A diverse panel with expertise from across the real estate and restructuring industry in Asia, South America and UK discussed the impacts of COVID -19 on the global real estate market and emerging trends and opportunities in investment opportunities across the globe.
In terms of macro themes, the panel examined the competing tensions of high liquidity set against unstable occupancy rates and overall market uncertainty, which is making it difficult to price assets and narrow the gap between bid and ask prices in some sectors.
Overall, while some sectors are showing strain and a greater increase of distressed asset availability is predicted, the panellists were broadly positive about the opportunities for Real Estate investment arising across the region both in the short and long term.
Some of the more detailed take aways included:
- Driven by the rapid and escalating shift in consumer behaviour, online buying habits and large corporate reliance on big data, investment opportunities have arisen in logistics, data centres and industrial warehousing, and those properties more broadly catering to the rapid growth in the new digital economy.
- The face of traditional CBDs is shifting from standard office space to the creation of new lifestyle or “live, work and play” hubs. While this trend was identified prior to COVID-19, the current circumstances have seen an escalation in demand and this is expected to increase.
- Real estate assets are still seen as a safe investment despite the COVID-19 pandemic. While there has been varying level of impacts on specific sectors, most notably in hospitality, a range of regional and global data and investor sentiment surveys show that a large percentage of investors are expecting a solid recovery in global real estate markets between late 2020 and mid-2021.
- Recovery of the retail sector is already underway with some areas in China back to 80% of 2019 levels, whereas the recovery of the hospitality sector is expected to follow strongly as soon as international borders re-open. Ultimately, real estate remains an important and strategic investment option that provides stability and predictability through rental incomes and simply by its nature of being a physical asset, which can always be put to some use even if repurposing is required.
- Despite the positive indications in some sectors, it is inevitable that distressed opportunities will also arise in the real estate market. Whilst those have started most significantly in the hospitality sector to date, opportunities in other areas such as office and retail are more difficult to predict as the various emergency measures that most governments have implemented have delayed the real impact on those sectors becoming evident.
Related material prepared by Baker McKenzie:
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