The pandemic has caused turmoil, but it could be an opportunity to re-assess the situation and devise new strategies, delegates heard at Real Asset Media’s Outlook 2021 –Iberia briefing, organised with Iberian Property, which took place online this week.
“It has been disruption on a grand scale, but now real estate is engaging with people like never before,” said José Manuel Llovet, CEO, Commercial Real Estate, Grupo LAR. “It’s an opportunity to re-focus, especially as we have fantastic digital tools, data and information now at our disposal to understand customers and tenants better.”
This has helped, even in a sector like retail that had been in crisis mode for a while and was then badly hit by the pandemic.
“When it comes to retail we’re still on a winding road, there’s not much visibility ahead,” said Llovet. “We have supported our tenants in shopping centres that have been closed for a long time, but other segments like food retail have seen two-digit increases in turnover and a lot of transactions.”
Retail parks have also done very well and had recovered by the end of 2020, partly because most of the tenants are big omnichannel companies that have invested a lot in their businesses and are more resilient.
While retail has its strengths and weaknesses, the crisis has definitely cemented the status of logistics as a core investment.
Vaccinations mean fast return to ‘old normal’
“Logistics is in great demand, and retail assets can easily be turned into last mile delivery hubs,” said Pedro Coelho, chairman, Square Asset Management. “We expect a quick economic recovery after the vaccination programme and a return to the old normal. Even hospitality, which has been badly affected in Portugal, and retail, which has suffered less than in Spain, will recover much faster.”
The pandemic has also led to a blending of businesses and a creative use of spaces.
“We’re integrating all of our activities and looking at complementary businesses, running last-mile deliveries out of office buildings or shopping centre parking lots after opening hours’, said David Brush, chief investment officer, Merlin Properties. “We are the biggest logistics operator in the Iberian peninsula and we have a big pipeline of projects because we still like the sector.”
Some trends, like the decline of retail and the rise of logistics, were already evident but have been accelerated by Covid-19, while some are new trends that are emerging and are still difficult to read.
“Residential is the one sector where we don’t see an acceleration of existing trends but rather the emergence of a brand new trend, brought on by the shift to remote working,” said Francisco Sottomayor, CEO, Norfin. “It’s a huge opportunity for both Spain and Portugal to attract people to move there to live, not just pensioners but working-age people. It’s a market that can be expanded hugely.”