“Sharing is caring” - the millennials generation in particular - i.e. those born between 1980 and 2000 - appreciates the many benefits of using apartments, offices or floor space for a limited space of time. In the real estate sector, the so-called sharing economy is seen as one of the most important real estate trends of our time.
Definition: Sharing economy
The term sharing economy refers to the shared use of services, goods, property, spaces or capital. In an increasingly globalised and networked world, this development complements other real estate trends such as sustainable living, or new technological opportunities which permit faster communication between demand and supply.
The sharing economy as a driver of change
The sharing economy holds an enormous potential, but also impacts professions dealing with the construction or management of properties. One would assume that a decrease in demand for buildings would also lead to reduced demand for construction companies, planners, architects, property owners or operators. But it is not quite that simple. On the contrary: The sharing economy brings with it many new opportunities that could influence occupations in the real estate sector positively in the long run.
Many tourists, especially millennials, prefer authentic travel experiences. This includes living like a local. New online platforms rent out rooms or entire apartments for short-term use directly from private individuals. Part of the authentic travel experience is that this private accommodation is often less expensive than hotel accommodation, and is often located in trendy neighbourhoods. In this way the sharing economy is becoming serious competition for the classic hotel industry and the rental property market.
In cities such as Zurich, Munich or Berlin, professional providers of coworking spaces or short-term office space are a real blessing for young entrepreneurs, start-ups and founders of small businesses. In the past, this target group often had problems finding office space in the regular market. As low value tenants, they were not of interest to investors.
In apartment buildings, periods abroad or tenant changeover may lead to temporarily unused space, which can be leased out to third parties. In basements, there is sometimes a stark contrast between heavily used spaces and unused areas. These unused areas could be rented out as storage space. The sharing economy principle also works for common rooms which are not used for certain periods of time, as well as for outbuildings, green areas or even services such as janitorial services.
Opportunities for the real estate sector
In general, it can be said that, despite the various advantages and disadvantages, the interest in and demand for interim property use is on the rise.
In order for real estate service providers to be able to use this sharing economy trend effectively, they should ask themselves: Which type of shared use is acceptable, and what must be taken into account to ensure that the statutory and legal requirements are met? It must also be determined in which areas and by which means the brokering of unused spaces can be actively expanded. Thus the sharing economy holds the potential for many new and exciting business models, cooperations and partnerships.
Always one step ahead with Engel & Völkers
One thing is for sure: With real estate trends like the sharing economy, the future of the real estate sector remains an exciting one.