PODCAST | Real-estate investors can benefit from recent boom in e-commerce

In this edition of Business Day Spotlight, we are discussing how real estate investors can benefit from the recent boom in e-commerce, driven by lockdowns and the coronavirus.

Host Mudiwa Gavaza is joined from the UK by Tom Walker, co-head of global real-estate securities at Schroders, a British multinational asset management company.

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Walker says the Covid-19 crisis has resulted in winners and losers within retailing as consumer habits have been forced to adapt to the “new normal”. Retailers and supermarkets offering online services have recorded huge increases in demand. Other sectors, such as restaurants and department stores, haven’t fared so well, and many companies have announced that some of their stores will not reopen when lockdown ends.

With these factors in mind, Walker says there’s an opportunity for industrial real-estate to take advantage of increased e-commerce adoption, particularly in offering warehouse space for distribution.

In 2019, SA’s e-online retail market was estimated at 1.4% of total retail or R14bn in sales, according to World Wide Worx. With lockdowns having reduced foot traffic at shopping centres, some estimate SA’s online retail to have more than doubled to about 5% since March, with expectations that this will reach 10% by the end of 2020.

In Europe, adoption is much higher. Walker says in the UK, online retail is at 20%, with expectations that this will rise to 40% by the end of 2020. That rise in different parts of the world provides an opportunity for property owners, he says, especially in urban centres.

Outside of warehousing, Walker explains how businesses can find opportunities throughout the e-commerce value chain. Ride hailing companies such as Bolt in SA have started doing deliveries for businesses, taking advantage of their vast driver network.

Discussion points include global real estate trends, options for investing in real-estate, good cities to invest in around the world, and an outlook for the sector.

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