In downtown Chongqing, renovated neighborhoods in traditional 'Bayu style' coexist with skyscrapers. (Photo/Xinhua)
Chongqing - Savills, a global real estate services firm, has recently released the 2025 edition of its Impacts report, themed “Adapt.” The report argues that, amid economic and geopolitical volatility, climate change, and demographic shifts, global real estate is entering a new cycle defined by proactive adaptation and long-term positioning. It suggests that 2025 could mark the industry’s year of adaptation, with future growth relying more on retrofitting existing stock, strengthening climate resilience at the city and asset level, and reshaping space to meet the needs of a new generation of occupiers.
James Macdonald, Head of China Research at Savills, notes: “Transformation is challenging yet imperative. Globally, people are increasingly seeking living and working spaces that enhance their quality of life and sense of community belonging. Achieving sustainable prosperity requires collaboration among governments, investors, and developers to create spaces that meet present needs while preparing for future demands.” He adds that after three decades of rapid development, many Chinese cities now face the task of upgrading and reusing existing buildings to better match an economy led by services and modern industry.
Investors are reframing real estate from returns to resilience
On the investment side, Impacts 2025 finds that real estate is shifting from passive holding to thematic investment and active management. Institutional investors are looking beyond short-term gains from single assets and instead allocating capital around long-term structural trends such as population ageing, artificial intelligence, and healthcare. This is driving greater focus on residential and logistics facilities, data centres, and life sciences parks.
Traditional asset such as offices and retail are also accelerating their transition into service-oriented properties. Landlords are using health and wellness facilities, smart building systems, and flexible layouts to strengthen tenant engagement and income resilience. Supply-chain restructuring and production reshoring are driving demand for logistics and industrial assets in established industrial clusters with robust transportation links, as companies seek to build more resilient operations.
Climate adaptation has become another critical dimension for safeguarding asset values and managing financing costs. According to Aon Insurance, the report notes that global natural disasters resulted in approximately US$368 billion in economic losses in 2024. Rising climate risk is feeding directly into lending conditions, insurance pricing, and operating expenses. Cities that invest in robust infrastructure and proactive adaptation strategies are better placed to attract residents, businesses, and tourists, helping to stabilise real estate values over the long term.
Faced with mounting insurance costs, property owners are accelerating renovation and retrofit programmes. Deloitte projects that US commercial building insurance premiums could rise at an average annual rate of 8.7 percent through 2030. The report recommends partially offsetting risk premiums by obtaining green building certifications such as LEED or BREEAM and integrating renewable energy and low-carbon materials into projects. At the city level, coordination among governments, developers, and communities can help upgrade infrastructure, strengthen disaster resilience, and reduce the risk of assets becoming stranded.
Younger tenants and housing pressures reshape real estate
For occupiers, real estate is shifting from providing space to creating an experience. As millennials, Gen Z, and Gen Alpha become the backbone of the workforce, they expect a different workplace. Impacts 2025 projects that by 2034 these cohorts will together account for around 80 percent of the population in advanced economies, driving demand for healthier, more personalised and tech-enabled workplaces. Since 2020, the total area of real estate enrolled in one or more WELL programs has increased by approximately 300 percent, and features such as natural lighting, ergonomic furniture, and dedicated wellness areas are becoming increasingly standard in premium office buildings.
A Savills survey across 32 global markets shows that working in the office three to four days per week has become the dominant pattern, with Asian cities displaying an especially strong preference for in-person work. On average, Gen Z employees spend about 12 percent more time in the office than older cohorts, reflecting the importance they place on learning, social interaction, and mentoring opportunities in physical workplaces. In response, landlords are introducing modular layouts and smart workstation management systems to better balance on-site and remote work. Landmark office towers in the core business districts of cities such as New York and Shanghai are further enhancing their appeal by adding fitness centers, childcare facilities, and bespoke services; many such projects command rental premiums of up to 60 percent, with some exceeding 100 percent.
Looking ahead, the report highlights housing as a critical piece of urban infrastructure. By 2050, around 68 percent of the world’s population is expected to live in cities. Savills argues that reframing housing as core infrastructure, alongside transport and energy systems, can help mobilise larger and more stable pools of capital. Measures such as expanding Real Estate Investment Trusts markets and supporting long-term rental housing are seen as ways to improve supply stability and policy continuity while unlocking investment to tackle housing shortages. In an era of overlapping pressures, from demographic change and affordability constraints to climate and sustainability goals, treating housing as a long-term foundation for people’s livelihoods rather than a short-term trading asset is presented as a key pathway for cities to deliver a scalable and sustainable housing supply.