Insights from the live broadcast with Peter Wenzel about “Commercial Real Estate – Post COVID” organised by Bespoke Connections
The coronavirus pandemic that has swept the globe has disrupted the Commercial Real Estate Market. As economies have shut down to combat the outbreak of the virus, what has been the impact? Real Estate investments have been called into question as businesses look for support in a time of immense uncertainty and change. Here are some insights from the panel put together by Ankush Mehta, Founder and CEO of Bespoke Connections.
Real Estate Recovery
Peter Wenzel shared how during the pandemic RLI has looked to other markets outside Germany, to the west and to the east. They have found very attractive logistics markets, especially in the east, where Poland and the Czech Republic have a very bright logistics future ahead. The inclusion of selected properties from Eastern Europe strengthens the return performance with promising prospects and the current return advantage of up to 2%. That’s very attractive for people looking for long term stable income or yields.
“RLI’s predictions in the past have always worked in a very volatile market environment. RLI is expecting the market to be a little less volatile in the next couple of years because COVID did probably slow it down a little. We are very positive to achieve an annual distribution yield of 5.5% over a ten-year period.”
Development Strategies for Logistics
Globally, logistics tenants are reconsidering their early centralized approach and are now looking for properties catering to submarkets to mitigate risk.
There is a growing demand for land or logistics space close to urban areas; the pressure on those spaces feels even bigger now than before COVID because it is all about time: how quickly can you reach your customer? Cities are reluctant to designate land for logistics because it’s loud, it’s dirty, it’s 24/7, it’s not attractive.
Industrial real estate is the sector that everyone wants to be in at the moment. And given the background research and some future projections it’s the sector which is going to weather the current storm better than other sectors of the market.
Through the crisis, we have learned and gained some confidence about our tenants and our business model: we have the right niche at the moment.