„Impact of the Crisis on International Real Estate“
2020 and possibly the years to come have the potential to dramatically change the path of our economy, business and all industries around the globe in a way which we can only start to outline at this point in time. As part of our new conversations series „A look into the future – new paths and directions after the crisis”, we invite you to our upcoming online discussion on the impact of the crisis on international real estate. We want to discuss the long-term effects on the real estate markets in Germany, the USA and India and identify possible opportunities that come along. The current situation has the potential of a huge impact on property markets around the world. Other long-term effects like the ‚Green New Deal‘ will also affect the markets dramatically.
Will the effects be the same around the world? Which real estate sectors might gain, which sectors will lose?
ALPHAZIRKEL Managing Partner Dr. Albert M. Geiger discussed with Taurus Investment Holdings (https://www.tiholdings.com):
- Peter A. Merrigan (CEO & Managing Partner | USA)
- Erik R. Rijnbout (President | USA)
- Ajay Prasad (Managing Director | India)
- Dr. Nicolai C. Striewe (Director Investor Relations | Germany)
- The Covid-19 crisis has different effects on the different types of real estate sectors. The logistics sector will grow, while retail will experience an accelerated decline. In regard to the hotel sector, the decline will be more of a more temporary nature.
- With the New Green Deal and the crisis, production facilities will be relocated back from Asia to Europe and the US. In the US there are already massive shortages in products like pharmaceuticals. Thus, regardless of the results of the election, there will be a forced change due to the domestic demand for warehousing and manufacturing.
- There is a change in investment strategy due to rising trends such as domestic manufacturing, logistics and assisted living. In Germany the focus will be on logistics and office developments.
- In regard to the future strategy in India, the different demographic context has to be taken into account. The focus there lies on creative offices and the technology sector, while the residential market is focusing on midscale houses and co-living. Nevertheless, there is a demand-supply gap in retail.
- Investors these days make rather selected investments, they look out for bargaining opportunities and transformations in an economic dimension. Also, there’s been a light shift with focus on R&D, medical use, logistics and multi-family and mezzanine capital. Further, the greater volatility at the moment leads to a temptation for gambling.
- The New Green Deal influences the corporate strategy in so far that Taurus has two companies to address these requirements. First, the EcoSmart solution, made for new construction where resources should be saved, and energy reduced. Second, Renu Communities, which deals with the transformation of already existing assets.
- India is in terms of renewable energy quite ahead, due to sustainable minimum requirements in buildings and significant pushes from building occupiers. Further, the valuation of buildings is dependent on well-building standards.
- From an investor’s perspective the benefits of a more sustainable development are clear, due to risk management factors and a reduced uncertainty in future reals estate, the added value and a philanthropic component to give something back.
- The most important criteria for foreign investments are local management, local investors, a gapless and detailed track record and the ability to have the foresight to prepare for an eventual crisis.
Cover: Simon Gehrke Kommunikationsdesign www.simongehrke.de