The Corona pandemic has highlighted how vulnerable smallerbusinesses are. We have seen numerous businesses having to shut downwhich has led to an unprecedented amount of redundancies andbusinesses facing bankruptcy.
The risk of bankruptcy extends not only to restaurants, cafés and retailersbut also to their landlords, who are facing vacancies and missedpayments from their tenants. This is particularly problematic for smallerlandlords.
We started to think if there was something that could have been donedifferently or if there was a way to protect smaller landlords.We tried to think of new ways to minimise the risk for landlords bycreating a stable foundation that could be used when times were tough.
The idea is to implement portfolio theory on smaller landlords andthereby imitating the diversification that larger real estate companiesachieve by holding larger portfolios of properties all over Sweden. Thequestion we asked was: how can a smaller landlord achieve somethingsimilar?
By combining smaller to midsize properties, weighing them accordinglyto minimize risk and obtain a stable return, this could work as a cushionthrough uncertain times, just like the one we are in right now. Hence,this would result in stronger positions for smaller landlords who seek tospread their risk but don’t have the capital needed to expand.
By theoretically testing our idea we’ve found that there’s a way forsmaller landlords to achieve a stable return as well as lowering their riskthus giving them a greater hope of surviving economic distress.