The Show Ahead

Forecasts for the real estate market - 2021 and beyond
Deeksha Pahariya/Unsplash

The world over, real estate is battling two demons - one, a cyclic downturn pushed down further by the pandemic and two, a long term disruption brought about by the changes in the way we live and work. 

Here's a quick look at top trends in the world's real estate markets.

Asia-Pacific Leading Recovery

This is due to the fact that major APAC economies faced the pandemic in better shape when compared to most Western economies. 

Also, major Asian countries have managed the crisis with more surety so far, which is a big reason why global investors are increasing their allocations of capital to the APAC region, India included. 

Low Interest Rate Is A Tailwind

Despite the risk of greater volatility arising out of fiscal stimulus being applied on a global scale, a super easy monetary environment is keeping interest rates low for the time being. 

That's resulting in a higher yield spread for real estate than other asset classes, making real estate very compelling to investors. Many global experts believe the inherent attraction of real estate income is even stronger this year than in pre COVID times. 

Bifurcating Prices

There is a widespread acceptance in the belief that distressed real estate debt will increase once the government support packages are withdrawn across the world.

Due to this stress on occupier markets, “a bifurcation in pricing” phenomenon is being reported by many experts. 

This means prices are now different between favourable sectors like logistics, which have provided stable income during the pandemic and those sectors that have been worst hit, like parts of retail and hospitality. 

The Shared Economy Is Back

Most experts believe that employees will eventually return to the office, though in more of a hybrid working model and no matter how you look at it, the need for more flexible space is inevitable. 

From an investor point of view, a polarisation is predicted between perceived high-quality buildings — modern and adaptable — and outdated and inflexible secondary stock that is likely to witness a marked decline in demand. 

In one sip - old office buildings are passé. 

ESG Measures Are In Full Swing

The let's-go-green effort to reduce emissions, with net zero in its crosshair is finally being widely accepted as an investment in the future of the business as well as the planet. 

Compared to just 2 years ago, a far greater level of collaboration - to address the complexity of decarbonising the built environment - is already underway. 
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