29. October 2008 11:44
Periods of economic challenge almost always contain a legitimate component of opportunity. Naturally, it's easy to be troubled; in times like these, some people are bound to fall prey to gloom and despair. But the truth is that money is available and genuine prospects for real estate development exist even in current circumstances.
Tight credit and investor fears are at the heart of current worldwide economic troubles. Needless to say, these basic problems directly affect development work. Even so certain specific markets in the U.S. and abroad offer legitimate development opportunities. And for many of these niches, high-quality multi-unit systems-built construction remains a perfect fit.
Where can these niche opportunities be found? You'll see them in a wide range of geographic areas and a number of still-active markets.
Consider the relative strength of the euro versus the dollar. Current exchange rates mean that more Europeans - millions of whom have long been interested in visiting the United States - can travel here very affordably. Hotel occupancy rates in many of our tourism markets are up, driven by a substantial influx of foreign tourists. What's more, those occupancy rates are projected to remain strong.
This means that opportunities for new hotel construction look good now and in the longer term. Systems-built construction is an excellent option for the hospitality industry because it provides controlled, predictable costs; because it's suitable for urban environments; and because it offers rapid completion schedules.
Savvy observers of the American market recognize that dormitory construction is also in line for long-term growth. The demographics explain it: in each of the next 12 years, more than 4 million Americans will turn 18. As a result, the requirement for new student housing will stay strong for years to come. For dormitories, as for other types of construction, the controlled costs and fast completion of systems-built construction make it an ideal choice. In previous posts, we've shown that colleges and universities have found systems-built dormitories make it easier to provide apartment-style amenities that influence students' selection of schools. This is one more advantage that makes modular construction highly competitive for such projects.
In other countries, powerful demographic forces define an unmistakable profile of opportunity. In 2005, there were 80 million people more than 80 years old worldwide. During the next quarter-century, their numbers will more than double, rising to 197 million by 2030. One result: steady increases in demand for assisted living housing and nursing homes.
What else shapes development opportunity tomorrow and the day after? Earthquake and disaster relief demand the ability to provide high-quality, permanent housing with short lead times. Economic growth in Asia and the Middle East brings with it a spectrum of exciting opportunities. Demographic analysts project, for example, that India's population will outpace China's by 2030. Vast new workforce housing developments will be an inevitable feature of this future. Here at home, likewise, constant population growth will powerfully support the need for new multi-unit construction.
The meaning of all this is clear. Defying the credit crunch and investor concerns, many significant projects here and elsewhere will go forward. When projects are strong on equity, and when they dovetail with market forces and demographic trends, there's a good chance that they'll be built.