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Real Estate Emerging Markets - How will be the trillion-dollar recovery?

5 MIN READJune 04, 2020
 GRI Club consolidated a panel of real estate emerging markets C-level investors, developers, lenders and economic experts to map out the likely recovery scenarios, focusing on Brazil, India and Latin America. The online meeting that started with a Kick-Off Keynote Presentation by CBRE followed by a Collegial Discussion with our members and specialists raised important points.

What are the market impacts so far and where do we go from here? How quickly can the global economy recover? What does this scenario mean for occupiers, rents and liquidity? What will be the investment appetite for emerging & developed markets and what it means for capital real estate flows? When can we expect a recovery and which asset classes are going to prevail? What fundamentals to base on and how to be prepared for the future?

These and several other issues were discussed on the morning of Tuesday (02nd June) with over 110 senior professionals from the Real Estate market. Read below a full summary.

Summary

The presentation made by Richard Barkham, Global Chief Economist from CBRE, "Global Economic and Real Estate Outlook - COVID-19 and Emerging Markets", brought optimistic insights about the recovery in developed and emerging markets.

Developed countries, except for those that were more affected by Coronavirus, like the USA, UK and Spain, are gradually opening their economies. With the government working very hard behind the scenes, with big fiscal stimulus packages, the negative economic effects were less felt by the population and developed nations are discussing how the recovery is going to be, with a gradual opening back to normal life, stabilization and growth. 

Even with a difficult scenario to predict in the future, we can see that some countries that were affected firstly and contained Covid increase, like China, are bouncing back nicely after the end of lockdown. With a pent up demand, it can lead to a good shape of recovery for these countries in the near future. Although, it's not a reality for other ones (at least for now). 

Differently from the developed countries, where the curve of confirmed cases of Covid is almost bent and economies are moving out of lockdown, emerging countries are still struggling to contain the virus and the scenario for most of them is a freefall and recession of the economy. With fiscal support that is not so strong, these countries can suffer more if they can't manage the return of their economies. 

Related to the real estate scenario, Brazil, India and Mexico players can look to the core, core plus, opportunistic and value add strategies. The highlights are on industrial, logistics and warehousing, multi-family, office and residential assets. In an optimistic overview, after surpassing the lockdown, we can expect a recovery of them in Q4 2020 and investors will need substantive expertise to look at major opportunities in each country. 

During the presentation, GRI consolidated four surveys about the recovery in the Real Estate markets. See the results below:

Question: When will the U.S. economy bounce back from Covid-19 recession?
Answers:

- Q2 2021 (34%)
- Q4 2020 (26%)
- Q1 2021 (21%)
- 2022 (10%)
- Q3 2020 (9%)

Question: What is the optimal timing for investors to deploy capital in emerging markets?
Answers:

- Q3 2020 (38%)
- Q4 2020 (28%)
- Q1 2021 (24%)
- 2022 (6%)
- Q2 2021 (3%)

Question: What is the best Emerging Market property play?
Answers:

- Logistics Hub (46%)
- Logistics Last Mile (33%)
- Residential Multifamily (29%)
- Offices CBD (22%)
- Residential for Sale (19%)
- Hotels and Resorts (10%)
- Offices Suburban (10%)
- Retail Malls (9%)
- Others: Data Centers, Retail Hypermarkets, Residential Senior, Residential Student (3%)
- Retail Shops (0%)

Question: Is inflation a looming threat to the global economy?
Answers:

- Yes (54%)
- No (46%)

*Surveys made with 110 senior executives in the real estate market on 2nd June 2020. 

After the presentation, the debate was attended by Ankur Gupta (Brookfield Asset Management), Daniel Cherman (Tishman Speyer), Gregorio Schneider (TC Latin America Partners), Joshua Pristaw (GTIS Partners), Sanjay Dutt (Tata Realty Infrastructure Ltd), Sonja Gibbs (Institute of International Finance), Thomas McDonald (Jaguar Growth Partners), among others. 

See exclusively the research presented by CBRE here.

The GRI Club Real Estate agenda

The GRI Club Real Estate eMeetings agenda for 2020 is now available. Know what's ahead and plan yourself.

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