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NEWSLETTER | 30 Jul 2020  
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The pandemic is not the only problem facing the property sector…


As with just about every part of the global economy, the coronavirus pandemic has impacted the property sector. But while developers, property owners and their tenants all reassess their strategies in light of Covid-19, as Madeleine Taylor finds out, a new whitepaper from SEI is highlighting two rather different ‘threats’ to real estate investment – climate change and housing affordability.

The Future of Real Estate Investing looks at how fund managers regard climate change as a major concern, with investors in many parts of the world having traditionally focused on coastal areas where high returns are increasingly at the mercy of rising sea levels. “You better start thinking about that ‘thousand-year flood’ happening twice in 10 years,” says Pat Jackson of Sabal Capital.

A switch of focus to areas at less risk of flooding though, could provide an opportunity to tackle the second of SEI’s ‘twin threats’ – affordability – according to Oscar Vasquez, COO of Encore Capital Management. “Climate change and housing affordability are not disconnected,” he says. “You can mitigate both issues through greater density of housing in less vulnerable areas.

Tapping into the demand for green, or at least greener, investment opportunities, Foresight Capital this week launched the FP Foresight Sustainable Real Estate Securities Fund, which will invest in listed, highly liquid Real Estate Investment Trusts (REITs) but with sustainability as a key consideration in the investment team’s stock selection process.

Mark Brennan,  Lead Manager of the new fund, says: The Fund provides global access to sectors of the property market that are well positioned to benefit from modern tailwinds, such as the growth of e-commerce and acceleration of digitisation, which can play a vital role in income-focused portfolios, while directly contributing towards a sustainable future.”

This week’s newsletter also contains a raft of stories focused on the future of real estate sector, post-pandemic, including a prediction from AEW that future office supply will be restricted by Covid-19 as demand for space falls and finance availability tightens.

We also report on a new survey by Flexioffices which suggests that flexibility of contracts, as well as space, will be key factors as occupiers adapt to the new normal.

That’s a theme acknowledged by Legal & General, which is moving away from traditional long-term leases with the launch a new flexible partnerships model for retail and leisure occupiers based on four initial turnover rent options. “It  will provide optionality to all our existing and future occupiers in how they want to partner with us, and flexibility for us around who we want to work with,” says Denz Ibrahim, Head of Retail & Futuring at LGIM Real Assets.

Property Funds World
 



 
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