A recent webinar held by the Institute of Directors looked at the impact of technology, sustainability and investment as drivers in the property sector for 2021 and beyond. Molly Haynes and Laura Blenheim, trainee solicitors in Forsters’ Commercial Real Estate team set out below their five key take-aways from the broad panel discussion by Nikki Greenberg who is founder of Real Estate of the Future; Munish Datta who is a Fellow at the University of Cambridge Institute for Sustainability Leadership and Alex Moss who is the director of the Real Estate Research Centre at The Business School.

1. The interaction between physical and digital space – digital interaction is now a fundamental part of the way businesses operate. This technology disruption is not likely to diminish when the workforce returns to the office, especially given that, by 2030, 75% of the workforce will be millennial and Gen Z.  An opportunity has arisen for the real estate sector to consider how to package up an offering to include both a physical space and digital experience.  A great example of this is a Post Office in Helsinki, which recently created a lounge that included fitting rooms where customers could try on their online purchases and immediately return those they did not want.
2. Shift in demand from office and retail space to industrial units and PRS – there remains a strong demand for real estate, with the industrial and private rented sectors rapidly becoming the magnets for global capital.  However, these sectors are less scalable than the traditional larger property assets.  While we are not likely to see a sharp rise in investment following the pandemic (as there will still be levels of operational risk), fast-growing cities will present a wider range of investment opportunities.
3. Economic recovery alongside sustainability – in mitigating the economic effects of coronavirus, the government has an opportunity to consider how recovery can take place hand-in-hand with green progression.  2021 is a critical year for the UK Government with their Ten Point Plan for a Green Industrial Revolution published at the end of 2020 and the UK hosting COP26 in November 2021.  This Government’s plan provides the UK with an opportunity to be a world leader in creating jobs and stimulating green growth as part of the journey to achieving net zero carbon emissions by 2050.
4. Businesses must take ESG seriously in order to attract capital investment – businesses and private equity houses alike are slowly coming to the realisation that ESG is no longer a ‘nice to have’ but must be an integral part of the overall strategy and can indeed increase returns.  As such, we are seeing an encouraging trend whereby PE houses are increasingly considering ESG attributes as a key part of their due diligence when deciding whether or not to invest in a particular company.  As businesses transitioning to a zero-carbon model are likely to require external investment, this trend is here to stay. 
5. 2021 must be the year of action for green recovery - 2020 was a year of discourse around ESG issues. In particular, the pandemic itself has accelerated our awareness of these issues and highlighted the need to align ESG with financial return and strategic decision making.  With the increased role of private equity houses in Covid-19 recovery efforts, in addition to the Government's commitment to achieving net zero carbon emissions by 2050, there is real opportunity for 2021 to be the year where all of the thought and discussion of 2020 begins to become a practical reality.

For further commentary, please visit Forsters LLP's dedicated Sustainability Hub where you will find expert insights on how sustainability considerations are shaping our advice to clients in the Private Client, Real Estate, Tax, Banking and Corporate sectors.