.

Building for an older demographic

Aging population is a key part of demographic divergence, one of the five mega forces we track that is shaping returns now and in the future.

It’s rare that demographic changes are so big that they upend the outlook for real estate – but we’re currently undergoing just such a shift.

Two major generations, Baby Boomers and Millennials, are simultaneously going through lifestyle changes that we believe will have a major impact on the type of real estate that will be in demand over the next decade.

The world’s 1.8 billion Millennials are moving into their mid-career phase and becoming parents for the first time. While they will likely be earning more than ever, they will also face higher non-discretionary expenses as they move into parenthood – as a result, they will be seeking increased living space (typically in suburban areas) but with constrained budgets.

While the Millennials are entering into the high-spending, high-expense part of their lives, Baby Boomers are moving into retirement. For example, we anticipate higher healthcare spending and more demand for simpler concept living. At the same time, the generation is the wealthiest ever and now has more time for leisure. For real estate investors, we believe these trends will drive greater demand in certain markets where retirees may want to live or travel to, and in property types that support the lifecycle of care.

Chart of the Current G20 population by age group

Authors

Simon Durkin
Global Head of Real Estate Research
Alex Symes
Head of U.S. Real Estate Research
Yasmine Kamaruddin
U.S. Real Estate Research
Chloe Soar
EMEA Real Estate Research
Rukeyah Syeda
EMEA Real Estate Research
Tobias Gotfredsen
EMEA Real Estate Research

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