16 Mar 2021
Investcorp released a market update report on North America real estate. The report analyzes the recent performance of various property types following the impact of the COVID-19 pandemic and discusses potential outcomes looking ahead to recovery.
Khulood Ebrahim, Real Estate Product Specialist at Investcorp commented, “At Investcorp, we remain focused on continuing to identify attractive investment opportunities where we see the most value and intend to take advantage of the short-term windows, and our early recognition of resilient property types – primarily industrial and multifamily – has allowed us to operate from a position of strength throughout the pandemic.”
Key insights highlighted in the report, include:
- A number of key themes have influenced the divergence in property type performance, including shifting demographics.
- Millennials now comprise the largest generation in the US labor force and their behaviors are having a distinct effect on society and real estate, from e-commerce to changing workplace preferences and the integration of technology. COVID-19 has accelerated many of these trends.
- Industrial and multifamily real estate have delivered exceptional performance over the last decade and Investcorp expects this trend to continue given the strong fundamentals in these sectors.
- E-commerce helped the industrial market recover from the Global Financial Crisis. It has been the most sought-after property type in recent years and this is expected to continue in the post-COVID recovery.
- As seen since the onset of the pandemic and demonstrated in past cycles, the Multifamily sector is typically viewed as recession resilient and relatively safe. Millennials have been one of the main drivers of the increased multifamily renting lifestyle as they continue to focus on liquidity and mobility, partly due to increasing student debt, and changing lifestyle dynamics.
- Other real estate property types including retail, hospitality and office have underperformed and their future prospects remain uncertain given the challenges stemming from the pandemic.
Investcorp has a long history of successfully investing in real estate across multiple market cycles, having acquired more than 850 properties with a combined value of more than US $20 billion since 1996. The real estate team is comprised of approximately 30 investment professionals and the senior leadership team has an average of more than 25 years of industry experience. In 2014, Investcorp narrowed its strategic focus to target what it believes to be the most resilient sectors of real estate, residential and industrial, which currently represent 90% of the firm’s US real estate portfolio.