New trending forms of ownership: Temporary Home Ownership
"Temporary home ownership" is based on the circumstances and needs of the owner. In the current era of individualism, the model certainly seems promising. But the construction and real estate industry still considers the trend to be of little relevance. This is shown by the results of this year's edition of the Digital Real Estate Survey by pom+. We wanted to know from our expert why this is so and whether it will remain so.
Dreamed away! For many people in Europe, owning their own four walls has moved into the unattainable distance in recent decades. And if the means are there, the younger generation in particular is unsure whether such a commitment is even worth it in today's fast-paced world. Who knows today exactly where they want to grow old?
Against this backdrop, new ideas and forms of ownership are slowly establishing themselves, such as "temporary home ownership." In this model, ownership of a residential property is limited in advance to a fixed period. The time period is based on the needs and circumstances of the buyers. If, for example, a career change requires a move abroad or the children move out, many people are prepared to change their housing situation. The purchase price is based solely on the useful life and is therefore more affordable. Investors can refurbish the property to make it marketable after the return, thus avoiding obsolescence. A clear case of win-win, right?
Apparently not. A recent survey of 200 executives and professionals in the construction and real estate industries found that the impact of new forms of ownership on the role of their own company is considered to be very low. The users of real estate also see the added value only to a limited extent: 85 percent attest the trend a low or very low influence. Only in marketing do they expect it to have an impact on their own area of activity. Slightly more than half of the respondents anticipate minor consequences for the real estate sector in the medium term.
The expert's assessment
- The results of the study are not surprising, but rather reflect the current (still) almost non-existent spread of new forms of ownership. At present, it is mainly the research community that is concerned with this trend. In Switzerland, there is currently only one property in Bern that is based on the "temporary home ownership" principle. Further properties are planned, but whether implementation will actually take place is not yet certain.
- Investors are currently still cautious; the trend toward flexible home ownership still seems elusive. First attempts with the temporary model are possible in condominiums that are approaching the first maintenance cycle. Often, problems with insufficiently accumulated renewal funds and different interests of the condominium owners come to light. This trend offers interesting opportunities, especially for existing owners, to enhance their own real estate portfolio with qualitatively appealing residential properties in good locations.
- Increasing individualization goes hand in hand with new, unconventional life models and therefore changes the demand for residential property. The importance and demarcation of life stages is increasing and could therefore also have an impact on the corresponding form of housing. The currently widespread notion of "perpetual ownership" is likely to be softened as a result and openness to new models is likely to increase.
- Nevertheless, it can be assumed that "temporary home ownership" will remain a marginal phenomenon. The model is still not attractive enough for investors. Thanks to the capital glut in the past decade, there has always been more than enough capital available and the pressure to try out new ideas is simply too low. If at all, new forms of ownership are likely to be taken up for the time being primarily by cooperatives and innovative, socially oriented investors in urban areas.
- Nevertheless, it can be assumed that the demands for affordable housing for both tenants and owners will be intensified at the social and political level. Therefore, it is also worthwhile for professional investors to analyze innovative approaches and to deal with new forms of ownership.
About the survey
The Digital Real Estate Survey has been surveying the status of the digital transformation of the construction and real estate industry in Switzerland annually since 2016 and for Germany since 2019. The whitepaper presents the current situation in the two countries based on the assessments of various executives and professionals from the industry and is supplemented by the expert knowledge of consultants from pom+Consulting AG.
The study can be downloaded free of charge. Note that the study is only available in German.