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RESEARCH • 26 November 2020
Outlook 2021: building resilience in global real estate portfolios
When we entered 2020, we could have not anticipated how different this year would turn out to be. The global COVID-19 pandemic has radically changed the way we live, work and play.
Some of the major central banks have implemented a ‘whatever it takes’ policy to save economies, lowering interest rates to around zero and conducting large-scale asset purchases through quantitative easing programmes. Meanwhile, global sovereign debt levels continue to grow.
While containing the spread of the pandemic will remain the focal point, other challenges also lie ahead in 2021. The impact of the UK leaving the EU will come into full effect. There are also climate-related risks, rising inequalities and continuous geopolitical tensions, all of which could threaten global stability. Embracing disruption to protect existing portfolios and identify new investment opportunities is, therefore, ever more important. Part of this involves capitalising on structural trends that have accelerated as a result of COVID-19.
This year for the first time we have conducted a survey for our Outlook publication. Some 45% of investors expect that real estate investment will increase over the next 12 months and 25% expect investment to stay the same. The even lower-for-longer interest rate environment leaves investors with less choices to meet their return targets. Given the challenges facing financial markets, we believe investors need to look at alternative asset classes with more attractive risk-adjusted returns. Real estate has the characteristics and fundamentals to take advantage of this secular shift in capital markets.
The Savills Investment Management Outlook 2021 report features our views on the commercial property markets, serving to help investors build resilience in global real estate portfolios in these unprecedented times.
