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Institutional investors can offer a boost to real estate post-Covid-19 only if we have the right product, says expert

Institutional investors can offer a boost to real estate post-Covid-19 only if we have the right product, says expert

Institutional investors and private equity fund investments are significantly gaining the spotlight as a reliable key player that can aid revive crucial industries of the economy, particularly the real estate, as various markets begin to increase from the impact of the COVID-19 pandemic, according to Medallion Associates, a leading private real estate investment advisory firm.

Market professionals in the UAE are recognising the power of private equity and also fund structural financial investments taking into consideration the healthy and balanced flow of foreign direct investments (FDI) right into the nation in 2019, which has jumped to more than 34 per cent amounting to about USD 14 billion from USD 10.4 billion in 2018.

Property developers and operators across nearly every property class are dealing with the possibly long-lasting impact of the unique coronavirus outbreak and also are re-examining their service plans to adapt to the obstacles throughout the situation.

This situation has led to market analysts exploring innovative opportunities for institutional investors to focus on various other real estate properties such as warehousing, logistics and information centres to be a contemporary sanctuary for investments.

Masood Al Awar, Chief Executive Officer, Medallion Associates, said: "The UAE has always showcased its creativity and is at the global lead even during significant challenges such as the current pandemic and we have seen them in the country's outstanding response such as rolling out of stimulus packages, easing on regulations, and remission of fees. These prompt actions can lead to an increase in the loan-to-value ratio applicable to mortgages, which is a solid step in supporting the real estate sector."

"At the start, it might seem difficult to see the underlying opportunities amidst the crisis as the implications of COVID-19's global spread are felt by all sectors, and it had been quite visible for the real estate. However, innovative thought leaders would always look into future potentials and enable business owners to see the value of creating new product offerings for new investors and take advantage of offering wholesale deals at competitive prices.", he added.

Medallion Associates analysed market scenarios which indicated that while real estate investments in offices, residential, and retail complexes remain quiet, other segments are facing trends higher and present a more robust option to better other asset classes in real estate in the near term.

The private real estate investment advisory firm noted that as experts, they observed the various investor personalities in the market even at the beginning of this unprecedented circumstance and observed many seasoned investors kept their composure and stay focused on their long-term objectives. In distinction, many others as well had to deal with doubts as the value of their portfolio declined and thus required different types of support from their relationship managers and wealth advisers.

Al Awar further recommended that buyers and investors must take advantage of the opportunities to fill up the need for cashflow, the decline in prices, and increase their investments. He inspired them to develop a systematic approach through regular investing and be more futuristic in their strategy as investments in real estate always tend to smooth out the cost of financing over time.

Market researches show that in recent years, real estate industry leaders have been diversifying their sources of revenue by exploring digital strategies and enhancing tenant experiences. Weighing these factors, the COVID-19 crisis has prompted the sector to accelerate these types of strategic change.

Investors can benefit from low mortgage interest rates, higher LTVs (loan to value), reduced service charges and attractive valuations to make the best of their investments at present. Also, the market-friendly policies of the UAE offer investors the security and viability of their investments.

"This is not the time to take a step back. In fact, this is the right opportunity to grow because whatever the cause may be, challenges will always be there, but seeing the best options in these situations enable investors and companies to gain the best position in the industry," Al Awar concluded.