Need and opportunity: What COVID-19 revealed about social infrastructure

The pandemic has highlighted a lack of vital facilities in many communities across the globe, including health care and affordable housing. Read more from Franklin Real Asset Advisors.

    Raymond Jacobs

    Raymond JacobsManaging Director, Franklin Real Asset Advisors

    Gaston Brandes

    Gaston BrandesHead Institutional Portfolio Manager, EMEA, Franklin Real Asset Advisors

    John G Levy, CFA, CAIA,

    John G Levy, CFA, CAIA, Director of Impact, Franklin Real Asset Advisors

    COVID-19 revealed a lot about the world. It drew the curtain back on our ability to deal with a significant global crisis, laying bare systemic weaknesses and exposing structural failures. One such failure pertains to social infrastructure. The pandemic highlighted that many communities around the world lack the necessary facilities—things like accessible health care facilities and affordable housing—to combat threats like COVID-19 effectively. These shortcomings likely contributed to the tragically high levels of sickness and death. While the lack of necessary real estate infrastructure certainly existed prior to COVID-19, the pandemic emphasized the need for increased investment. Looking ahead, we need to address this critical deficit head on. Inevitably, another global crisis will strike, whether it be another pandemic or a climate change emergency, or perhaps some other unforeseen circumstance. Whatever the challenge, we need better social infrastructure systems in place to defend against these events.

    Key Takeaways:

    • Good news/bad news: the global COVID-19 pandemic highlights the lack of adequate social infrastructure in place in much of the world, particularly in terms of health care facilities.
    • Government funding shortfalls, notably with the austerity measures associated with public spending following the global financial crisis (GFC), have contributed to the lack of investment in good and accessible social infrastructure.
    • Given the dearth of public spending in the space, coupled with the magnified need post-COVID-19, the opportunity for private capital flows into social infrastructure is substantial. While governments have implemented a range of fiscal and quantitative measures to cope with many aspects of the pandemic, social infrastructure funding has not been a priority.
    • The need for social infrastructure investments may be accelerating shifts in real estate allocations away from traditional retail and commercial properties and toward more impact-related allocations.
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