Return to normal capital spending patterns is in sight

There is growing promise that capital flows into real estate investment markets will revert back to the patterns seen before the pandemic.

“The thing to recognise with this crisis compared to the GFC for example is that, except for in pockets of the market which were going through structural change anyway such as retail, real estate investors haven’t really lost any money. They were not over-leveraged and the income that real estate provides has remained very strong,” said Gabi Stein, managing director and senior real estate specialist at Nuveen.

Investment did pause during 2020, as investors took a wait-and-see approach at the beginning of the pandemic. And equity markets’ initial volatility generated fears of a potential denominator effect and becoming over-allocated to real estate. But those fears were really short-lived, Stein said.

Talking to Real Asset Insight’s Richard Betts she said: “Markets rebounded pretty quickly, particularly with the announcement of vaccines coming along and really that demand for real estate just rebounded with it and has remained very, very strong,” she added.  

Despite the travel difficulties that made due diligence inspections so difficult in 2020, she said the mounting pressure of money in the system “has really seen things starting to unlock this year.”

“I’m witnessing way more willingness from investors to look at new strategies new managers new regions and being prepared to do full underwriting, full due diligence, virtually.”

Click on the video above to watch the full interview or listen to the podcast below.