The importance of real estate assets for portfolios after the crisis

Stable development in real estate

It is currently becoming clear how fragile some industries react to economic crises. While almost all sectors of the global economy are suffering from the consequences of the corona lockdown, real estate prices remain highly stable. Government measures will decide which buildings will be particularly attractive for private investors and investors after the crisis. Government measures have recently been particularly effective in protecting tenant interests. The dismissal protection for tenants that expired in June is a good example. In times of crisis, however, it is at least as important to protect the interests of landlords as well. Because only if landlords can generate regular, stable rental income will the property valuation be positive. Rent stability and real estate valuation go hand in hand.

Residential real estate or commercial real estate — that's where the trend is

Investors know: People always get used to it. And that makes residential real estate attractive assets for your portfolio, even during and especially after the crisis. Even in times of crisis, people must have a roof over their heads. The rental income is therefore secured. But the state-imposed house arrest imposed by the corona crisis is now arousing new aspirations among millions. Many employees have had to come to terms with a home office unintentionally; however, there is no room for this in most apartments. Terraces, balconies and gardens were also sorely missed by many tenants during the corona isolation. It can be assumed that tenants will place much more value on larger apartments in the future and will be willing to pay higher rents for amenities such as balconies, home office space or gardens. For anyone who spends more time in their own four walls, pays more money for comfortable living and works from home more often, attractive locations with local recreation facilities are more important than short commutes.

As a result of the crisis, many companies and employees have recognized the benefits of working from home. For employees, there is no need to travel to work, which saves time and money. Employers can rent much smaller offices, as a significantly larger part of the workforce will want to work regularly from home in the future. Office properties will therefore no longer be as interesting for many investors after the crisis. The growing importance of residential real estate combined with the loss of importance of office real estate is the most important finding out of the crisis for investors. Other commercial properties, such as shopping malls or retail stores, are also expected to continue to fall in demand, as the boom in online retail has been massively reinforced by the crisis.

Serviced apartments and holiday properties — a growing market

The fact that the importance of comfortable living is increasing and that real estate capital investments in residential properties are becoming more attractive is good news for investors in operator properties such as serviced apartments. Serviced apartments are becoming increasingly important as they combine the advantage of a homely atmosphere with the service of a hotel. Higher returns are expected for these properties as demand will rise. Holiday properties can also be an interesting opportunity for investors. Hotels and holiday resorts have suffered severe cuts in the crisis. Holiday properties, on the other hand, experienced very high demand at the same time. It can be assumed that the form of vacation will change, away from package holidays in hotels and towards holidays in holiday apartments and houses. Holiday properties promise significantly higher rental income than traditional residential properties of the same size and equipment.

Another trending sector in the real estate sector: healthcare real estate. As a result of demographic change, demand for nursing homes, health centers and care centers will increase. The trend in life sciences is also interesting from a demographic perspective. Many disruptive, young startups are entering the pharmaceutical market and revolutionizing traditional pharmaceutical offerings through digitized solutions. Individual, data-based health solutions are being developed today for the elderly of tomorrow. For this, however, life science startups need incubators, research spaces and development hubs. Investments in appropriate real estate make perfect sense today.

It is worthwhile to carry out a detailed market analysis before investing in a property. This allows you to quickly identify the winners and losers in the real estate sectors. The experiences and insights of the crisis are your best opportunity to strengthen your portfolio now with the right investments.