Pandemic raises concerns over office investments, prompts switch to warehouses
Since businesses adopted flexible working measures, offices have become risky investments
According to the executives at Goldman Sachs Asset Management (GSAM), global insurers are now considering increasing their investments on commercial warehouses over office spaces since the pandemic has forced employees to work remotely, reported Channel News Asia.
The executives from GSAM’s arm that handles investments for insurers’ portfolios said that the outbreak has accelerated insurers’ need to switch from “undesirable” real estate investments, which also includes retail properties like storefronts, for commercial warehouses.
Lockdowns during the outbreak have prompted companies to consider their need for office spaces if their employees should continue working remotely post-pandemic, which could potentially reduce office occupancy rents and rates.
Moreover, concerns over the virus have escalated the demand for commercial warehouses as most businesses transition to e-commerce sites and consumers avoid going to physical shops.
More: Asian investors search for lucrative property deals beneficial in a post-coronavirus world
Mike Siegel, global head of GSAM Insurance Asset Management, said that the pandemic has accelerated the commercial real estate trends in the past few years, but he also addressed the difficulty that comes with unloading certain assets like mortgages during the outbreak to make the transition.
He added that insurers are constantly keeping an eye on their real estate investments and are trying to manage through it all. “They are not going to sell unless they feel they can get good value.”
Mike explained that they would have to sell the investments into funds that purchase distressed investments, but they are currently trying to avoid this since distressed funds obtain risky holdings on the cheap, with hopes of turning these into profit.
Recommended
Thailand’s real estate sector watches closely as the Shinawatras return to power
Time will tell if the return to power in Thailand of the Shinawatras will lift the country’s ailing real estate sector
China’s homebuying surge: Can new stimulus measures keep the market rally alive?
Stimulus measures have sparked a surge in homebuying activity around China, but many are sceptical the shift will endure
Meet the architect transforming Asia’s retail spaces with nature-inspired designs
David Buffonge, the cofounder of Hong Kong-based Lead8, has strong opinions on how to improve built environments around Asia
6 sights to check out in Siem Reap, Cambodia
Cambodia’s “temple town” is bolstering its touristfriendly attributes with new infrastructure and residential developments