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.
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.