With interest rates at record lows real estate offers a highly attractive investment opportunity with attractive leveraged returns in addition to capital appreciation. The challenge for real estate investors is to make the right investments amidst the changing tides of consumer behaviour which have accelerated by the Coronavirus pandemic.
Technology is having a pronounced impact on real estate by creating new A-quality micro-locations which transcend conventional real estate cycles. In the US two cities – LA and Pittsburgh — are seeing an influx of tech companies and with them well-paid jobs and employees seeking homes and local amenities. Pittsburgh has gone from an industrial town to one where technology now makes up nearly a quarter of its workforce. LA now has companies like Snapchat, Google and Amazon moving into the area.
Tel Aviv in Israel now has 6,600 tech firms in a city with a population of just 9 million, while in Shenzhen, China, 3,000 new tech companies set up shop in the last year alone. In Gurgaon in India a buzzing technology city has risen from wasteland. And in Berlin real estate values may have appreciated dramatically since 2010, but the city still remains cheap by European standards with average real estate prices of €1,800 to €7,000 per square metre compared to €10,000 to €18,000 in Paris and €12,000 to €18,000 in London.