Stay alert.

21 October 2020 | The changing picture of real estate and infrastructure

Bloomberg News reported that rental prices in large cities are falling significantly, when they are actually paid — it has been reported that a third of rents are assumed overdue in the US. Studio prices are dropped by 20% in Manhattan, while single house lending prices went up 16% in Westchester County, a residential neighborhood north of the city. This suggests that as more people work from home, the need for commuter apartments in NYC is diminishing.

What does it mean?

The infrastructure of large cities like New York and London becomes more difficult to finance if part of the population permanently or periodically works from home. This does not mean that there are no opportunities in infrastructure—the Joe Biden campaign slogan “Build Back Better” encapsulates the candidate’s plan to create jobs through infrastructure investment if he is elected.
Infrastructure is a defensive asset class, trading at historical discounts with high exposure to secular trends like decarbonization, which will further drive growth potential of this asset class. Other trends are Ageing Assets and Data Growth.