Coronavirus is having a positive impact on some real estate segments

Real estate is an ideal way to diversify one’s portfolio today. Capital invested in real estate brings not only interesting opportunities for appreciation, but also protection against inflation. How did industrial real estate, retail parks, residential development and construction of housing for seniors perform last year and why is capital distribution important? Find out in this next instalment of our Investing in Real Estate series.

Industrial real estate: e-commerce is the driving force

Demand on the part of e-commerce

The long-term growth trend in e-commerce has accelerated by roughly one to two years due to the pandemic. It is expected that e-commerce’s share of total retail sales in the Czech Republic could reach 29% compared with the current 16%. This is putting tremendous pressure on logistics properties and warehouses, as well as on related infrastructure and shipping/logistics companies. However, the Czech Republic is no exception among countries where e-commerce has grown and continues to grow. The most advanced e-commerce market is the United Kingdom, where the share of online purchases of total retail revenues reached 28% in 2020. Slovakia also registered record growth in revenues from online sales last year.

Property value

The value of properties in the context of logistics has shifted over the past year thanks to the inflow of capital from other sectors such as hotels, offices and shopping centres, as well as due to the lack of space resulting from the increased interest of e-shops. Investing in this segment is also interesting with respect to long-term lease agreements, the creditworthiness of tenants from the ranks of e-commerce entities, and rent levels, which are very stable and predictable.

Change of standards

Due to technological changes and ongoing automation, there is rising demand for infrastructure in the case of industrial real estate, and building standards, such as height, are changing. Initiatives aimed at achieving carbon neutrality and reducing the energy intensity of buildings are also increasingly important.