After the onset of the pandemic, it became difficult and often unprofitable to invest in commercial real estate in European countries - the market has changed, the old rules of the game no longer apply. How to optimize asset management and not turn an investment portfolio into a cash vacuum cleaner, says Mikhail Devyatov, Managing Director, Head of Real Estate Department of UFG Wealth Management.
2020 brought many changes to the global real estate markets. The quarantine regulations in most of the countries had a significant impact: world GDP decreased by more than 5%. This has led to an increased risk of investing in certain segments of real estate. For example, we do not recommend our clients to invest in assets in the UK, Italy and Spain without professional assistance: the new coronavirus has caused the maximum damage to the economies of these regions.
But no need to think that the rest of the European countries got off lightly. Due to the quarantine regulations, the vacancy rate of retail premises and hotels has increased, which has led to a reduction in the budget for their maintenance - now the owners have to “tighten their belts” and optimize costs.
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