Investors will continue to target the real estate sector in the post-Covid-19 scenario

Savills analyzed the main trends to determine the future of global property investment in a series of articles and interviews released under the Impacts research program. The international real estate consultant studied the various critical aspects in social, environmental, demographic and technological terms that the global real estate sector faces in a more immediate way. 

The conclusions were:

• Trade conflicts between the US and China will influence cross-border activities for many years, regardless of the leadership of the US, thus strengthening real estate investment opportunities in markets such as India, Vietnam and continental Europe.

• According to Savills, the global life sciences sector received $ 2.5 billion in investments in the five years to 2019; this sector is expected to grow following Covid-19, with potential opportunities in new markets such as India, Spain, Australia and Austria.

• Low long-term interest rates will ensure that the real estate sector continues to be sought after as an asset class, with a discrepancy between capital reserves and the low availability of high-quality stock, maintaining high competition and low yields.

Real estate sector associated with the life sciences sector will be one of the fastest-growing trends

Simon Hope, Global Capital Markets Director of Savills, comments: "The impact of the Covid-19 pandemic on investor strategies is much less than the role it is playing in accelerating some underlying structural trends that have been developing for a long time. This includes the growing demand for e-commerce, the fragility of global distribution networks - affected today by factory closures, but increasingly by climate change. Real estate investors need to continue to adapt to this uncertainty. Careful asset selection, diversification and the correct pricing of long-term risk will characterize successful investments.”

Paul Tostevin, Savills World Research Director and co-leader of the Impacts program adds: "In times of adversity, the real estate sector is perceived as a safe haven. With interest rates at minimum levels, there is still a lot of capital to be allocated, mainly from institutional investors who need to look abroad to fulfill their allocations. The structural changes identified by Impacts bring opportunities: capitalize on the disruption of e-commerce through retail redirection, opportunities for scientific advances and the knowledge economy through a rapidly growing life sciences sector, and even opportunities within the scope of changes geopolitical changes through geographical changes resulting from the US/China trade war. These are the critical points prior to Covid-19, but the recent pandemic means that some of these changes in the real estate sector may now have an extra boost behind them.”