Although the combination of government policy and the direction of the pandemic make 2021 difficult to predict, 2022 and 2023 could bring an interesting combination of economic and different cyclical factors into play according to Simon Martin, senior partner at Tristan Capital Partners.
“For me the really interesting thing will be that monetary policy and fiscal policy are aligned for the first time in probably 30 years,” he told Real Asset Insight’s Richard Betts.
Once there is a return to relatively normal economic behaviour after the lockdowns have ended Martin said there will be a “pretty potent tailwind” for a couple of years.
“We could see an injection of pace, particularly in the European economy in that timeframe and that’s going to kick start the revival of the cycle.”
Real estate is also going to receive more attention. “Clients are desperate for real yield and income and real estate is one of the few places that you’re able to find that,” he said.
He added that if monetary and fiscal policy are aligned for long enough and allowed to “run quite hot” then there may be an “inflationary impulse”.
“You can just start to see signs of people starting to think ‘do I need an inflationary hedge?’”
When property income’s ability to keep pace with inflation is added to the low or no yield from government bonds and the volatility of the equity market, increased allocations to real estate are the result, Martin said.
Click on the video above to watch the full interview or listen to the podcast below.