Yes what you know is right, Retail will suffer in most of the world for the considerable future, or at least not have as shiny a future when compared to the years it lived prior to 2020.
Yes some commercial is expected to have a rough way forward in some markets.
And yes if reflected in the price they will still be good investments and serve the same role those two market segments served in portfolios.
Residential real-estate will always stand the same way and mostly perform the within the same range it did and be affected by the same dynamics.
To go back to retail, the most affected or at least the first hit in the new world; it’s true digital and ecommerce will change retail forever, however will not make it obsolete. Retail will become more experiential yet more efficient, and there is a probable marriage between some ecommerce, digital experiences and some retail may give a new commercial angle to retail.
However where is the new boom. My friends it is in Logistics. It is modern, well positioned, components of the Logistics sector.
It is a fact that this will change some investor behavior as this is an asset that demands higher capital. Although dominated by institutional investors, family offices, and UHNWI the Logistics sector supported by traditional and modern investment tools and methods it will be accessible to the average investor. Investment funds, REITs, syndication, Fractionalization, will make it possible to access this sector of the market for a wide segment of investors.
Will all logistics boom?
No some will suffer. Non-modern, non-well positioned will suffer although may be impacted by short term growth. With the revolution of robotics in warehousing, it is more imperative than ever that everyone in ecommerce stands the challenge of efficiency in cost and more important effectiveness in time.
Is such an asset suitable for every portfolio?
I would say it sits well with all kind of assets. Leased to a solid company, on a long term lease it can be the perfect passive income generating asset.
Does this mean that I should exit assets I traditionally help similar to apartments and offices?
Although portfolio repositioning is always advisable, it should be only done after a current portfolio assessment and evaluation. Done right it will give you better returns in the long run and allow you greater protection against market changes.
Can I get leverage when doing such a purchase?
A mortgage for a warehouse usually is a commercial mortgage. Although there is several other ways to borrow against a warehouse purchase, the most common is an old good commercial mortgage.
Can I use directly purchase a warehouse from a developer or an owner with no third parties involved?
It is always advisable to use a lawyer a conveyancer, a surveyor, and a professional broker to help you do the purchase while minimizing your risks in the process.
In the logistics sphere usually there is more detail involved in the purchase and ownership, it is a must that you consult professional parties to get things right.
Shall I buy a warehouse if I am an individual investor?
All depends on who will manage it for you, who will let it for you, what category of companies may be interested in renting this warehouse from you, feel free to call us at Arms &McGregor International Realty to get it done right.
There is always a winner. In every mess, in every war, in every Pandemic, in every crisis even one which is so huge and with repercussions that will be long lived, there is a winner and here is ours today.
By Makram H. Hani
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