Home working, reduced travel and social distancing requirements have all had a profound impact on the worlds of real estate and infrastructure in the space of just a few months.
Retailers were already facing major headwinds from the gradual shift towards online shopping, and the COVID-19 pandemic's impact has only served to accelerate this move.
Meanwhile, the huge and rapid move to remote working has raised serious questions about the future of offices.
recent paper Tomorrow's world: COVID-19 and the long-term future of commercial real estate' - Aviva Investors' Chris Urwin and Jonathan Bayfield said that, even before the pandemic hit, there was a "polarisation" in this market driven by automation of some office-based roles and the rise of co-working spaces.
Central London office occupancy had inched back up to 25 per cent by September 20, but with the government again advising people to work from home if they can, this figure looks set to fall once more.
In infrastructure, the travel sector has been particularly badly hit as restrictions on movement have grounded most air traffic around the world.
However, there are reasons to be positive, according to new research by Aviva Investors. Despite the issues facing small subsets of the real asset universe, a poll of more than 1,000 global insurers and pension funds found that appetite for this asset class remained strong - much more so than for equities and fixed income.
In particular, 39% of European pension funds said they planned to increase their allocations to infrastructure equity in the next 12 months, while 38% said the same about real estate debt and real estate long income.
Aviva Investors' full Real Assets Study 2020 is accessible here.
Aviva Investors' managing director for infrastructure Daryl Murphy says: "COVID-19 has demonstrated that infrastructure is a resilient asset class. The virus has had an acute impact on demand-based transport assets, with the major impact being to airports and toll roads.
"However, even in these cases we have seen strong asset-level liquidity through reserves and cash available, meaning we are not aware of any payment defaults across the sector."
Assets such as warehouses and data centres are also expected to benefit as logistics and cloud computing become ever more vital elements of work and home life.
In addition, other factors are pushing people back to office working, providing a tailwind for the battered sector in some regions. In Asia, for example, there is more appetite to get back to the workplace as professionals typically have much smaller homes.
Daniel McHugh, Aviva Investors' managing director for real estate, says: "If anything, COVID-19 means we will double down on our investment strategy.
"Artificial intelligence will take over a lot of the commoditised office jobs that are now being done from places like call centres, and home working will become more appropriate for some more administrative functions. But we don't believe that COVID-19 signals the end of the office."
Aviva Investors' full Real Assets Study 2020 is accessible here.
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144029 - 31/10/2021
