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[vc_media_type_category]The coronavirus pandemic has impacted the way we work and live in unprecedented ways that are impacting how we consume. These thematics – including the increased use of technology, working from home, and online shopping – are acute in the real estate sector. This session will examine what this means for the asset class opportunities and risks as well as learnings for the whole portfolio. How investors can best combine listed and unlisted opportunities, and balance liquidity, will also be considered.[vc_quotes layout=”accordion” 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title=”Speaker” el_class=””][vc_quotes layout=”accordion” 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title=”Moderator” el_class=””][vc_empty_space height=”10px”]
Key takeaways
Jon
Retail and office are only 25 per cent of the property market. Today, the property asset class has a material weighting to data centres and technology towers.
We have to deal with the fact that it’s a recession, so hotels for example will naturally be impacted.
Some aspects of property are being uniquely impacted, for example university housing which is normally a defensive asset.
There will certainly be some permanent destruction of the office opportunity, even though advocates of office investment believe physical offices provide benefit relating to talent concentration, culture and collaboration.
The property market, like an economy, is always evolving, with some parts becoming obsolete and some parts becoming more relevant.
Over a cycle, it is best to have a combination of both listed and unlisted property within a portfolio.
We will not necessarily witness a doom and gloom exodus from big cities, but there may be opportunity for decentralised models to be explored.
Jason
COVID has turbocharged changes that were already underway.
It’s too soon to predict the future fate of the office market.
Knowing how to adequately perform due diligence in this environment will be key.
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Poll results
Do you think the office real estate sector has been permanently disrupted?[vc_line_chart x_values=”” values=”%5B%7B%22title%22%3A%22Yes%20(72%25)%22%2C%22y_values%22%3A%2272%22%2C%22color%22%3A%22blue%22%7D%2C%7B%22title%22%3A%22No%20(16%25)%22%2C%22y_values%22%3A%2216%22%2C%22color%22%3A%22pink%22%7D%2C%7B%22title%22%3A%22Unsure%20(12%25)%22%2C%22y_values%22%3A%2212%22%2C%22color%22%3A%22juicy-pink%22%2C%22custom_color%22%3A%22%23f7be68%22%7D%5D”][vc_dfp_ad ad_embed_id=”/30578185/T1F/LEADERBOARD” display=”both” css_float=”none” bottom_margin=”1″]
The Florida State Board of Administration has made some strategic moves to take advantage of opportunities in the dislocation, including in private equity, distressed debt and active listed equities.. But CIO, Ash Williams, is concerned about the underlying real economy.
This research studies the interaction between economic decisions and epidemics. The model implies that people’s decision to cut back on consumption and work reduces the severity of the epidemic, as measured by total deaths. These decisions exacerbate the size of the recession caused by the epidemic.
The global economic shutdown triggered by COVID-19 has put the North American private debt industry to its first major test. What lessons can be learned from the global financial crisis that are relevant today? What lessons are emerging as a result of COVID-19? And how might the industry evolve?
The global economy is projected to contract sharply by –3 per cent in 2020, much worse than during the 2008–09 financial crisis. In a baseline scenario--which assumes that the pandemic fades in the second half of 2020 and containment efforts can be gradually unwound—the global economy is projected to grow by 5.8 percent in 2021 as economic activity normalises, helped by policy support. The risks for even more severe outcomes, however, are substantial.
The PRI is working with signatories to further develop thinking on what the COVID-19 crisis means for investors. It is establishing two signatory participation groups to coordinate and develop investor responses, focusing on short term responses, and a future economic recovery phase.
This OECD note provides illustrative estimates of the initial direct impact of shutdowns, based on an analysis of sectoral output and consumption patterns across countries and an assumption of common effects within each sector and spending category in all countries.
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