The real estate market is a volatile and highly competitive industry, and regardless of financial turbulence and economic turmoil, there are always investment opportunities for savvy investors. The Coronavirus outbreak has triggered and economic slowdown across the world, but real estate experts remain positive about hunting down commercial investment opportunities resulting from the ongoing pandemic.
Experts believe that the pandemic will leave behind scores of investment opportunities, allowing all stakeholders and players to stake their claim. As opposed to investing in properties, many developers and investors are focusing on investing in problem debt from lenders. Offices, shopping malls, resorts and hotels have reported a wide array of problems, which are expected to worsen if the economic shutdown continues.
Mortgage Default & Foreclosures
In the wake of the Coronavirus pandemic, banks and financial institutions are conducting property workouts. But they seek to avoid getting embroiled in foreclosures, bankruptcies and mortgage defaults. It is expected that mortgage defaults will rise in the next 6-12 months. Therefore, this has created an opportunity for realtors and investors as many banks are willing to sell mortgage portfolios.
It is important to note that over 20% of the commercial investment properties are funded through mortgage-backed securities. Scores of investors and business owners are expected to default on their mortgage payments, creating an opportunity for investors to step in.
Experts believe that the hotel industry, which has suffered the greatest in the wake of the pandemic and the resulting economic lockdown, is ripe with investment opportunities. While the retail sector is holding up strong, restaurants, gyms and clothing stores have been forced to shut their doors to customers.
Diversification Benefits
Commercial real estate is a significantly lucrative asset class, and its value continues to expand. Given the immense diversification benefits, there is a burgeoning interest in commercial real estate investment. In the wake of the pandemic, commercial real estate has been largely affected due to the closure of businesses, and stay-at-home orders.
Commercial real estate takes precedence over other real estate asset classes as it is nestled within the urban landscape in a unique fashion. Commercial buildings and investments allow new businesses to emerge in a neighborhood, creating a vehicle for commerce and development.
Investment opportunities are opening up in the retail and hospitality sectors, which have been badly affected by the pandemic. Industrial properties and multi-family investments are doing good and therefore, they are ideal investments for the future. Experts have predicted investment opportunities in both kinds of commercial properties: core and non-core properties. These include apartment buildings, office buildings, malls and shopping centers, industrial properties, lodging resorts, and storage facilities.
Core properties, such as Multifamily and Retail Centers tend to be less risky as compared with non-core commercial investment. Experts accept an aggressive year of competition despite the disruption. Investors who have ready access to capital and the ability to move quickly can access a wide array of lucrative commercial investment opportunities.