While the state of the economy and government policies are some of the key factors affecting real estate, there’s a new variable to keep in mind: a global sand shortage whose impact is already being felt in industries across the board.
The Reasons Behind the Global Sand Shortage
The screen you are looking at, the toothpaste you use every day, and every building you can think of have something in common. They are all made using sand.
In fact, according to the United Nations (UN), sand is the world’s second-most used resource after water. This is in large part due to the fact that sand is one of the main components of concrete.
The combination of urbanization megaprojects in China and India and rising demand from other countries is driving up sand consumption at such a pace (40 to 50 billion metric tons per year) that it has become impossible for this raw material to renew naturally.
Until recently, sand was mined from land quarries or riverbeds. As these sources have become scarcer, marine and coastal sand aggregates are being exploited. However, these aggregates require extra processing, and in the case of marine aggregates, sodium must be completely removed, otherwise structures built with it might collapse.
To make matters even more complicated, overexploitation of sand can have serious environmental consequences, as it causes erosion and alters rivers and coastal ecosystems.
The Implications for Real Estate
As mentioned earlier, sand is one of the main ingredients of concrete, which in turn is the world’s most consumed construction material.
Any variation in the price or availability of sand has a direct impact on construction and real estate.
And with demand increasing and extraction becoming more complex, a continued steep upward trend in the price of sand is almost inevitable. For example, between 1991 and and 2021, the price per ton of sand in the U.S. went from $3.96 to $9.90.
All players in the real estate industry should be prepared to deal with the impact of sand becoming scarcer and more expensive to mine. The effects may include:
- Increased construction costs
- Project delays
- The need to use alternative materials, such as mass timber and crushed rock
- Potential government regulation of the use and extraction of sand
- At a global level, the formation of “sand mafias” that attempt to control the mining and export of sand in their countries
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