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  • Hello.

  • Welcome to sectors up close.

  • I'm Angeline on our focus today is real estate and our guest is Chris Beacham, the chief market strategist at I G.

  • Now the real estate sector has been seriously upended by the pandemic, with offices and many city centres devoid of people.

  • This index, the footsie 3 50 real estate index, is still down around 7% over last year.

  • But the sector is broad, encompassing builders, developers as well as dividend paying real estate investment trusts that focus on everything from shopping centers to healthcare.

  • So what is the outlook for this sector this year?

  • Let's ask I g s Chris Beach and Chris, Thank you so much for joining us at such an interesting space.

  • I know you said that for the longer term, the outlook for this sector amid the pandemic is harder to pinpoint.

  • Why is this?

  • Is this Because there's this uncertainty, whether people will go back to officers.

  • Yes, I think there is very much in a unknown unknown at this point in time.

  • Really, when it comes to the scale of the return, obvious is we've had pronouncements that the office itself is is dead and gone.

  • We've had the opposite end of the spectrum from the head of Goldman Sachs last week, saying that it just doesn't work to have working from home.

  • I suspect the truth lies.

  • Some in the middle would say, People going to the office, maybe 2 to 3 days a week, so 2/5 of the time compared to where they were just over a year ago.

  • And I think that's the question of how much demand or need for offices, particularly and then where that space goes or what becomes of it.

  • In the wake of this, if you turned into apartments, that's fine.

  • But the rationale for that is is somewhat odd.

  • And, of course, or that retail space has been hit, of course, with the absence of workers in the city and the huge shift to online shopping means that there is fundamentally much less demand for the kind of retail space and much less footfall to support the retail space.

  • As we head into the second half of 2021 beyond.

  • How about dividends?

  • Chris?

  • We still have quite a few good paying companies in terms of dividends.

  • Are they attractive?

  • Given what's going on and how this pandemic might affect future returns.

  • I think they are.

  • I think.

  • Certainly it is, perhaps even with the previous question that there are a lot more certain in terms of lower than they were a year ago.

  • We know, for example, of course, that people will go back to the office, and as a result, some of those dividend yours which hover for some of those companies in the sector around 4.5 to 5% do still look quite sustainable, I think, And that's that's a good thing for investors.

  • I don't expect you think they'll increase dividends, particularly, um, at the time when they're just gonna leave them where they are.

  • Um, you have seen, of course, a big drop off in the amount of rents being paid.

  • But it looks like investors are prepared to look through this, Um, in the hope that things will return to something more like normal.

  • Um, as we go through the rest of this year, how would you advise investors who still want exposure to this space?

  • Should there be sub sectors they should be looking at?

  • Well, I think we want the ones where there's like to be increased residential demand.

  • More than anything else, I think that's the area where that there is like to be, perhaps an improvement.

  • As economies returned, more people will be looking back to move around more rather than obviously being in lockdown.

  • The the areas you want to be cautious about remain.

  • Of course, I think most importantly, retail particularly, of course, in the UK you've seen this.

  • Diversions in a number of the rights ones focused more heavily on retail have suffered more than those are the more diversified portfolio.

  • I think that's something that's being reflected in their relative performance.

  • So if you see those dividend yields begin to creep back again, Uh evaluations, of course, have improved markedly from where they were a year ago.

  • I think those are the things to bear in mind that rights shouldn't be treated as one single group.

  • You have to look past that and make a case for saying, Actually, there are pockets of strength and there's some cities will do better than others and maybe even if you're looking further out from the big cities from New York and London, for example, to to regional cities that We'll see a bit of a growth as people issue communities those big names and look to work more regionally in the future, right?

  • Thank you very much.

  • We have to leave it there.

  • That's Chris Beacham, chief market strategist at I G M.

  • Before I go, here are some of the top stories in this sector.

  • Britain's third largest homebuilder, Taylor Wimpey, reported a strong start to the year and forecasts of recovery in sales and margins in 2021.

  • The FTSE 100 companies said it expected to build fewer affordable homes this year, boosting profit margins back to around 19% after falling to 10.8% last year.

  • It has been reported in the media that Britain will extend by three months a tax break on home purchases and unveil a mortgage guarantee scheme in Wednesday's budget moves that could further bolster the sector.

  • British House price growth unexpectedly accelerated last month, according to mortgage lender Nationwide, house prices rose 6.9% in annual terms in February, above all forecasts.

  • In a Reuters poll, nationwide said the outlook for the housing market was uncertain given Wednesday's budget and the likely weakening of the labor market as government wage support is withdrawn.

  • And finally, a real estate brokerage backed by Japan's Softbank has filed for an I P O.

  • In its filing, Compass revealed a 56% surge in revenue to $3.7 billion for the year ending in December.

  • And that's a round up of the real estate sector.

  • I'm Angelina Song, and this is what is mhm.


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Return to offices may not boost the real estate sector

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    林宜悉 posted on 2021/03/04
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