We don’t have a playbook for a crisis like COVID-19, but there are some guiding certainties that are reassuring as we look to navigate our way through a steep recession.
One month into life in lockdown, and it’s clear that the COVID-19 crisis requires responses that are both considered and agile, to give utmost priority to the safety and wellbeing of our staff, tenants and the people who visit our commercial real estate assets every day. It’s a challenge, and one we have faced into with the advice of government, the relevant health authorities and our own steering committee.
Leadership looks and feels different at this time, but I’m encouraged by how quickly and effectively the teams at AMP Capital have mobilised to work remotely. It’s reinforced the value of clear accountabilities and having an energised, collaborative group of colleagues who are focused on servicing the needs of our stakeholders. This period has especially reinforced the value of effective and clear lines of communication.
More than ever, the COVID-19 crisis has brought home the importance of absolute adherence to long-term thinking and to long-term strategy. In our view it’s the prospect of solid long-term performance that gives us reassurance in the real estate sector.
For one, Australia is a global standout in its management of COVID-19.1 It has among the highest rates of testing in the world and tough social distancing measures, which bodes well for a smoother road out of lockdown than pockets of Europe and the US are likely to experience. The curve is flattening, reminding us this is a manageable situation, and we can calmly work our way into recovery.
Second, the stimulus measures from the Australian government are designed to prop up essential components of the economy: jobs and confidence. The recession in Australia will be steep, but it will also be offset in part by stimulus as households on welfare receive additional payments and programs such as the JobKeeper wage subsidy program rolls out. Keeping jobs and households afloat during this time will help the eventual rebound in GDP growth, as we all work our way back to a variation of our normal activities. Again, these measures remind us of the controls we have to manage and navigate this huge disruption.
The devastation and human impact of this crisis cannot be downplayed. However, this situation won’t last forever, it can and is being managed and contained. In the meantime, while it’s tempting to get caught up in the panic of short-term outlooks for investment markets, as is always the case in commercial real estate, it’s an investment for the long term. And for commercial real estate in the long term it’s people, the fundamental quality of assets and active, effective management that matters most.
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