Real estate scenarios for 2025

It is impossible to predict how fast the world will change. All we can do is adapt to shifting circumstances. But it is useful to outline the contours within which these changes will take place. We do this based on four scenarios for real estate needs in 2025. The scenarios show the potential consequences of technological-social changes in relation to economic growth.

Lees de visie van de Rabobank op nieuwe technologieën.

Scenario 1: Surviving on reserves

There are hardly any key growth areas in the world and geopolitical tensions are placing more and more downward pressure on the economy. A fragile recry is nipped in the bud by a fresh setback time and time again. The Netherlands is not attractive to well-educated professionals and has a shrinking working population. This combination is causing the country's labour potential to erode further. New investments don't get off the ground well enough, which leads to lagging growth in labour productivity. The Netherlands is living off its reserves.

Scenario 2: Resilient

We leave the gloomy years of the global economy behind us. Fresh growth emerges in the Netherlands. Thanks primarily to the return of consumer and business confidence. The Netherlands utilises its available production capacity more effectively and employment is increasing further. We also see a recovery because the Netherlands is managing to maintain its lead on other countries and the internal European market provides us with the space and protection to export. Domestic spending is rising too, thanks to easing of the tax and premium burden.

Scenario 3: Smart stagnation

The Netherlands is hardly moving forward economically. This is causing businesses to focus intently on their costs. There are individual companies that do, however, still have the ambition to grow. Labour productivity is rising thanks to the process of replacing people with smart equipment and machines. So we're working in an ever smarter way, but the country is scarcely reapinq the rewards of this in the form of increased prosperity.

Scenario 4: Demand-driven growth

Growth arises from the demand side. We utilise innovation to enable society to operate more effectively. Investments are causing us to work in a more solution-oriented way and to continually put the demand side first. Growth arises because we repond to this demand as optimally and efficiently as possible. New business activities are being initiated to develop and attain this large scale. Demand is obviously the related focus, rather than optimising the production capacity. Chains are fully integrated and reversed to enable working with a focus on that demand.

Facts over emotions

We introduced this model that encompasses four scenarios in our Real Estate Report 2016. We have regularly discussed these scenarios with real estate clients since then. While none of these visions of the future will turn out precisely the same in reality, most people think the vision outlined in scenario 4 (upper right) is the most likely one. Spurred by the economic recovery, it also appears that we are moving to mainly the right side of the above grid. Scenario 2 (lower right) has the fewest proponents. This is chiefly because economic recovery is expected to go hand in hand with the development of smart technology. This is, however, the scenario many people envisioned several years ago during the low point of the financial crisis. This reveals that emotion plays a key role in assessing the outlook for the future. It is therefore crucial to keep looking at the facts and to gain a clear picture of which trends will lead to opportunities in the market.