Debunking real estate myths: separating fact from fiction for savvy investors

1. The office is dead

Myth: Post-pandemic, more people are working from home and office occupancy is falling.

Fact: Far from being obsolete, the office is evolving to meet the demands of modern work and shifting employee expectations. Hybrid working is driving companies to rethink office spaces, emphasising flexibility and purpose. As businesses adapt, the office will transform into a dynamic hub for meaningful workplace experiences and a strong organisational culture.

Did you know? 86% of global occupiers anticipate their future workstyles to be office-only, office-centric or hybrid by 2026.

2. Retail is history

Myth: The rise of online has made retail real estate uninvestable.

Fact: Retail remains a key driver of global economic growth, fuelled by population increases and rising per capita spending. Online sales still represent a small share of global retail, and multi-channel models are outpacing online-only, with store-based ecosystems outperforming.

After past corrections, retail has reclaimed top asset-class status in some markets including the UK, delivering total returns in 2024 of 8.2% vs 5.1% for all property.

Did you know? Only 20% of retail sales are accounted for by e-commerce.

3. ESG is no longer relevant

Myth: Governments around the world are placing less emphasis on ESG, and investors should do the same.

Fact: This argument is flawed for several reasons. COP29 brought a renewed focus on climate action, making it risky to downplay ESG concerns. Institutional investors, key drivers of green building progress, are unlikely to abandon sustainability for short-term political shifts.

Additionally, legislation and public demand for sustainable investments can quickly rebound, leaving those acquiring non-compliant buildings with no clear mitigation strategy and vulnerable to illiquidity.

Did you know? 200 governments have tightened their climate action plans following COP29.

4. There’s no place for data centres in a sustainable investment strategy

Myth: High energy use conflicts with environmental goals.

Fact: While they remain major consumers of energy and water, data centres are transitioning towards renewable energy sources with many also adopting more sustainable practices such as using recycled water for cooling and selecting sites to minimise ecological disruption. Data centres also enable environmental efficiencies by deploying technologies such as AI and big data analytics, which enhance energy and resource management. Cloud computing infrastructures reduce the need for physical hardware, cutting waste and supporting virtual services that lower carbon footprints.

Did you know? 20% of data centres have a key role to play in driving down global CO2 emissions by one-fifth by 2030.

5. Geopolitical tensions are bad for supply chains

Myth: Demand for logistics real estate will suffer as a consequence of instability.

Fact: Geopolitical upheaval can disrupt trade routes and sourcing strategies, affecting warehousing needs. However, it also creates opportunities. Companies may shift production closer to consumers, shortening supply chains, or hold more stock to safeguard against disruptions. Both strategies boost demand for local industrial and logistics facilities.

Did you know? There is an estimated increase of 6% in logistics floorspace needed to support longer lead times.

6. AI is stealing our jobs

Myth: Demand for office space will plummet because of technological advances

Fact: Fears that AI will eliminate jobs oversimplify its impact. AI is reshaping work by augmenting roles, not erasing them, and could solve the productivity puzzle. Rather than reducing the workforce, AI drives innovation and creates dynamic career opportunities in a changing economy.

Did you know? Research from the World Economic Forum predicts that AI will create 97m new roles between 2020 and 2025.

To read more about what’s fact and what’s fiction in the world of real estate, download the full Wealth Report. We explore whether repurposing is the answer for every challenged asset, as well as how savvy investors are uncovering opportunities in overlooked sectors for long-term success.