Property investments are unlikely to return to their pre-COVID-19 levels following the end of the current worldwide lockdown and investors may need to consider a new market landscape reshaped by digital working patterns, according to a property and infrastructure investment manager.
Freehold Investment Management managing director Grant Atchison said while investment markets were on hold due to the lockdown, the reopening of markets was hard to predict and would be dependent on a range of global factors.
“I spend time each day with my team discussing this topic and none of us know the answer to how markets will return, but a few things will have to play out when it does,” Atchison told smsftrusteenews.
“We are watching China and parts of Europe that have been hard hit by the virus and whether these countries release restrictions progressively or immediately, and will they be reapplied if there are breakouts, and that process will be the major factor in how this plays out.”
He said decisions about COVID-19 are controlled by governments, which will be the largest factor determining how the property market responds, and that even under a best-case return scenario there will be unknown outcomes that will have to be considered.
“If, say, in three months’ time the government says all is well and people can head back to what they were doing, people will return to the city and shopping centres will reopen, as will airports and other large facilities, but does that mean they will all go back to 100 per cent usage immediately?” he said.
“If we consider how we have been working and the use of technology, what will the new normal look like? Have we learnt during this period that some businesses will not need as much office space as they used to and we can do the same with some people working from home?”
People may have also learned to go without inessential goods, which could affect the rebound of retail shopping centres, while corporate travel could also decline, impacting on airports as people decide videoconferencing can replace long-distance travel, he said.
“If the government immediately releases restrictions, what will be the rebound factor? I suspect it will be less than 100 per cent and there will be a permanent impact,” he said.
“In a longer and more protracted release we will probably become more embedded in the ways we have come to work and there will likely be a greater impact on the valuations of property investments because we will find different ways of doing things that will remain in place,” he noted.''