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Even when government restrictions are lifted, retail real-estate markets may struggle to recover because of alternatives investors avoiding investment in retail, according to a new survey.

There were 34% of the investors who said they would avoid investing in retail-focused real estate projects because of the virus, according to a  survey by Prequin. It noted that one respondent said for real estate as a whole, people won’t have money to invest in real estate, although healthcare sectors will be booming.

“This does highlight the extent to which retail real estate markets may struggle to recover when government restrictions are lifted,” the survey said.

The company surveyed 110 investors and 180 fund managers to ask how the coronavirus pandemic has impacted their business operations and their industry.

“Economic interruption and travel restrictions have led investors to delay making fund commitments, and fund managers have faced challenges in fundraising, deal origination, and portfolio company operations,” said a company statement.

Even though 83% of investors at the end of 2019 said they would make new commitments to alternatives, the COVID-19 outbreak has caused them to reconsider. Now, 59% of surveyed investors said they would slightly or significantly decrease their planned commitments.

They’ll also cut the amount of capital that they commit: 60% said they would decrease the monetary size of commitments slightly or significantly.

Fund Managers

The investors’ trepidation is already showing up for alternative assets fund managers: 55% reported a slowing of their fundraising processes, said the survey.

In a separate survey of 180 fund managers, 69% said the pandemic–particularly travel restrictions and social distancing–has caused a significant disruption to their business, and an equal percentage said it has negatively impacted fundraising from investors.

Also, 61% reported a negative impact on portfolio company operations, and 59% said deal origination faced a negative impact.

Yet there were 62% of respondents who felt their returns would be unaffected. Another 16% expected slightly lowered returns.

Good news: 75% of respondents didn’t plan to change their investment strategies for active funds, and 90% said they wouldn’t change their valuation method for portfolio companies, the survey said.

“Why are fund managers not taking action amid the disruption? A viable reason could be that they remain unsure whether the market turmoil caused by COVID-19 will have a lasting impact,” the survey said.

Among the fund managers, 34% felt that operations will go back to normal in three to six months, and another 34% expected six to 12 months. Only 3% of the respondents thought the disruptions will last more than two years.