Essential Property Could Be The Safest of Safe Havens
Image Credit: EdTech Stanford University School of Medicine/CC BY
Investors usually retreat to hard assets as a safe haven during economic downturns. However, last month’s downturn was anything but ordinary.
Commercial and residential properties were caught up in the whirlwind, as economic activity across the world was suddenly halted. Now, property values and commercial mortgages are looking as precarious as any other asset class.
However, investors seem to have found, perhaps, the safest niche in the market – essential real estate. While the global economy is shut, hospitals, clinics and grocery stores have seen a spike in demand. Landlords of these niche properties have experienced a windfall despite the ongoing financial chaos.
In India, veteran investor Radhakishan Damani was the only billionaire to see his family’s wealth surge in March. Damani’s Avenue Supermarkets operates a national chain of low-cost grocery stores under the D-Mart brand. Unlike other grocery chains, Avenue owns the underlying property which has become essential as Indian consumers stock up on essentials. Avenue’s stock price is up 21% year-to-date.
Further east, property tycoon Li Ka-shing and his son Victor Li Tzar-kuoi have been seeking bargains as property values decline, according to the Star. The billionaire is widely considered to be a skillful investor, having made early bets on Facebook, Zoom and Spotify. This year, he has increased his stake in Canadian healthcare technology company WELL Health Technologies. The Vancouver-based startup owns 20 clinics across British Columbia and expects to double its clinic network this year. Sir Ka-Shing has also increased his stake in his own firms, CK Hutchison and CK Asset.
From hospitals to server farms, esoteric types of properties have become more valuable as social distancing measures spread across the world.