Real estate sits at the core of social challenges
The Nordic capitals are the fastest growing in Europe and are simultaneously facing structural challenges such as demographic shifts, a growing elderly population and an increasing number of single person households.
The impacts from a lack of suitable and affordable housing in the major cities are felt across age groups and are having a profound effect on how we live our lives.
At NREP, we have set ambitious building targets to help provide more people with more affordable and fulfilling ways of living.
1. INCREASE AFFORDABILITY & ACCESSIBILITY
For decades we have not been able to build remotely enough housing to keep up with demand. With space becoming scarcer and incomes failing to keep up with rising house prices, it has become much harder for a much larger group of ordinary people to find a suitable, affordable place to live. And a particular lack of rentals makes it even less accessible to those unable to buy. In Stockholm, waiting lines to get a rental contract range between 10 and 30 years depending on the area.
The impacts are felt across age groups and are having a profound effect on the way in which we live our lives. We see many opportunities for the real estate industry to improve affordability by employing smarter customer centric design (more user value for same cost), more efficient production (lower cost for same quality) and enabling more efficient use by sharing spaces and resources (increased utilization of asset).
2. ADDRESS THE SHORTAGE OF ASSISTED LIVING FOR ELDERLY
A major demographic shift is underway. Ageing population is a structural challenge in many parts of the world, and no less so in the Nordics. The age group +80 will increase by more than 50% until 2030. And this new elderly generation will have far fewer family members to look after them.
In addition to a growing number of people in need of care home living, the existing stock in the Nordics is generally old and a significant portion will need to be replaced. A large proportion of Nordic municipalities are already experiencing shortages of care homes and are lacking the capital and personnel resources required to enable the construction of a sufficient amount of new care homes. In Sweden, more than 40% of municipalities report an immediate shortage of care home beds.
Furthermore, the living environment is crucial to enable elderly people to stay healthy, social and happy. Traditional home models or care homes often limit individual choice and isolate residents from the local community. The opportunities to do better are already here. New more user centric models are emerging. Collaboration between municipalities, developers, operators and investors with long term mindsets have the potential to unlock the supply.
3. HELP STUDENTS ACCESS POSITIVE & AFFORDABLE LIVING
Students struggle to find access to affordable student housing in all the Nordic capitals and main university cities, and much of the existing stock is outdated and run down. The student body has grown faster than new supply for the last three decades and is expected to continue to grow. In Copenhagen, there is student housing available for less than 20% of the student body.
Nordic students live on limited budgets based on the government provided grants/funding, making regular studios too expensive. Hence, students are forced into poor alternative forms of housing.
Students indicate lack of access to housing as the main cause of stress and poor quality of life. Poor/unstable living conditions also negatively impact academic results.
We see that there are clear opportunities to maximize quality of life within even the Nordic student’s limited disposable income levels. We can change the value equation through better understanding of student preferences, emphasis on community rather than large private space; optimization of design and production, and partnering with municipality, university, student unions etc. to jointly identify solutions.
4. Combat loneliness
More than ever, we are choosing or are forced to live alone, and this trend has been accompanied by an alarming increase of people – young and old – experiencing loneliness. In Sweden, approximately 40% of households are single person households.
Single-person households are projected to see faster growth than any other household type in the coming decades. This is true for the Nordics as well as across low-, middle- and high-income countries globally. And research shows that loneliness does not only have profound impacts on our happiness, but also that prolonged loneliness has a large impact on both our mental and physical health and could even be a greater health hazard than obesity or smoking.
By enabling people to live their own private life but still be part of a “community” and have a social life, shared living and building concepts that encourage interaction could improve the health and well-being of many urban dwellers.