The 10 Key Questions for Real Estate in 2021
Mike Phillips, Bisnow
After several years of predictability, 2020 was one of the most tumultuous years in recent real estate history, and 2021 looks set to be equally uncertain.
Coronavirus vaccines, social impact, climate change and what constitutes a mainstream real estate sector will be on investors’ minds in the new year, according to UBS Asset Management. Here are the investment bank’s top 10 real estate questions for 2021.
What are the different COVID-19 scenarios?
This is the central question for much of humanity, not just real estate. UBS’s base case is that “vaccination will be effective, become widely available in 2021 and allow the economy to gradually recover to sustained growth.” This will support real estate occupier demand and investor confidence, it said.
If the vaccine is rolled out more quickly than expected, leisure and hotels will see the biggest benefit. If it is slower than expected, well, 2021 will be “lacklustre,” the polite term used by UBS. If the virus mutates and proves resistant to the vaccine, “This could see the pandemic endure and ultimately force society to adapt to live with the virus on a permanent basis, radically altering the way we live.” Best not to think about that too much.
What is the role of real estate in client portfolios post-COVID-19?
The pandemic has shown that the income component of real estate can be risky. But in a world where central bank stimulus keeps stock prices high and bond yields low, prime real estate where the income is very secure will continue to be highly desirable to institutional investors who need to pay out liabilities, and so capital will keep chasing the sector and liquidity will remain high, UBS said.