Global Real Estate Outlook: A Quest for Certainty in Uncertain Times
April 20, 2020

Global Real Estate Outlook: A Quest for Certainty in Uncertain Times

Max Swango. Head of Global Client Portfolio Management, Invesco Real Estate; Timothy Bellman. Global Research Strategist, Invesco Real Estate

The COVID-19 pandemic is clearly an unprecedented event that has led to a major disruption of the global economy. In the near-term, real estate net operating income is under real pressure, values too have come under pressure. The outlook is uncertain. If the disruption is reasonably short, it is easy to envisage a relatively swift bounce back. If the disruption endures for any length of time, the consequences would be more substantial. But either way the prudent broad real estate investment strategy actions are likely to be similar.

Long term, we have strong conviction that many of the positive secular trends we had been pursuing have simply been reinforced by the COVID-19 crisis. We hold to these:

  • Logistics. Online sales/delivery have come into their own; accelerating a structural shift.
  • Offices. Innovation/life science hubs and prime CBD locations are the economic focus.
  • Multi-family. The trend to higher quality institutional stock has been reaffirmed.

Near term though, the immediate emphasis is on prudent asset and capital management; in time attention will also turn to the potential opportunities that might arise. For now:

  • Cash is king. A focus on prudent cashflow management by efficiently collecting rent, nurturing tenants, hoarding cash, maintaining occupancy and minimizing discretionary operating expenses.
  • Care for capital. Frequent communication with investors, pay close attention to loan covenants, carry out stress tests, maintain low levels of long-duration leverage.
  • Pursue opportunities. Consider quality assets benefiting from favourable long-term trends, especially where favourably priced due to dislocation, stress or distress.

Find out more in our whitepaper.

Investment risks

  • The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested. Property and land can be difficult to sell, so investors may not be able to sell such investments when they want to. The value of property is generally a matter of an independent valuer’s opinion and may not be realised.

Important information

  • Past performance is not a guide to future returns. The views and opinions expressed herein are those of Invesco Real Estate professionals based on current market conditions. They are not necessarily those of other Invesco professionals and are subject to change without notice.