Wellness is everywhere today as consumers of all ages seek to improve their physical and mental health. Demand for and investment in wellness real estate in the commercial market is surging as consumers increasingly seek buildings, homes and communities that help them live healthier lifestyles.
The Global Wellness Institute (GWI) recently released a new report. 2024 Wellness Real Estate: Market Growth (2019-2023) and Future DevelopmentsHere we present the latest data and insights on the wellness real estate sector, which has grown rapidly over the past six years, growing from $225.2 billion in 2019 to $438.2 billion by 2023, an annual growth rate of 18%. By comparison, the annual growth rate for overall global construction over the same period was just 5.1%.
GWI predicts that the wellness real estate market could grow 15.8% annually from 2023 to 2028, approaching $1 trillion at $912.6 billion. The report also explores the biggest opportunities and challenges the wellness real estate market may face in the future. Key findings from the report include:
Largest Market
- By 2023, the United States will account for 41% of the global market.
- The United States and Canada, along with some Asian countries (China, Australia, Japan) and Europe (UK, France, Germany), account for 85% of the global market.
- Average annual growth rates from 2019 to 2023 remain fairly high across all major country markets, with many of the countries on this list growing faster than the global sector average (18.1%) over this period.
Wellness Building Certification
- Interest in wellness certification has grown rapidly since 2017, with the total number of wellness-certified building projects set to increase more than 40-fold by 2023.
- The WELL Building Standard (WELL) and Fitwel are two leading third-party assessment systems operating in multiple countries with a specific focus on the health and wellness of building occupants.
- As of the end of 2023, there were more than 3,300 WELL and Fitwel certified projects worldwide, with more than 55% of these certifications in the United States.
- The majority of certifications are for office/commercial, hospitality and retail properties, with residential projects making up about 19%. As of March 2024, another 1,800 projects are in the pipeline for certification (Fitwel) or pre-certification (WELL), most of which are in the United States, China and Canada.
Key Drivers and Opportunities for Wellness Real Estate
- Healthy indoor air is even more important in the post-pandemic era and in areas where air quality is declining due to climate change.
- Future wellness real estate projects will increasingly incorporate natural assets such as parks, natural areas for outdoor recreation, landscaping, trees, and green public spaces, and many advocate for making these natural assets more equitably distributed and accessible to traditionally underserved populations.
- Thoughtful environmental design can improve everyone’s mental and social health. Socially-oriented design features help people feel connected to one another and encourage spontaneous social interactions that improve well-being. Green spaces and biophilic elements have been proven to reduce stress, evoke positive emotions, improve cognitive function, and accelerate healing.
- Luxury and wellness are increasingly intertwined. In the future, wellness amenities in luxury properties will promote connection with nature, mindfulness, sleep and other aspects of mental and social wellness. GWI predicts that many of these features will increasingly be found in mid-range and affordable properties, including single-family homes and multifamily purpose-built rental communities.
- Wellness tourism is leading to the development and purchase of wellness facilities. Major destination spa and luxury hospitality brands are developing branded residences (e.g. Six Senses, SHA, Canyon Ranch, Rancho La Puerta, Aman Resorts, Mandarin Oriental, Mission Hills Spa, GOCO Hospitality, etc.) adjacent to existing properties or in urban areas.
- A wellness-focused workplace will help encourage people to return to the office. With overcapacity in the global commercial office market, commercial tenants may be looking for more value in their leases, including better wellness features and upgrades. This trend will continue to increase the demand for wellness real estate in the commercial real estate market.
- Wellness real estate has great potential to differentiate to cater to diverse needs and clientele. Consumers in large cities may be most concerned about air and water quality, noise pollution, mental health, and access to green space, fitness and other wellness amenities. People in large suburban developments may want more walkability, public transportation options, bike paths and outdoor recreation options to better connect with their neighbors.
Key challenges facing wellness real estate
- The impacts of climate change will drive demand for climate adaptation features in wellness real estate. Wellness real estate buyers, investors and developers will need to address many new risks, and adaptability and resilience will need to become a key part of the wellness framework.
- Rising temperatures are threatening the health and safety of workers around the world, with construction workers being one of the occupational groups most affected by extreme heat. Developers need to take precautions to look after the health of their workers as they build health-conscious buildings that will help others in the future.
- The overall premiumization trend is widening the gap between ultra-wellness properties built for the wealthy and homes built for the average family. At the middle and lower end of the market, buyers are looking for a more basic range of wellness support features. Wellness property builders need to ensure they are catering to these key consumer needs.
- The regulatory environment for construction and urban planning often impedes the achievement of healthy real estate and a healthy built environment. Construction is primarily regulated at the local level, and cities around the world have regulations that prohibit healthier urban design and building practices.
GWI defines wellness real estate as buildings, neighborhoods, and communities that are actively designed and constructed to support the overall health of residents, occupants, and visitors. Wellness certifications and rating systems provide useful signals to tenants about the wellness features a building offers, but the organization notes that wellness real estate is not limited to certified developments. Wellness real estate is highly diverse, and in estimating the market size, GWI acknowledges that it is impossible to create a checklist of what does and does not count as “wellness real estate.” Although not measured in this dataset, buildings and spaces designed to address different aspects of health and wellness by improving physical wellness, social wellness, mental wellness, and environmental wellness can provide residents with the same benefits as dedicated wellness real estate.
“The need for purpose-built/privately developed wellness real estate may be reduced if governments invest more in health-promoting and environmentally friendly infrastructure at the neighborhood, community, city and regional levels,” the report states. “Such public investments could include active design, public transport, public parks, walking trails, sports and recreation facilities, community centres and community events. However, until people around the world have direct access to these healthier built environments, demand and adoption of wellness real estate is likely to continue to increase for the foreseeable future.”
