Originally published January 2022.
It’s time to widen the net.
Social changes accelerated by Covid-19 are shaking the property investor community to its core as risks increase from investing in traditional ways. This is important to us all, as a material part of most of our pensions are invested in property.
Traditionally, offices and retail assets have been the focus for investors looking for a predictable income return with some capital growth over the medium term. While pension fund trustees may have varied the focus of their capital allocation between different countries, most of their real estate allocation would have been to these uses.
The shift to internet shopping, most pronounced in the UK at over 30% during the pandemic, has reduced the need for retail units, as is so clear in our high streets. Investors at best have seen a reduced level of rental income and at worst been faced with empty shops and liabilities for business rates, insurance and service charges. While these changes were evident pre-Covid, the pandemic has supercharged the change in demand.
“What two years ago was a comfortable trustee allocation to prime offices is now filled with doubt and risk”
