Buy retail… maybe, selectively – The Property Chronicle
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Buy retail… maybe, selectively

The Fund Manager

There is barely a facet of life that has been unaffected by the coronavirus pandemic. One of its most visible impacts has been on the use of real estate – shops and pubs have shut, offices stand empty and housing market activity has slowed to a trickle. Whilst a short-term hit to real estate performance is inevitable, the long-term story is more nuanced. Performance will depend on how well aligned an asset, a location and a portfolio is to the structural changes that the pandemic will generate or hasten. To preserve and enhance value, investors must identify the themes which are changing real estate demand and allocate accordingly. 

Let’s take retail to illustrate the dramatic impact of fast-moving structural change on real estate. The pandemic has prompted an explosive consumer shift from physical to online shopping (see Chart 1). This shift was underway before COVID-19 struck but it has been accelerated from perhaps five to ten years to a matter of months. Historically high online penetration rates may not hold when normality resumes, but they will settle permanently at much higher rates. This has major implications for retail and logistics real estate.

Chart 1: E-commerce explosion: UK online retail penetration rate

The Fund Manager

About Tom Duncan

Tom Duncan

As Head of Research, Tom Duncan is responsible for setting the research strategy for Cromwell’s international platform, producing investment and strategy research to advise the business and its investors on market and sector opportunities and risks. He is also responsible for creating thematic-based investment strategies, and using his experience in economic and property market analysis to support the investment decision-making process. Tom joined Cromwell in 2021 from Mayfair Capital, where he spent four years and was latterly Director of Strategy and Innovation, responsible for research across Europe and the UK. Prior to this he spent two years at JLL in the UK as an Associate Director in their Corporate Research team. He also has experience working in Australia in a research role and in property economics with Colliers International and Hill PDA respectively. Tom holds Masters degrees in Property Development from the UTS Sydney and Town and Country Planning from the University of Sheffield, as well as a BA in Human Geography from Nottingham Trent University.

Articles by Tom Duncan

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