Thought Leadership

Real estate companies have ramped up their investment in technology in response to the COVID-19 pandemic, finds a survey of some of the biggest property players in Asia.

The survey by independent news source Mingtiandi, in collaboration with technology company Yardi Systems, finds 70 percent of real estate companies are scaling up their investment in property technology, or proptech.

Please click below to download the full report.

When COVID hit the world, the accompanying lockdowns brought the term Work(ing) From Home (WFH) from the margin to the mainstream. This sounded alarm bells around the world, from savvy investors like Warren Buff et to analysts and other market watchers, thinking that the age of the CBD office market is over. Those who believe that WFH will significantly reduce demand for office space have valid reasons but their concerns about demand have not been articulated considering the following:

When COVID hit the world, the accompanying lockdowns brought the term Work(ing) From Home (WFH) from the margin to the mainstream. This sounded alarm bells around the world, from savvy investors like Warren Buff et to analysts and other market watchers, thinking that the age of the CBD office market is over. Those who believe that WFH will significantly reduce demand for office space have valid reasons but their concerns about demand have not been articulated considering the following:

1. The discrete nature of office leasing terms
2. Time domain
3. New demand

By not accounting for these factors, any analysis of the market is likely to fall short of the mark. Today, we will analyze the Singapore CBD Grade A Office market to look at how it may permutate over time after we adjoin these three extensions to the mainstream WFH belief that there will be a sharp climbdown in demand. From a list of permutations, we will input our prior probabilities as to which of these are likely to play out in future. This approach is in sharp contrast to providing a singular outcome after just one round of reasoning.

• The COVID-19 pandemic and the ensuing lockdowns’ economic ramifications have caused significant uncertainty over the future of work and rental income from office properties.
• Nearly 60% of the UK Quarterly Property Index’s office rental income comes from leases that expire or contain a break-clause date over the next five years.
• A review of lease events showed that in 2019 47% of offices were vacant for one quarter or more after a break clause and 72% were vacant after lease expiry.1 These numbers could rise amid COVID-19, leaving more rent at risk.

• Lockdowns and social distancing have impacted many tenant businesses, resulting in an unprecedented number of requests for rental relief, stressing real estate rental-income streams.
• For equity investors, income returns have weakened, despite softening asset values. Recent income returns may understate the full potential impact as accrual of deferred rents may mask further shortfalls.
• Lower rental incomes may also stress debt covenants and increase servicing pressures on some loans. In loans that default and are foreclosed upon, falling asset values may also increase potential loss severity.

What’s the effect on investors when commercial tenants can’t pay their rent? For answers, we caught up with Bryan Reid, executive director on MSCI’s real estate solutions research team.

As record-breaking investment flows into real estate, fund managers face increasing complexity and growing investor demands for real time reporting. We talk to Yardi’s Bernie Devine about the trends.

As governments around the world start to ease restrictions on lockdowns, attention inevitably turns to the concept of “returning to work.” However, this viewpoint incorrectly frames the current state of play. Many office-based workers have continued to work through the pandemic and so the focus should actually be on who should go “back to the office?” Of course, the first focus has to be on employee wellbeing and vulnerable employees need to remain safe.  But after that, the situation becomes more blurred,

As governments around the world start to ease restrictions on lockdowns, attention inevitably turns to the concept of “returning to work.” However, this viewpoint incorrectly frames the current state of play. Many office-based workers have continued to work through the pandemic and so the focus should actually be on who should go “back to the office?” Of course, the first focus has to be on employee wellbeing and vulnerable employees need to remain safe.  But after that, the situation becomes more blurred, not least as social distancing will mean that not all employees can still be accommodated in the available space.  In conjunction with this, companies recognize that some workers can successfully operate remotely at least part of the time. As a result, companies will have to provide more choices and greater flexibility to work away from the office for the foreseeable future.
 

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We are happy to share our member, MSCI, model: MSCI Real Estate Climate Value-at-Risk (Climate VaR) model that demonstrates how the nature and magnitude of physical risks may differ across assets and portfolios; and highlight the importance of considering.

As the world struggles to contain the COVID-19 outbreak, global travel has practically ground to a halt, impacting retail and travel related industries. Estimates by the United Nations point to the global economy slowing to under 2 per cent in 2020, costing some USD 1 trillion. There has not been any precedent with an equivalent scale of economic disruption in recent times to guide policymakers across the globe. The typical responses to this outbreak across the world thus far involve containment, social distancing, and economic support through fiscal and monetary measures to help cushion the financial fallout. The World Bank, for example, has set aside a USD 14 billion package to help companies and countries in their efforts to fight the spread of COVID-19.

In the past decade, the rise and fall of mainland Chinese investment in global real estate markets has created quite a stir amongst the international real estate community. However, in recent years overseas real estate investment activities of this group of investors has shifted from overseas acquisitions to disposals, with 2019’s total overseas investment volume down 79% since the peak in 2017.