Developers can create unique wellness concepts by leveraging specific local attributes like springs, cultural and heritage sites, and proximity to advanced medical facilities.
The Global Wellness Institute (GWI) released its "“Global Wellness Institute, Wellness Real Estate: Market Growth (2019-2023) and Future Developments" report on May 14, 2024. This report, presented at the Wellness Real Estate & Communities Symposium in New York City, highlights the significant expansion in the wellness real estate sector over the past few years. According to the report, the wellness real estate market grew from $225.2 billion in 2019 to $438.2 billion in 2023, marking an impressive annual growth rate of 18.1% (Global Wellness Institute).
Key findings also include the dominance of the United States, China, and the United Kingdom as the largest markets for wellness real estate, and it identifies major drivers and challenges facing the industry.
Market Growth and Regional Breakdown
The growth in this sector has been driven by increased awareness of the importance of physical and mental health environments, especially accelerated by the COVID-19 pandemic. The report projects continued robust growth at an annual rate of 15.8%, with the market expected to reach approximately $912.6 billion by 2028.
From 2019 to 2023, wellness real estate saw substantial growth despite an overall slowdown in global construction. North America remains the largest market, accounting for 44% of the global total in 2023. While the overall construction market growth slowed significantly (from 16.7% in 2020-2021 to 1.9% in 2022-2023), wellness real estate maintained higher growth rates, albeit decreasing from 24.8% to 13.4% over the same periods.
Key Trends Driving Wellness Real Estate
Indoor Air Quality. The pandemic and increasing wildfires have heightened public concern about indoor air quality. Safe, healthy indoor air is now a priority across residential and non-residential buildings due to its impact on cognition, mood, and productivity.
Natural Assets and Green Spaces. There is a growing interest in integrating parks, natural areas, and green spaces into projects and communities. This trend is driven by the recognition of the mental and physical health benefits provided by nature.
Environmental Design for Mental and Social Wellness. Modern living environments have negatively impacted mental wellness. Incorporating green spaces and biophilic elements can alleviate stress, improve cognitive function, and enhance social interactions. Urban planners and designers are increasingly leveraging these elements to foster community well-being.
Public Health Strategy. With rising healthcare costs, especially in countries with public health systems, there is a push to integrate health-enhancing features into affordable housing to reduce long-term public health expenditures.
Luxury and Mainstream Markets. Wellness features have become essential in luxury properties and are gradually being introduced into mid-market and affordable housing. This includes purpose-built rental communities that offer wellness-oriented amenities.
Wellness Tourism and Real Estate. Wellness tourism acts as a gateway to wellness real estate, with travelers seeking to continue their holistic wellness lifestyle at home. This trend is driving demand for retreat-style wellness living concepts, including primary homes and vacation properties.
Healthy Workspaces. As remote work becomes more entrenched, employers are using wellness-enhanced office spaces to attract employees back to the workplace. Features that promote health and well-being are becoming critical in commercial real estate..
Emphasis on the Social Aspect of ESG Metrics: The increasing focus on the "S" (social) in ESG (environmental, social, and corporate governance) metrics is expected to drive demand for wellness real estate. Despite political resistance in the U.S., ESG investing is expanding globally, with assets projected to reach $40 trillion by 2030 . Historically, ESG metrics have prioritized environmental factors, but there is now a shift towards integrating social factors into these evaluations .
Convergence of Planetary Health and Human Wellness: There is a growing convergence between sustainability in construction and human health. Governments worldwide are enacting policies such as energy efficiency standards, green building codes, and greenhouse gas reduction mandates to meet climate goals . The International WELL Building Institute (IWBI) and the U.S. Green Building Council (USGBC) have developed a streamlined certification process for projects seeking both WELL and LEED certifications, highlighting the integration of environmental sustainability with human health.
Diverse Opportunities in Wellness Real Estate: The wellness real estate market is poised to diversify, addressing various demographic needs and leveraging unique site characteristics. There is a growing demand for wellness-integrated living environments across different residential types, including urban high-rises, suburban homes, rental apartments, university housing, senior living, co-living, and spaces for digital nomads. This diverse demand offers developers vast potentia to differentiate wellness real estate projects, catering to specific needs and preferences of various populations while enhancing overall well-being and environmental sustainability.
Challenges
The wellness real estate sector is navigating several significant challenges as it strives to integrate health and well-being into residential and commercial properties. The following are the key issues facing this burgeoning industry:
Climate Adaptation and Resilience:
Extreme Weather and Natural Disasters: The increasing frequency of extreme weather events such as floods, wildfires, and power outages necessitate the incorporation of climate-adaptive features in wellness real estate. Properties must now include measures to protect inhabitants from unhealthy air, contaminated water, extreme temperatures, and storms.
Sustainable and Resilient Design: There is a growing demand for low-carbon homes and renewable energy sources, heat-reflecting materials, green roofs, climate-appropriate landscaping, and the protection of natural habitats. This shift is driven by a heightened awareness of climate change and a desire for homes that contribute to environmental sustainability and energy independence.
Worker Health and Safety:
Rising Temperatures: Construction workers are increasingly vulnerable to extreme heat, which can lead to heat strokes, exhaustion, and impaired cognition, resulting in higher mortality rates and on-the-job accidents. Ensuring the health and safety of construction workers is essential, aligning with the wellness ethos that should permeate all stages of real estate development.
Affordability and Accessibility
Premiumization and Market Segmentation: Wellness real estate is often associated with luxury, offering extensive wellness amenities for the wealthy. However, this has led to a widening gap between high-end wellness properties and those accessible to the average family. There is a pressing need for affordable wellness homes that prioritize essential health-supporting features like non-toxic materials, good ventilation, natural light, and access to green spaces and public services.
Inflation and Housing Costs: Rising housing costs, driven by inflation and high interest rates, have made homeownership increasingly difficult for many. This situation underscores the necessity for affordable wellness real estate that can meet the needs of a broader demographic.
Regulatory and Policy Barriers:
Outdated Regulations: Many local regulations governing construction and urban planning have not kept pace with the evolving understanding of how built environments impact health and well-being. Restrictions on mixed-use developments, high-density housing, and walkable neighborhoods hinder the creation of healthier living spaces.
Building Safety and Health Issues: Incidents of building-related illnesses and deaths highlight the deficiencies in current building standards and enforcement. Problems such as contaminated water, structural collapses, and toxic building materials call for updated regulations and better enforcement to ensure safer and healthier buildings.
To address these challenges, the wellness real estate industry must adopt a multifaceted approach:
Integrating Advanced Climate Resilience: Developers should prioritize features that enhance resilience against extreme weather and promote sustainability.
Ensuring Worker Safety: The industry must implement rigorous safety protocols to protect construction workers from extreme heat and other hazards.
Promoting Affordable Wellness Housing: There should be a concerted effort to develop affordable wellness communities with essential health-supporting features, leveraging partnerships with governments and communities.
Advocating for Regulatory Reform: Stakeholders need to push for updated regulations that facilitate healthier and safer built environments, ensuring that wellness real estate can thrive without being stymied by outdated rules.
By addressing these challenges, the wellness real estate sector can create healthier, more sustainable living environments that cater to a wide range of needs and preferences, fostering overall well-being for all residents.