COVID-19 and the Impact on Real Estate

May 29, 2020

How has COVID-19 affected the markets and why bricks and mortar may be the safest investment in future.

Despite the recent challenges with the Covid-19 Pandemic, investors who are savvy are making well informed decisions right now and picking up some great deals in the property investment market.

Companies in the real estate sector are fast adapting and being flexible, allowing employees to work from home and encouraging a new way of working with flexibility and less time spent in offices.

Covid-19 changed the way we work and live almost overnight and is likely to have a long-term impact on real estate. The real estate industry is at a crossroads with climate change and the global drive towards zero carbon future. Financial institutions such as the Bank of England are increasing requirements of financial organisations to properly price climate risk, whether it is debt or bonds. There will be cheaper debt and better terms for property investment that is more sustainable. 

One of the other main issues is new building versus old buildings. A lot of emphasis for change goes into new buildings, but the reality is that the built environment of 2050 already exists. Focusing on new builds is therefore a positive move, but to make an impact, the mitigation has to also be in refurbishing and retrofitting older buildings.

Landlord relationships with their tenants are also evolving as the move towards more flexible office and work space solutions means they’re in more of a partnership.

LOW INTEREST RATES – HIGH DEMAND

With interest rates at record lows, investors have been increasing allocations to real estate across all regions. “Director, European Research, Savills.

Domestic investors in London for example, who know their local markets well, might also consider prime opportunities in secondary cities, especially with good quality tenants and long lease terms in place. Some investors who are seeking more resilient property markets may wish to invest in commuter towns around London where they will be seeking lower entry prices and more affordable tenant demand with higher rental yields.

New developments will consist of diversity of design to include both living accommodation, well-being facilities and workspace environments that adapt to our new way of living and co working together.

During times of uncertainty, property has always been considered a safe haven for investors. We envisage a new landscape where investors find the risk/return values they need from the market by choosing assets and property partners who’s core values are transparency and liquidity, with demand and supply fundamentals of paramount importance to reduce risk. “Dale Anderson, Sales Director at Fabrik Invest”

Between low interest rates, a weak pound and under-performing global stock markets, the UK property investment market may still offer a much stronger value proposition against investments such as stock markets and bonds.

Fabrik Invest

Covid-19 has jolted financial markets, since February 21, 2020, bond yields, oil, and equity prices have sharply fallen with trillions of dollars across most asset classes are looking for safety.

The above graph displays the impact of Covid-19 had on the five main money markets globally. The short-term outlooks is unclear, and therefore investors should look to alternative asset classes to diversify and balance their investment portfolios.

Property is a medium to long term investment proposition. The above graph displays the steady and positive growth of the UK property market over the past 10 years. Bricks and mortar should certainly be considered as part of a healthy and balanced investment portfolio when stocks and other markets are down. Investors are seeking more tangible asset classes such as gold and property.

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Wayne Venter

International Business Development Manager

Wayne has been in the property industry for over 17 years. He started out selling residential properties in the northern suburbs of Sandton, South Africa, for one of the bigger real estate brands, before moving to a boutique, Johannesburg-based property developer. He worked at a senior level, specialising in residential developments on the north coast of KZN and various other areas of Northern Johannesburg.

Wayne moved to selling luxury, free standing homes and apartments in Sandton, Johannesburg in 2006, having joined the Country’s leading real estate brand and within six months was leading the team. In 2008, he began to focus exclusively on the luxury apartments in central Sandton, priced from approximately R2 million to R60 million. Over the years, he has also added commercial property sales and rentals to his repertoire, as well as building his own investment property portfolio between 2011 and 2018.

By 2018, realising where the South African property market was headed, he sold out of his investment property portfolio to de-risk and went looking for a real estate company to buy into. South Africa’s property market was extremely volatile at that time, so Wayne took the initiative and moved to London to work in property in the UK.

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Edward Snell

Senior Property Consultant

I live in Spanish countryside with my wife and our 11 rescue dogs.

Originally from Bedford, I have two sons, two step children & 6 grandchildren.

I have a keen interest in property investment and over the years have built up a personal portfolio for the purposes of rental income and capital growth.

I have over 20 years’ experience in property investment, both in the UK & overseas.

My other interests include animal welfare, football, motorsports, travel and music

My personality is of an even temperament and I enjoy the cut and thrust of doing deals.
I am happy and successful in what I do & take great pleasure in providing my clients with successful outcomes.

I’m a good team player but work well as an individual.

Daniel Harburn

Property Sales Consultant

Daniel had a passion for property from a young age so he began his working life by undertaking a plumbing apprenticeship for a large well known UK developer to pursue a career in construction. After qualifying he soon realised that building relationships was a preferred skill of his due to his loyal and trusting nature.

From then on Daniel launched his career in sales where he worked his way to to a high performing sales person at a creative media company. Part of Daniels success in accumulating clients over the last 10 years is put down to his diligence in customer experience.

Daniel has a keen interest in golf and also in keeping himself fit which is essential as he and his fiancé have 4 year old twins, Jacob and Sofia who keep them both on their toes.

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