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30 / June / 2020

London Bed Sector 2020

COVID-19 has had an unprecedented effect across the real estate sector with every type of property use impacted to some extent. Over the short-term the focus has been on tenants’ ability to trade and their financial strength. The medium-term implications will depend on issues such as how quickly a vaccine can be found that enables the world to return to some sort of normality.

The impact of COVID-19 across the bed sector has been varied. The Private Rented Sector (PRS), including the co-living sub-set, has proved to be relatively defensive, with high levels of occupancy and rent collection being maintained. In contrast, student housing and serviced apartments have struggled to maintain occupancy and hotels have been hit hard due to the inability to trade.

Investors are likely to continue to target the defensive parts of the bed sector as they look to diversify their investment portfolios away from commercial real estate. The medium-term prospects for student housing and hotels look less certain. COVID-19 could bring about more online learning at universities, allowing students to study from home. Meanwhile, it is likely that there will be less business and leisure travel for some time, leading to a structural oversupply of space in real estate sectors catering for tourism and hospitality.