Is property a good investment right now?
How different property classes changed because of COVID-19
When it comes to the property market, especially in a time of economic turbulence, it may be easy to assume that all sectors of real estate have been equally adversely affected. Contrary to expectation, then, it should be noted that while there have been sectors of the market that have been affected negatively, this is not the case for all sectors.
Below we look at some of the various sectors of the property market and consider how each has been impacted by the COVID-19 pandemic, while offering some insights for prospecting investors. Please note that these insights are based on observation and do not constitute legal advice.
Commercial property
Retail
Because of the pandemic, many ideas of traditional retail have been challenged - especially with the growing interest in online purchasing. This means that those looking to invest in retail property should consider doing so in a shopping complex with a strong anchor tenant and other good tenants where they can draw sizable foot traffic.
Hospitality
One of the hardest-hit sectors of the property market during the pandemic was the hospitality sector. Investors were left with months of little-to-no income and even when tourism started up slowly again, the market showed minimal increase in activity. The hospitality industry is still expected to continue suffering from the fallout of the pandemic for some time. In fact, calculated estimates only see the hospitality industry returning to normality in terms of return on investment from 2024.
Offices
Traditional offices have taken a very big knock in terms of investment potential. There is some difference between the office building vs hospitality real estate in the short term (and in this respect the hospitality sector has taken more of the brunt of the burden of the pandemic). However, with greater focus on remote work and the possibilities that are being opened up due to technological advancements, the traditional office looks to lose out in the long term, while the hospitality sector will recover and grow.
Industrial property
One of the main growth points in the property market during the COVID-19 pandemic has been seen in the industrial property class. In large part this is due to the fact that manufacturing has stayed steady, and never before have the right supply-chains been so central to navigating production. For investors, turning retail spaces into distribution centres could go a long way to becoming part of future developments as online retail grows.
Residential property
Healthcare
Buildings with tenants who offer healthcare services could be a good investment - especially if the tenants offer critical care. Investors are encouraged to consider a location with committed tenants where the practice is sustainable.
Student housing
In some respects, student housing has been a volatile sector of residential property as students have moved online for the largest part of the pandemic, while only few institutes are really welcoming back students in full swing. Nevertheless, because of occupancy restrictions, students may very well start moving out of residences or on-campus housing to reside in off-campus housing that is still within safe walking distance.
Senior residences
As advances in medicine and medical technologies continue to be made, the average life expectancy is bound to increase. This means that the need for senior housing will also increase in the years to come, which could make for a good investment.
Choose 3%.Com Properties
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)
When it comes to the property market, especially in a time of economic turbulence, it may be easy to assume that all sectors of real estate have been equally adversely affected. Contrary to expectation, then, it should be noted that while there have been sectors of the market that have been affected negatively, this is not the case for all sectors.
Below we look at some of the various sectors of the property market and consider how each has been impacted by the COVID-19 pandemic, while offering some insights for prospecting investors. Please note that these insights are based on observation and do not constitute legal advice.
Commercial property
Retail
Because of the pandemic, many ideas of traditional retail have been challenged - especially with the growing interest in online purchasing. This means that those looking to invest in retail property should consider doing so in a shopping complex with a strong anchor tenant and other good tenants where they can draw sizable foot traffic.
Hospitality
One of the hardest-hit sectors of the property market during the pandemic was the hospitality sector. Investors were left with months of little-to-no income and even when tourism started up slowly again, the market showed minimal increase in activity. The hospitality industry is still expected to continue suffering from the fallout of the pandemic for some time. In fact, calculated estimates only see the hospitality industry returning to normality in terms of return on investment from 2024.
Offices
Traditional offices have taken a very big knock in terms of investment potential. There is some difference between the office building vs hospitality real estate in the short term (and in this respect the hospitality sector has taken more of the brunt of the burden of the pandemic). However, with greater focus on remote work and the possibilities that are being opened up due to technological advancements, the traditional office looks to lose out in the long term, while the hospitality sector will recover and grow.
Industrial property
One of the main growth points in the property market during the COVID-19 pandemic has been seen in the industrial property class. In large part this is due to the fact that manufacturing has stayed steady, and never before have the right supply-chains been so central to navigating production. For investors, turning retail spaces into distribution centres could go a long way to becoming part of future developments as online retail grows.
Residential property
Healthcare
Buildings with tenants who offer healthcare services could be a good investment - especially if the tenants offer critical care. Investors are encouraged to consider a location with committed tenants where the practice is sustainable.
Student housing
In some respects, student housing has been a volatile sector of residential property as students have moved online for the largest part of the pandemic, while only few institutes are really welcoming back students in full swing. Nevertheless, because of occupancy restrictions, students may very well start moving out of residences or on-campus housing to reside in off-campus housing that is still within safe walking distance.
Senior residences
As advances in medicine and medical technologies continue to be made, the average life expectancy is bound to increase. This means that the need for senior housing will also increase in the years to come, which could make for a good investment.
Choose 3%.Com Properties
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)
05 May 2021
Author 3%.Com Properties