Slowing Population Growth Could Weigh on Property Demand

Slowing Population Growth Could Weigh on Property Demand

A global slowdown in population growth may create long-term challenges for commercial real estate demand and investment returns, according to a recent report from Oxford Economics. The firm has downgraded its already modest population growth forecasts for both the United States and the United Kingdom for 2026. It now expects the working-age population to decline in nearly one-third of major cities worldwide over the next two decades.

“Most impacts will stem from demographic shifts such as an aging labor force, changing migration patterns, and shrinking household sizes,” said Mark Unsworth, director of global real estate economics at the firm. Oxford’s analysis of roughly 100 global cities shows that stronger population growth has historically been associated with higher real estate returns over the past 20 years.

Among property sectors, office demand is most directly tied to working-age population trends. As more workers retire, company payrolls—and the need for office space—are likely to shrink. Retail real estate appears less sensitive to population changes, as aging populations often coincide with rising wealth levels. This trend also provides some support for industrial and logistics properties that underpin consumer commerce.

Residential real estate, meanwhile, may remain relatively resilient. In many countries, the rise in single-person households is helping sustain housing demand, even as overall population growth slows, the report noted.