With a vaccine for COVID-19 on the horizon, and a slight upward trend in markets as observed in Q4 2020 and a varied offering with regard to stimulus to the sector, the real estate sector is abound with lucrative opportunities, if you know where to look.
Moving beyond primary markets:
Given the tech upgrade most of the industry has had due to the COVID-19 crisis and the subsequent lockdowns, it has become easier for investors irrespective of their bandwidth to explore opportunities in markets beyond their primary focus. In 2021, we are likely to see continued, diversified interest in secondary and tertiary markets. What will prove to be crucial for investors are that the markets have strong fundamentals; and are resilient in the face of unprecedented events.
Big cities still retain their sheen:
While 2020 saw reverse migration to smaller Tier 1 and 2 cities, primarily evoked by the pandemic induced remote working concept and auguring well for the growth and development of these cities, larger cities will continue to thrive. There is substantial inventory of quality office space in these cities and CRE investors will continue to seek lucrative bargains, even as newer business hubs begin to evolve, away from the central business districts.
Resurgence of retail:
Investors haven’t given up on retail, in fact they are looking at the coming year for expansion and potential of retail investments in previously inaccessible markets. While return to near normalcy isn’t expected till mid or third quarter of the year, what will be interesting is how this investment is safeguarded till such time that the consumers eventually return to in-store consumerism, plausibly through a hybrid model encompassing e-tailing.
Increased significance of REITs:
With two eminent Real Estate Investment Trusts (REITs) in operation, the interest in ownership in commercial assets through such investment instruments is expected to become more significant in 2021. Besides augmenting the sector’s growth, this shall also result in strengthening and organizing the sector’s mechanisms more effectively. Several large REITs including Brookfield’s are in various stages of launching, and 2021 may see 2-3 such issues, subject to regulatory approvals.