The history of real estate: from huts to skyscrapers

Thousands of years ago, our ancestors led a nomadic life, as hunters and gatherers, living in huts in places where they migrated from time to time. Gradually, they discovered the advantages of stability and the importance of organized society, but also of the settlements in which they lived.

The transition from nomadic living to the first forms of organization of society occurred in the Neolithic when people began to domesticate animals, develop agriculture, and raise seasonal or permanent settlements. Later, in the Bronze Age and the Iron Age, this trend intensified, as our ancestors developed new technologies to process metals from which they made various objects used for trading. The beginning of the Bronze Age brought with it the emergence of city-states.

Starting with the year 3,000 BC, the first major social centres were formed in Mesopotamia, India, China, and Egypt, encompassing, among others, irrigation canals, fortresses, and temples. As these urban centres developed, leaders were elected: kings, pharaohs, emperors who began to claim taxes and rent for the land worked by their subjects. Property titles were then introduced and were bought mainly by wealthy merchants and aristocrats.

With the discovery of new trade routes and the development of maritime transport, the need to build warehouses for goods arose, especially in port cities, thus developing the logistics branch of the real estate market. Venice was the city where the first large commercial warehouse was built in the Middle Ages.

As for office buildings, early forms have existed since ancient Rome, but the first building resembling the ones we are used to is the Old Admiralty Office in London, built in 1726 in order to manage the acts of the Royal Navy. Along with a series of meeting spaces, it featured a boardroom for the Admiralty, which is still used today.

In 1798, the world's first covered shopping gallery was built in Paris - Passage du Caire, the predecessor of modern shopping malls.

With the advent of the Industrial Revolution, the fields of work multiplied, as did the need to provide housing for workers. In the 1800s, the notion of mortgage appeared in Europe, and at the same time, the first real estate transactions were carried out.

The development of an informal association of local real estate agents, however, has its origins in the United States in the 1880s. On May 12th, 1908, the foundation of the National Association of Realtors, comprising 120 founding members, 19 councils, and a state association, was laid in Chicago, Illinois. Initially, it was called the National Association of Real Estate Exchanges, the current name being adopted in 1972.

As new industries and trades emerged, the real estate market flourished, as most areas of activity are dependent on it - whether it's architecture, banking, retail, medicine, or others. Although it has not stopped evolving, the history of the real estate market has not been without crises, often called real estate bubbles, which appear, locally or globally, every few years. The most recent crisis took place in 2007-2008, following the granting of mortgages without real coverage, which eventually led to the crisis that resulted in the bankruptcy of financial institutions with hundreds of years of history. A euphoria in granting mortgages to people who could not afford to pay the interest, turning those mortgages into toxic assets, and transferring them between several banks has generated one of the biggest economic crises of the 21st century.

A decade later, in 2019, thousands of years after the first forms of activity in the real estate market, the size of the global professionally managed real estate investment market reached a value of USD 9.6 trillion dollars.

Data for this article was obtained from investopedia.com, linkedin.com, msci.com, wikipedia.org, and k2space.co.uk.