Central business district (CBD) offices, supermarkets and food-anchored retail parks as well as logistics assets in key locations across Europe will present attractive investment opportunities in 2021 as investors regain confidence following the Covid-19 crisis, according to Savills Investment Management (Savills IM), the international real estate investment manager.
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. Climate-related risks, rising inequalities and continuous geopolitical tensions likewise remain, 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.
Savills IM’s 2021 Outlook report, titled “Building resilience in global real estate portfolios”, envisages no major demise of the office sector despite the increase in agile working driven by the pandemic. Offices in CBD locations with good transport links are here to stay while the resilient income streams of food retail assets represent a strong buy for core/core-plus investors. Logistics, which has been a clear winner throughout the pandemic because of the increase in online shopping, will continue to be backed by solid fundamentals and structural tailwinds, the report emphasises. But with returns on traditional property assets – office, industrial and retail – low, investors are also looking to alternative sectors such as student housing, build-to-rent accommodation and senior living.
Mid- to long-term prospects for Poland’s commercial real estate market remain positive as the fundamental drivers of the country’s economic success story remain intact. Above-average infrastructure spending, foreign direct investments, domestic demand growth and economic competitiveness continue to underlie the attractiveness of the real estate market in Poland.
Poland remains one of the most sought-after logistics markets in Europe. Despite the pandemic, a high degree of liquidity and popularity is fuelling transaction volumes and is keeping pricing of warehouse facilities keen or stable. Given stable occupier demand, the supply-side risk is moderate. Investors on the Polish market are increasingly joining up with developers in forward fundings to secure assets. Savills IM expects this trend to keep up in the coming months. Moreover, owing to the development of infrastructure and transport links, the markets of northern, western and eastern Poland will gain in importance. Savills IM also expects the progressive specialization of investors in dedicated logistics strategies.