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Baby Bust

Real estate investors with an intermediate to long term investment horizon are well advised get serious about demographic trends because change is accelerating.

By Tony LoPinto | Updated on February 05, 2013
Baby Bust

China is well known for its one-child policy, a policy that is aggressively enforced by the government and results in women having a 1.54 fertility rate. In an interesting article this weekend, it was pointed out that currently the U.S. has a 1.94 fertility rate which translates to a long term population decline because a 2.1 fertility rate is needed to expand the population. This is not good news. Low-fertility societies do not innovate because their consumption tilts significantly toward health care and capital shifts to preserving and extending life. The more obvious issue is that with a smaller younger population there are fewer workers to fund social programs. Obviously this not an immediate concern, but it got me thinking about demographic shifts that are already impacting the real estate industry. For example, the population shift back to the inner city where previously decaying neighborhoods are now in high-demand and command premium rents, has had a significant impact on real estate trends and investment. The lesson learned here is that real estate investors with an intermediate to long term investment horizon are well advised get serious about demographic trends because change is accelerating and some of the changes in the offing will turn old conventions on their head.

Tony LoPinto is the Global Sector Leader of Korn/Ferry International’s Real Estate Practice and founder of SelectLeaders. The views expressed in this article are the author’s own.

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