E-Commerce Boom Puts Commercial Real Estate on Fast Forward

E-Commerce Boom Puts Commercial Real Estate on Fast Forward

With the Coronavirus calamity driving the property market to embrace several technological tools to run businesses, it is only natural that commercial real estate is accelerating the adoption of e-commerce. It indeed became a reality when nonessential stores shut down, and people around the world started to work remotely to curb infection spread. That, in a way or another, left some kind of imprint on the overall realty sector.

Speaking of Egypt, the latest study by Invest-Gate’s R&A team on the influence gauge of e-commerce found that its adoption does not necessarily mean the gradual disappearance of commercial properties. The reason is that online retailing’s supply chain operations require more warehouse and logistics spaces to ease product delivery to consumers. 

Based on more than 50% of Invest-Gate’s survey respondents, e-commerce will not jeopardize the commercial segment’s survival but will instead reshape and revolutionize doing business. Accordingly, we believe companies are showing resilience in the face of the technological boom, standing firm despite the COVID-19 disruption. 

When asked about the influence of e-commerce on commercial units’ prices, there were mixed opinions among responding developers. Almost 65% assume price hikes in the wake of the pandemic and e-commerce rise, whereas the remainder sees no changes whatsoever. As for warehouses, half of the respondents anticipate prices to remain stationary. The other half, however, considers price increments in the coming period. 

It is safe to say that e-commerce and digital transformation, in general, have literally changed the entire facet of the business operation. But this will not affect the developers’ need to own commercial units or warehouses for selling and storing purposes.

So, with people now expecting more from their visits to brick-and-mortar stores, investments should be geared toward unique property types that offer a little flair in the shopping experience. The added convenience and reduced costs spent on a given product are shifting consumer demand for many goods and services to the online marketplace. That is why Egyptian real estate developers need to work hard on innovating their business models to stay relevant; it is no longer about the sales per square foot in the retail world, but rather experience per square foot.

Recently, Invest-Gate’s R&A team has conducted in-depth research on the effects of the e-commerce boom on commercial real estate amid the Coronavirus shock. We surveyed about 20 Egypt-based developers to put together a summarized wrap-up on e-commerce’s impact on commercial properties and how this specific segment copes with today’s technological boom. For the full analysis, click here.


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