10 Trends for 2021
#9 Busines recovery
The pandemic continues to affect almost every aspect of our work and personal lives, in ways that potentially have far-reaching consequences for real estate assets. Investors are used to operating in an unprecedented ‘lower for longer’ interest rate environment that will persist for many years. However, the economic stimulus measures being considered by governments across the globe offer some interesting investor opportunities.While core real estate undoubtedly faces challenges from a weakened economy, a substantial volume of capital is targeting the sector in search of the yield and return profile that prime real estate can offer. As was evident during the Global Financial Crisis (GFC), many investors are looking to seize the chance to acquire real estate at advantageous prices under an expectation that there will be distress. Whether, and to what extent, this distress will materialize remains to be seen. In the meantime, investors are focusing on what the ‘new normal’ might bring. Some of the most interesting opportunities may emerge from the stimulus plans being discussed by governments seeking ways to boost economic recovery. The International Monetary Fund (IMF) and World Bank have strongly urged countries to use the current low interest rate environment to spend on infrastructure to reinvigorate their economies, given the strong correlation between infrastructure investment and economic output. This is in sharp contrast to the policies of austerity and spending cuts that were advocated in the years following the GFC. It mirrors the thinking behind the Marshall Plan implemented in post-war Europe – and the approach adopted in China in response to the GFC. With interest rates so low, the cost of servicing the enormous levels of debt currently being incurred is lower than it would have been in the past when the total debt was far smaller.
Political leaders around the world have been setting out significant infrastructure programmes. The U.K. pledged to invest heavily in infrastructure spending both before and at the outset of the crisis and since then, has committed to expanding the program. The Canadian government has committed to significant investment in infrastructure, and similar plans featured prominently in both candidates’ campaigns during the recent U.S. Presidential election. The term ‘infrastructure’ immediately conjures images of roads and bridges, and transport improvements could well form part of the plan – albeit more light rail systems and electric vehicle charging points than more traditional types of construction. The current focus centres around the type of investments seen as critical to fostering economic growth in the coming decades.
Three areas stand out:
Digital infrastructure – The pandemic has highlighted the importance of digital connectivity – and the deficiencies that still exist in many broadband networks. Our digital infrastructure still needs significant investment, with data centers an important element and local governments around the world investing to become ’smart cities’. Government stimulus is likely to focus heavily on digital infrastructure, including 5G networks and building upgrades.
Social and medical infrastructure – The pandemic has understandably led to a focus on medical facilities and life sciences. Venture capital funding for medical research has increased substantially, with medical infrastructure and R&D spending now increasingly seen as relevant to national security and demand for lab space likely to increase. The rise of social infrastructure up the agenda will see more opportunities for public-private investment in schools, hospitals and elderly living facilities.
Green infrastructure – Given the focus on climate change that we discuss elsewhere, it is hardly surprising that many governments view this as the ideal time to kick-start the significant investment needed in response to the climate crisis. Initiatives range from ensuring that infrastructure is climate change resilient to the generation of solar, wind and battery energy as well as supporting electrification, retrofitting buildings and helping industries decarbonize.
Green infrastructure is a broad swath of investment opportunities rather than a clearly defined sector in its own right. However, the profile of income generated is typically attractive to core investors seeking stable long-term returns. Many of the new opportunities emerging will be unlocked by government initiatives that increasingly embed principles of social value and public-private partnership into the investment process. While that may be a disincentive to some, for others it will be part of the attraction.Avison Young creates real economic, social and environmental value, powered by people.
Israeli commercial real estate deals
SUMMIT REAL ESTATE HOLDINGS LTD is buying portfolio of 3 shopping malls at Michigan for $17.5 million.
AZRIELI GROUP LTD sells Kiryat Ata mall and offices (Globes).
CPI fell 0.1% in January, housing prices jumped 0.9% (Globes).
Tel Aviv Airbnb bookings hold firm despite closed skies (Globes).
Commercial Real Estate Opportunities:
For sale 2,200M2 commercial building in Petah Tikva, in the center of Israel.
For sale two floors (2,300M2) out of five, in a comercial building in the center of Tel Aviv.
For Sale in Tel Aviv 600M2 floor, (one out of 4) + 13 parking spaces.
For lease, in Alon Tower Tel Aviv 156M2 office space, high floor, 5 rooms.
For lease, in Or Yehuda, 600M2 office space ready to occupy.
For lease, in Petah Tikva 1,700M2 office space ready to occupy.
For lease in Kadima, commercial units in a new neighborhood commercial center.
The purpose of this Newsletter is to update you with Commercial Real Estate information related to companies from Israel. The information contained herein does not constitute an opinion or professional advice. It is recommended to use the information detailed in this Newsletter only after consultation with the appropriate professional consultants from our office.
Propertech Real Estate is a commercial real estate boutique, a leader in providing professional and unique brokerage services for office spaces, logistics spaces, commercial buildings, brokering and negotiating investment real estate transactions, land, etc,
managed by Avi Gimpel and Guy Amosi.