Global Real Estate and COVID-19

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07 July 2020

We are currently experiencing the slowest rate of real estate transparency improvement since the period following the financial crisis of 2007–2008, according to the Global Real Estate Transparency Index.

The biennial index, published by JLL and LaSalle, covers 99 countries and territories worldwide.

Functioning as a guide for companies operating in foreign markets, the index reveals which countries provide the most favourable operating environments for investors, developers and corporate occupiers.

JLL has also produced a paper summarising the effect of COVID-19 on the real estate sector, assessing how it can adjust to a “new normal.”

“Sustainability commitments have become the biggest single driver of real estate transparency globally since 2018. As companies demonstrate an unwavering commitment to corporate social responsibility, there is increased voluntary adoption of Environmental, Social and Governance (ESG) measures and greater acknowledgement of the need to create a sustainable built environment.”

–Jeremy Kelly

Director, Global Research, JLL

Increasing Standards in Sustainability and a Growing Adoption of PropTech

JLL’s research shows that top-performing “highly transparent” markets, including the UK, USA, Australia and France, are driving higher standards in sustainability. 

Another key driver of transparency is the volume of real estate data now available due to the growing adoption of PropTech platforms, digital tools and big data techniques. 

Although real estate markets have historically faced challenges when implementing new technology, the pandemic is leading to an acceleration in new types of non-standard and high-frequency data, especially relating to health, mobility and space usage.

The findings suggest that the COVID-19 pandemic could fast-track digitisation and stimulate innovation in the use of technology due to the need for accurate and real-time data.

The Journey to “Re-Entry”

JLL has also produced a report on what now happens as economies start to move out of lockdown, businesses begin the journey to re-entry and the real estate industry adjusts to a “new normal.”

The report considers the global policy response and the practical challenges businesses will face for “re-entry”, as well as capital market implications and sector-specific impact.

Emerging Structural Trends

In terms of offices, in the short term, JLL considers that the flexible space sector is likely to undergo significant consolidation, although in the longer run it will remain a key feature of global office markets. 

Despite the current switch to mass remote working, the report regards the physical office as crucial in facilitating interaction and collaboration and, ultimately,  employee health, well-being and productivity.

In terms of logistics, JLL predicts that COVID-19 pandemic will force operators to concentrate on supply chain risk mitigation and resilience. It may accelerate trends already in evidence across the sector prior to the pandemic: increased online penetration rates, expansion of online grocery, omnichannel retailing and the integration of technology into warehousing.

Looking beyond the pandemic, JLL concludes that many of the familiar pre- COVID-19 structural trends will be reinforced and will continue to shape the real estate sector. These include growth in corporate outsourcing, rising capital allocations to real estate, urbanization, technology and sustainability. 

The report can be accessed in full here. 

Picture: A photograph showing a model of a high-rise concrete building

Article written by Ella Tansley | Published 07 July 2020

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