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The Global Live-Work-Shop Report

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As society adapts to living with COVID-19 and life in most countries returns to normal, people naturally feel more confident in planning for the future.

This sentiment is revealing itself in the way we live, with one-third of survey respondents planning to move to a new home in the next two years and a majority seeking to buy rather than rent.

The pandemic has also driven a shift in home selection criteria, with consumers increasingly seeking properties providing better health and safety, more outdoor space and dedicated areas for working at home.

However, with housing prices remaining the overriding factor influencing home selection, the recent spike in mortgage rates and weakening global economic conditions could delay or dampen homebuying decisions.

One-third of respondents want to move

With the most severe phase of the pandemic seemingly over and most countries having successfully adapted to living with COVID-19, people are planning for the future.

This is reflected in a stronger willingness to move to a new home, with one-third of respondents planning to do so over the next two years, an increase from the previous two years.

Although many people are pursuing remote work locations as they no longer need to commute regularly to the office, the survey found that areas close to city centers remain most sought-after among those planning to move.

Intentions to move in the coming two years increased in almost all markets. Among developed economies, the U.S. recorded the strongest desire to relocate, while Brazil and India led emerging markets.

Mainland China and Japan recorded the weakest intentions to move, with such activity in the former continuing to be restricted by the hukou household registration system.

Gen Z and millennials are most keen to find new homes

About half of Gen Z and millennial respondents intend to move in the coming two years. With many of the Gen Z cohort still living with family or in student housing, this demographic will play a significant role in driving net new housing demand in the coming years.

While the desire to buy property is strong among younger generations, financial constraints remain a key challenge, meaning that rental properties or co-living will be the most viable housing format for the time being.

Perhaps due to a desire for stability as they approach retirement age, only 20% of baby boomers expressed a wish to move. They also displayed a slightly stronger preference for remote locations. A very small percentage of baby boomers live in senior housing, while almost half own their own home and no longer pay a mortgage.

Who is planning to move home?

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Source: CBRE Research, 2022.

Definitions

Gen Z (18-25 yrs.)
born 1997-2012
Late millennials (26-33)
born 1988-1996
Early millennials (34-41)
born 1981-1987
Gen X (42-57)
born 1965-1980
Baby boomers (58+)
born 1946-1964

People willing to pay for better and bigger homes

Reflecting a post-pandemic emphasis on improving quality of life, higher quality property, larger home sizes and better surroundings were cited as the main reasons to move in the next two years.

These choices are being driven in part by prolonged periods spent at home at the height of the pandemic, which led to greater awareness of the importance of a comfortable home environment.

Gen Z displayed a significant shift in attitude, identifying better surroundings and more attractive job opportunities as their main motivations to move home in the next two years. Saving money was cited as the main driver during the past two years.

Reason to move in the next two years

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Source: CBRE Research, 2022.

Actions for Investors

Capture robust housing demand

As more people seek to improve their quality of life by moving their home, housing demand will continue to grow in many parts of the world. Although steady wage growth over the past year will continue to underpin demand, short-term buying intentions could be affected by rising interest rates and the prospect of a recession.

Build housing for younger generations in urban cores

New housing in urban areas should be developed with younger generations in mind. Locations close to business districts should meet such demand from this demographic cohort, which typically seeks easy access to offices and supporting amenities.

Retain focus on placemaking

With families seeking to live outside city centers now placing more emphasis on a property’s surroundings than the unit itself, placemaking will be key. Alluring yet functional designs will be needed for interiors, outdoor areas and surroundings and should support working from home.

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Homebuying sentiment is robust

Of those who indicated an intention to move in the next two years, more than 60% want to buy instead of rent.

With most respondents already owning a home and seeking to relocate to better properties, purchasing demand is set to be driven by upgrading.

As around half of Gen X and baby boomer respondents already own a house without a mortgage and are less impacted by higher interest rates, a relatively higher proportion of this cohort who are planning to move intend to buy.

Gen Z accounted for around half of demand for shared housing, with around one-third of those doing so currently living with their parents. Co-living properties catering to young singles and those looking to leave their parents’ house can expect to continue to attract strong interest.

Homeowners spend a lower portion of their income on housing

With interest rates having remained low for the past decade, a large proportion (76%) of homeowners spend less than 30% of their household income on housing. Tighter mortgage approvals since the Global Financial Crisis (GFC) have also enhanced homeownership affordability in many markets by preventing substantial price increases.

In contrast, many renters struggle to keep their housing costs under control, with just two-thirds able to maintain their housing costs at under 30% of their income. This burden is also constraining their ability to eventually purchase a place to live.

Rental or mortgage expenses as a percentage of gross household income

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Source: CBRE Research, 2022.

People in most markets plan to buy rather than rent

Of those people planning to move home in the next two years, most plan to buy rather than rent, with Indian, Brazilian and Korean respondents indicating the most willingness to purchase.

Respondents from four markets displayed a clear preference for renting, led by Northern European countries including Germany and the Nordics, along with Japan. Although most respondents in the U.S. intend to buy, this market’s large economy and widespread acceptance of renting continues to underpin robust investment demand for multifamily properties.

While cultural preferences to buy limit investment potential for rental housing in Mainland China, there are opportunities to develop rental housing in Tier I cities, which continue to draw large numbers of migrants from other parts of the market.

Buy versus rent for those planning to relocate (by market)

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Source: CBRE Research, 2022.

Actions for Investors

Tap into strong housing affordability

With more than 70% of respondents spending less than 30% of their income on housing, the global housing market is well-positioned to weather the likely recession and higher interest rates. While overleveraged developers in Mainland China remain a cause for concern, a much higher proportion of households now live in properties they own and no longer have mortgages.

Cater to robust upgrading demand

The survey found that homebuyers and renters are willing to spend more of their income on housing when moving to improve their living environment. Upgrading demand appears to be strongest from homeowners, many of whom have benefited from the low-interest-rate environment over the past decade.

Design residential properties with renters in mind

The U.S., Germany and Japan are the top markets for rental housing investment in their respective regions and therefore continue to offer the most attractive opportunities. Developers and investors are also advised to consider building co-living facilities to maximize net new demand, particularly that arising from Gen Z leaving their parents’ homes.

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Asia Pacific Live-Work-Shop Report 2022

Cross-generational attitudes that will transform global built environments.

Read Local Response

The pandemic has driven a shift in home selection criteria

Property pricing remains the most important criterion for home selection and likely will gain even greater importance as economic volatility intensifies.

Respondents in the Americas placed a higher emphasis on housing prices and rents compared with those in Europe and Asia-Pacific.

With the pandemic leading to heightened awareness of health and safety and the importance of outdoor space, there is growing demand for more professional property management services. Given that most Asian markets are dominated by apartments, respondents in this region displayed a far keener interest in these criteria.

Reflecting the widespread adoption of hybrid working, the survey also noted stronger demand for homes providing dedicated work areas.

Hybrid workers already have areas to work at home

After working from home for several years, more than half of hybrid workers have a separate room or dedicated workspace at home for work.

A higher proportion of hybrid workers have moved their home over the past two years, perhaps indicating that some respondents likely will have moved their home specifically to secure additional workspace.

With a similarly high proportion of hybrid workers expressing their intentions to relocate in the coming years, this trend will likely continue.

Possess a work or study area at home

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Source: CBRE Research, 2022.

Workspace seen as more important for hybrid workers

Sixty-four percent of respondents who have hybrid work arrangements regard having a dedicated space for working as a more important home-selection criteria than pricing.

In cases where a property is too small to accommodate a dedicated area for home working, hybrid workers will prioritize properties in areas possessing facilities to support remote working, such as serviced offices.

Although hybrid workers may not visit their offices as frequently as they did before the pandemic, slightly more than half consider commuting time to their workplace as being an important factor in home selection.

Most important home-selection criteria since the pandemic, broken down by respondents’ work style

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Source: CBRE Research, 2022.

Actions for Investors

Recognize that pricing matters most

With pricing remaining the most important home selection criteria, investors must consider the impact of rising mortgage rates, price volatility and foreign exchange rate movements on buyer sentiment, even though intentions to move are high and affordability is strong.

Emphasize wellness and safety

Wellness and safety were named as the second most important factors influencing home selection, with respondents in Asia placing an especially strong emphasis on these criteria. With regular sanitization of common areas now a norm in many markets, owners of rental apartments may consider utilizing new technologies such as cleaning robots.

Understand that hybrid working is influencing home selection

As hybrid workers spend more time at home, they tend to have stricter requirements for home selection than office-based employees. Adequate space for dedicated working areas is a key point of differentiation for hybrid workers seeking to purchase new homes.

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The Global Live-Work-Shop Report Data Dashboard

How do your attitudes around how you live, work and shop compare to those in your region, market and age group?