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Trends and Challenges of Sustainability in the Global Real Estate Market

Sumaya Abdel-Motagaly, 2021 Summer Internship Program
Content Writing & SEO • July 5, 2021

The 2020 National Oceanic and Atmospheric Administration (NOAA) Annual Climate Report stated that the combined land and ocean temperature has increased at an average rate of 0.13 degrees Fahrenheit (0.08 degrees Celsius) per decade since 1880.

As these effects take place and “the hottest year on record” becomes more prominent, the real estate industry is shifting towards sustainability. The combination of luxury living and environmentally-friendly building materials, products and designs may seem confusing partly because sustainability and luxury have never been synonymous with each other – but, several factors have contributed for them to quite naturally go hand in hand.

At the core, a sustainable lifestyle is a form of lifestyle that seeks to use renewable and natural resources, avoiding and minimizing the creation of harmful waste. On the other hand, as natural resources continue to be depleted, it becomes a real luxury (the other side of the spectrum). It factors into almost every aspect of living such as construction and housing, transport, food and socialization.  It is important because it helps preserve environmental qualities such as clean air, but it also reduces carbon footprints — the total greenhouse gas emissions produced by a certain individual, group, or organization. 

Sustainable living also differs – from complete disconnect from electricity to smart homes and technology. At this point, it becomes defined. Priced high, it’s sustainable luxury and priced low, it’s eco-friendly, a term that catches on and gradually becomes more expensive until it becomes a norm.

Despite the differences, there is one thing that remains at the core of each spectrum: sustainability yields less energy than standard housing. As humans become smarter, demands are put on the real estate industry to meet the needs of the younger generations who share common sociopolitical and green views. This is only natural because they are the ones who are most affected by climate change, access to information and technology. 

It’s also no surprise that demands for solar powered, eco-friendly and rainwater collection systems in homes are increasing, especially because more than 10% of the ultra-high-net-worth individuals have made their wealth through technology or technological advances.

Green homes have numerous benefits, but there are also some shortcomings: the main being the cost. Since sustainable luxury homes use renewable resources, they are much more costly (20-30% more) than conventional housing. The high costs are due to the fact that “raw” sustainable construction materials are not always available, more complex, and time-consuming.

Smart Homes

As technology continues to rapidly develop, so do its uses. Smart homes include systems to manage energy, security, HVAC, entertainment, and health — all from a single remote. This allows homeowners to control house settings such as lighting and temperature while they are away, as long as they have a stable internet connection. They are energy-efficient and can reduce costs while homeowners can use smart home systems to observe and manage energy usage.

Challenges of Smart Homes

With the rise of many technological advancements, there are bound to be drawbacks and security threats; smart homes are no exception. Smart homes give access to a variety of information about a home buyer such as their location and without proper security, doors can be opened from a computer.

Environmental Impact

These life-changing advancements to the real estate market are capable of both benefiting and harming the environment.  

On one hand, these homes reduce the use of HVAC systems and electricity, and help conserve energy. However, the wide-scale production of electronics and batteries needed to power these homes is harmful to the environment. 

The Future of Sustainable Luxury Homes

New and upcoming governmental regulations continue to lean towards green initiatives and incentives, so it is expected that future housing will become more green as well.

According to Fortune Business Insights, by 2026, the smart home worldwide market is expected to reach a total value of $622.59 billion U.S. dollars. With many new advancements to artificial technology and a projected CAGR of 29.3%, it is only anticipated that smart homes will get smarter. 

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