Future Proofing Real Estate Portfolios

The COVID pandemic has caused three major direct and indirect impacts on the real estate industry:

• Triggered an unprecedented recession in the short term
• Accelerated megatrends that will have lasting effects in the medium term
• Disrupted industry beliefs and prompted complete rethink for the longer term

Impact of the Pandemic on Real Estate

One of the major implications of these COVID-induced impacts is that retail and to a lesser extent office assets, which still account for the bulk of typical institutional real estate portfolios in Europe, will become less dominant given the headwinds they are facing.

Residential and logistics are rapidly gaining in importance in institutional portfolios and to some extent replacing retail and office exposures. In addition, there is a broadening of the real estate asset class that should help investors tailor and diversify their real estate exposures with the advent of alternative property types (called ‘niche’ in the US). These are benefitting from strong demographic and technological megatrends.

The Rise of Alternative Property

Alternative property types have pretty much become mainstream in the US over the past ten years and now represent a cumulative asset value of over a trillion USD i.e, 43% of the real estate invested stock!

Alternatives in the US markets broadly fall under four clusters, driven by (overlapping) megatrends:

• Living alternatives
• Healthcare and Wellbeing
• Supply-chain
• Tech and digital

 

Real Estate Portfolio Construction

Historical evidence in the US also shows that alternative property types provide excellent diversification benefits to traditional sectors such as offices, retail, residential and logistics.

Indeed, if the changes observed in the US market are any guide, we may well be on the cusp of big changes in real estate portfolio allocations in Europe. Investors wishing to deploy capital in Europe will have to take these evolutions into account and decide which, if any, of these “emerging” property types they would like to include into their target portfolio mix.

In partnership with PATRIZIA, this webinar will focus on how investors can build a resilient real estate portfolio in a post-pandemic world.

 

Presenter

Mahdi joined PATRIZIA in January 2020 as Head of Investment Strategy and Research, overseeing PATRIZIA’s investment strategies, research and performance analytics. He works closely with the CIO in crafting PATRIZIA’s House View and serves on PATRIZIA’s Investment and Executive Committees.

Previously, Mahdi worked at LaSalle as Board Member where he led the European strategy and research team and served on LaSalle’s Debt & Special Situations and private equity real estate investment committees. Mahdi held leading roles at AEW, MSCI IPD, ESSEC Business School, and Caisse des Dépôts. He is also a regular keynote speaker.

Mahdi holds a Ph.D. in Economics and Finance from EHESS (France), a Masters in Financial Economics of Dauphine University, and is an active member MSCI IPD, INREV, EPRA and the RICS.

 

 

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