With investors eager to pursue opportunities post-pandemic, experts warn that plenty of risks still remain.
While the market turnaround is expected to lift global investing by as much as 50 per cent in 2021, Colliers International has cautioned against challenges faced by investors as a result of the ongoing COVID pandemic.
According to Colliers International’s latest report, experts anticipate a broad-based renewal of activity in the property market as investors seek to make up for lost ground by deploying pent-up capital in high-potential markets and sectors.
“While the pandemic is unprecedented on many counts, it has to be viewed long-term against the rising need for real assets and the massive volume of equity raised globally,” according to Tony Horrell, global head of capital markets and CEO for UK and Ireland.
“As plenty of that equity is searching for opportunities, we expect to see movement up the risk curve this year, with investors exploring everything from senior housing to public infrastructure projects.”
But, while significant opportunities are expected to emerge, particularly in commercial real estate, questions about the stability of demand remain, with Colliers questioning whether investors can sustain their growing appetites.
According to Colliers, the top five challenges facing investors in 2021 include:
Noting the barriers these challenges pose to investment goals, Colliers predicted that a majority of investors could turn to their local partners.
Further, in order to manage risk while maintaining portfolio performance, investors are tipped to focus on assets and markets that are seen as safe and transparent.
“This means that contrary to some expectations, assets in established global centres like London, New York and Sydney remain highly sought after, particularly for international capital.
“Investors are confident the infrastructure and facilities these cities have built up will continue to draw businesses and talent, regardless of how workplaces change,” according to Colliers.
But despite the risks, experts anticipate some investors could buck the ‘safe strategies’ trend, exploring non-traditional alternative assets with higher risks.
“While the near-term focus seems to be on core and core-plus assets, the quest for returns is prompting many investors to explore higher-risk, non-traditional logistics locations, as well as alternative asset classes like life sciences and student housing, and distressed hotel and retail opportunities,” Colliers said.
Overall, while much will depend on external factors such as government policies and vaccine rollouts, Colliers has predicted “an active and diverse year” ahead for investors who are eager to generate value and take advantage of the anticipated market rebound.