The pandemic period has created an unprecedented degree of uncertainty that has affected almost every sector and corner of the world. This also includes the area of real estate investments, which usually guarantee a stable appreciation and a low level of risk.
However, due to coronavirus, a difficult situation has arisen for retail investors focusing on non-residential real estate. The usual investor goals, such as hotels, offices or retail centers, face the consequences of the corona crisis to varying degrees. Not to mention that experts expect the second wave to emerge, which could cripple the economy again and slow down future investment strategies.
Let’s take a closer look at these three segments. Probably the worst hit were the hotels, which paid for the closure of the borders and a total decline in tourism. Given the continuing uncertainty in the tourism segment, there is no expectation of a faster recovery, and therefore investors are very likely to wait here with their investment. On the other hand, every crisis also means an opportunity, so it cannot be ruled out that new investment opportunities may not appear.
Even the shopping centers in the real estate market were not affected by the coronavirus pandemic. Due to emergency measures, the owners had to deal with a loss of traffic due to almost two months of closing. After the release of these measures, people have returned to shopping malls, but it is certainly not, and probably will not be for some time, a return to pre-coronavirus attendance levels.
Although the slow-moving pre-Christmas season is a promise that the shopping centers will function again, the risk of infection in these places to meet people will be a certain brake. And therefore a factor that will speak to the level of investment in this segment of real estate.
On the other hand, the decrease in the number of visitors to shopping centers meant their transfer to the world of online shopping. This places higher demands on warehousing and logistics services. Likewise, the upward pressure on prices in this segment is increasing. This fact can therefore be an alternative for real estate investors.
After all, this is confirmed by a comparison of revenues from shopping centers with the revenues of warehouses, which in recent years have approached the same level of about 5%.
Offices are relatively the greatest investment security, although even here the coronary crisis affects the behavior of corporate tenants. Many of them have found that their companies can to some extent operate remotely, so far more willingly than in the past to cater to home office employees. In addition, the lower need for office space is very likely to be affected by the situation on the labor market, where due to the economic slowdown, companies can be expected to reduce their stocks in order to save costs. It can be assumed that this trend will continue and therefore it will affect the demand for office space.
Not to mention that the trend of recent years in the world and in our country is a boom in coworking centers and serviced offices, which, according to experts, are one of the phenomena of the real estate market. And even though these centers emptied during the spring due to coronavirus, the current situation of their restart is recording again.
Investors should therefore remain cautious and assess very carefully whether to invest or wait with the investment. Although low interest rates are cheap in the market, banks will be similarly cautious about who they lend to.
In any case, as has already been said, every crisis represents an opportunity, but even in this case, it is true that good luck to those who are prepared. At the same time, it is good to keep in mind that individual investment instruments have various advantages and disadvantages in times of crisis. For example, our bonds are a profitable and safe investment.