Investors are moving to commercial real estate

Surveyors found consumer confidence fell sharply during the omicron wave to its lowest level since October 2020. People are not going out to shop which could only mean one thing: most brick-and-mortar businesses aren’t doing particularly well and that can affect their ability to make lease payments. 

It makes us wonder how the commercial real estate market is coping during the crisis?

Back in 2020, the lack of uncertainty around the virus was weighing down on activity of the sector. On the demand side, there was an abrupt stalling in overseas migration and a shift away from high-density housing options. The prolonged lockdowns also forced people to adapt to working remotely and shopping online more often. 

Taking this view, we saw the sharpest drop in demand across the country for many types of space, with hotels, offices, shopping centres and apartment buildings seeing the most significant dip.

Since last year, it has been striking to see how the commercial property market was quickly transforming and going beyond just adapting. Leaders in the commercial space are taking bold actions to solve the immediate challenge we all face to strengthen their position through this crisis. 

What else is pulling investors towards the lucrative commercial property you ask? Strong capital value and rental gains.

Given the pace of growth of housing value was at a mere 1% in December, investors have been hunting for more attractive yields, gobbling up some $3.2 billion of commercial assets in the final two weeks of 2021. 

This result indicated that investor sentiment towards commercial properties is moving into a more positive territory. 

Office spaces are once again attracting investor attention

Two years on, businesses of all kinds, across multiple sectors, are still holding out for staff to return to the office. However, their plans kept constantly being pushed back as the pandemic lingered. Now, employers are looking for a solution to upgrade their space for social distancing. 

Commercial real estate players recognise the need for reconfiguring spaces to meet the demands of the workforce. Investors continue to invest heavily in the sector, spending nearly $17 billion through 2021, looking into new workplace designs and advanced technology to make future workspaces