NEW YORK, June 12, 2008 — With demographic trends driving real estate strategy, the real estate industry faces opportunities and challenges as a result of an aging global population, rapid urbanization and new migration patterns, according to Global Demographics 2008: Shaping Real Estate’s Future, a new publication released today by the Urban Land Institute. 

Sponsored in part by Deloitte LLP, the report provides insight about the effect of global demographic change on real estate through a review of critical issues, an examination of core fundamentals and an analysis of underlying factors. Global Demographics 2008: Shaping Real Estate’s Future was authored by M. Leanne Lachman, president, Lachman Associates, LLC in New York City and Deborah L. Brett of Deborah L. Brett & Associates in Plainsboro, N. J.

“Over the next 20 years, demographic megatrends — and their variations by continent — present the real estate industry with tremendous opportunity to not only grow, but to better serve the people real estate is designed for,” said David Jacobstein, senior advisor to Deloitte’s Real Estate practice.

“Mature economies — especially growing ones — offer attractive investment opportunities, but emerging markets require vast quantities of infrastructure, as well as residential, retail, office, and hotel properties to support their burgeoning populations.”

“Working with demographics, rather than against them, reduces development risk and is likely to enhance returns,” said M. Leanne Lachman, president, Lachman Associates and the report’s author. “Therefore, the report’s emphasis on real estate demand has broad applicability for both investors and developers.”

Findings from the report include:

Aging
The aging of the world’s population is arguably the single most dramatic demographic trend today, with three key trends emerging:
• In 2006, almost 500 million people worldwide were 65 and older.
• By 2030, individuals 65 and older are projected to increase to 1 billion — equaling one out of every eight of the earth’s inhabitants.
• The most rapid increases in the 65-and-older population are occurring in developing countries, which will see a jump of 140 percent by 2030.

Real estate implications:
• Retirement housing is the primary real estate beneficiary of global aging, with the U.S. senior housing industry set to benefit from the opportunity to produce new products.
• Rapid consolidation of senior housing operators will result in more professional and cost-effective management.
• Investor interest will continue to grow because economic cycles have little effect on dementia and nursing care facilities.
• There is increased demand for affordable senior housing and senior housing options in ethnic communities.

Urbanization
As of 2007, 3.3 billion people — half of the world’s population — live in urban areas.  With that number expected to increase to 60 percent by 2030, five key trends are emerging:
• One billion people live in slums, with 90 percent of this population occurring in developing countries.
• At least 133 million city dwellers in the developing world lack durable housing.
• Twenty percent of urban dwellers in emerging nations are overcrowded, with more than three people per bedroom.
• Only two-thirds of the world’s urban population has access to tap water, with only 46 percent having access in their homes.
• More than 25 percent of the world’s urban population lacks adequate sanitation.

Real estate implications of these urbanization trends include:
• Investing in infrastructure — whether new or established — is essential to the viability of long-term commercial real estate projects.
• Privatization of infrastructure through public/private partnerships with investment funds are becoming increasingly important, with notable examples occurring in the United States, Spain and France.
• Better land use controls should be implemented to prevent high-density, informal communities from developing and reduce outward urban sprawl because both trends present difficulties to residents in terms of infrastructure, safety and lifestyle.
• There is increased demand for housing and retail as a result of a growing workforce.
• In stagnant or shrinking populations, new construction must be viewed as replacement properties — even if that entails older building demolition to maintain vacancy rates — as has occurred in continental Europe.
• Emerging markets can leap from traditional, organic models to contemporary multi-use projects and residential communities if ground level infrastructure is established.
• The lack of mortgage availability in the emerging market is the greatest limitation on new development.

Migration
Over the last 45 years, global migration grew by more than 150 percent to 200 million, with three key trends emerging:
• Migration has shifted from the traditional south to north pattern to a flow between developing countries.
• International migration has diversified beyond male laborers to include qualified professionals, students and female workers.
• Increasingly, migrants gravitate towards large, urban areas.

Real estate implications of these migratory trends include:
• Expatriate professionals demand international-quality real estate, especially in the emerging markets.
• Migrants at all economic levels generate housing and retail demands.
• Foreign nationals provide a mobile group of accomplished construction project managers, who move from market to market to develop both infrastructure and commercial real estate.
• The estimated $318 billion in global remittances from immigrants to their families support residential and retail developments in their countries of origin.
• Immigrants provide a strong construction labor market.

M. Leanne Lachman is president of Lachman Associates, an independent real estate consulting firm serving private and institutional investors. She is also an executive-in-residence at Columbia University's Graduate Business School and serves on the boards of Liberty Property Trust and Lincoln National Corporation. In addition to portfolio management, Lachman's research interests range from low- and moderate-income housing policy and the importance of the underground economy to long-term demographic patterns and urban redevelopment. Her most recent paper, "The New Exports: Office Jobs," was jointly published by Columbia Business School's Paul Milstein Center for Real Estate and the Urban Land Institute. Lachman is widely published and is a frequent speaker.

The ULI-Deloitte Global Demographics 2008-Shaping Real Estate’s Future report is the first in an annual series.

To interview Deloitte’s David Jacobstein, contact Elizabeth Fogerty at 212-436-7179 or efogerty@deloitte.com. To interview Leanne Lachman, contact Marge Fahey at 202-624-7187 or mfahey@uli.org.

About Deloitte
As used in this document, “Deloitte” means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.

About Urban Land Institute 
The Urban Land Institute (www.uli.org) is a nonprofit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. Established in 1936, the Institute has more than 40,000 members representing all aspects of the land use and development disciplines.

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