Real Estate during the Covid-19 era. Rules of thumb
I am sure you are receiving a huge amount of info and advice every day, so my aim is to feed you with the essential in a lean way that triggers your thoughts.
During the fist confinement, a greek leading newspaper ‘To Thema’ had the courtesy to publish my view on 3 key changing trends. These predictions have played out and proved its validity . Here is a summary
Residential space
Sunny spaces with efficient aeration and natural air flow through doors and windows will have an added value, especially if indications of Covid 19 sun sensitivity are confirmed.
Apartments, residencies and spaces that have several entrances or can be reorganized to have different leaving areas will be more sought after. It is what I call the emerging value of the Independent entrance/living space.
Bright and clean surfaces will be more important. Go for materials that are defensive and less susceptible to germ, virus and bacterial nesting. For example, marbles vs. plastic floors since they canwear down and become more porous, attracting germs and viruses.
Retail space
During the confinement consumers got even more comfortable with web shopping, helping deep root the habit. Even the most web shy consumers have embraced on line shopping increasing penetration and usage at record levels.
The bricks and mortar retail sector was already trying to tackle e-commerce canibalisation through omnichannel synergies. Overall, we think retailers have not utilized the full potential of these strategies. In many instances, omnichannel synergies were implemented with mediocre efficiency e.g. rare is the case where the salesperson of the physical store completes for the client the online order of an out-of stock item.
Now, in the Covid 19 era the growth gap between physical retail sales per square meter and web sales growth will become wider. Therefore, we reiterate our underweight position on Retail Space and equivalent REITS with the exception of well targeted micromarket locations .
Until recently Retail had found its defence from e-commerce on- line shopping by transforming large retail spaces to flagship “temples “ that offer brand experience, recreational shopping etc. However what we observe now is a Dislike ( mistrust) for confined and crowded spaces like shopping malls. This will be another long term effect that will change consumer behaviour in the post pandemic era, and places shopping malls on an even more sensitive watchlist.
Journal of past Forecast Highlights . Check out predictions
February 2018. Paris centre. The market has seen a robust growth in 2017 and trends are more than encouraging. The rental has been halted. Paris expects to receive part of the Brexit exodus .
January 2018. Our previous comments on the UK market are more and more apparent .
June 2017. Offers in London are becoming more attractive. Brexit however, is a historical shift which has not yet been unfolded and will bring profound changes to London’s economic structure. It may attract new activities but some of the existing ones may move to European Union (EU) countires. This will definitely cause property demand changes, especially in certain micro-markets. If there aren’t any special reasons, we suggest to investors to wait and not enter the market
Here is a related FT article.
( FT subscription access is required)
January 2018
Market data reaffirmes June’s predictions.