A real estate market operating under a veil of uncertainty
Following a tumultuous 2020, redefined by the Covid-19 crisis, 2021 will remain heavily impacted by the pandemic, with the emergence of Covid-19 variants and the consequences of the various measures take in an effort to contain the virus.
Commercial real estate investment was not spared from the suffering, with a significant decline in investment volumes in 2020, albeit to a lesser extent than in the rental market.
Real estate should continue to attract institutional investors in 2021 in a context of extremely low, if not negative interest ratesand an abundance of capital waiting to be invested.
In this climate of elevated uncertainty, assets offering a solid risk/return ratio are proving highly attractive for investors. However, on the supply side, assets that meet investor criteria remain limited. This may encourage French investors to explore opportunities outside France.
Office assets remain attractive target for investors, however uncertainties hanging over the labour market and the emergence of new ways of working have prompted new questions regarding this asset type. This has lead many investors to seek security in core assets, whith increased focus on tenant profile, location, and building mechanical, technical, and environmental qualities.
Moving into 2021, we should see a gradual refocusing of capital on alternative assets offering better yields than those generated by more traditional investment products, as well as specific product types benefitting from growing occupier demand (data center, services real estate, logistics and industrial). Investors with a higher risk profile will be on the lookout for opportunities. They will likely seek smaller assets, renegociate their financial commitments, and reconsider their axpectations in terms of yields.
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