In our monthly visual series on topical data themes, we look at whether Bitcoin could be the new gold, if COVID-19 has put pressure on London office rents, and the extent to which transport affects the carbon footprint of foods.

Is Bitcoin the new gold?

Bitcoin is often referred to as the new gold or digital gold

Bitcoin is often referred to as the “new gold”, or “digital gold”. But are they really that similar? We examined their performance and volatility since October 6, 2009 (Bitcoin’s first market price) and the contrast is stark.

Figure 1 shows how just one dollar invested in Bitcoin at inception would now be worth $72.5 million. The same amount invested in gold would have risen 71 per cent to $1.71.

Figure 1: Returns on $1 invested in Bitcoin versus gold since October 2009
Returns on $1 invested in Bitcoin versus gold since October 2009
Source: Willy Woo, ‘$1 invested in Bitcoin vs Gold over 11.5 years’, Woobull, April 21, 2021

Bitcoin’s meteoric run has inevitably attracted interest from all types of investors. However, the pursuit of greater returns often comes with greater risk, as Figure 2 clearly shows.

Digital and physical assets should not be viewed in the same light

Although Bitcoin’s volatility has decreased over the last decade, it still remains considerable – meaning these digital and physical assets should not be viewed in the same light. Given its inherent volatility, it seems unlikely Bitcoin will ever be considered a safe-haven asset like gold.

Figure 2: Bitcoin versus gold: 60-day volatility
Bitcoin versus gold: 60-day volatility
Source: Willy Woo, ‘Bitcoin 60-day volatility’, Woobull, April 21, 2021

Have rising vacancy rates put pressure on London office rents?

COVID-19 has hit many parts of the economy hard. London, a city that in ordinary times is buzzing with people at all hours, became a ghost town of empty buildings. With the government encouraging people to work from home when they can, companies had to ‘change fast’, adopt new ways of working (remotely) and, sometimes, scale back their businesses.

Vacancies across London office markets are at their highest levels since 2012

It is unsurprising then that vacancies across London office markets continued to increase quarter on quarter throughout 2020 – reaching 18.5 million square feet by the end of the year, as Figure 3 shows. This represents a rise of 36 per cent on the last quarter of 2019 and the highest level since 2012.

Figure 3: London offices availability, 2009-2020
London offices availability, 2009-2020
Source: DeVono Cresa Insights, Aviva Investors. Data as at December 31, 2020

The decline in demand has translated into lower office rents, although the decline has not matched the increase in vacancies. The steepest decline in Grade B office rents was seen in Liverpool Street/Bank, with a fall of 13 per cent and rents now pegged at £50.00 per square feet. This was followed by the West End, Euston/King’s Cross and Victoria, which also recorded double-digit declines.

The decline in demand has translated into lower office rents, although not in all areas

Not all areas recorded falls, however. Grade B rents held steady in White City and Hammersmith, while emerging locations such as Stratford, where supply inflation has been restrained, were unaffected.

For newer Grade A offices, which are less than five years old, the hardest hit area was Vauxhall, Nine Elms and Battersea, which fell by 12 per cent, while Soho and the Shoreditch and Old Street areas fell by ten per cent. Five areas – Hammersmith, White City, North of Oxford Street, Canary Wharf and the Hackney and Dalston areas – proved most resilient, with virtually no change year on year.

Figure 4: Rental change in London offices Q4 2019 – Q4 2020 (per cent)
Rental change in London offices (Q4 2019 – Q4 2020 in per cent)
Note: Grade A = under development, new or less than five years old. Grade B = older than five years, less than 10 years old of high quality. Source: DeVono Cresa Insights, Aviva Investors. Data as at December 31, 2020

Is transport to blame for food’s carbon footprint?

Food production is responsible for around a quarter of the world’s greenhouse gas emissions.1

As a result, many people have cut down on exotic foods from far afield, believing the transportation of these goods is a major contributor to their associated emissions. However, data shows transportation accounts for very little of food’s total emissions; cutting down on animal products would have far more impact in reducing the sector’s carbon footprint.

Many people have cut down on exotic foods from far afield

One kilogramme of beef, the food product with the highest footprint, produces 59.6 kilogrammes of carbon dioxide equivalent (kgCO2e), of which only 0.5 kgCO2e is due to transport and packaging combined. In comparison, a kilogramme of bananas generates 0.8 kgCO2e in total.

Interestingly, the highest transport emissions come from products such as cane and beet sugar. However, even these are relatively low when compared to the emissions produced by animal products – 0.8 kgCO2e and 0.6 kgCO2e, respectively.

In terms of packaging, the highest emitter is coffee (1.6 kgCO2e out of a total of 16.5 kgCO2e) followed by olive oil, sunflower oil and palm oil.

Figure 5: Transport emissions versus packaging and all other emissions in food production (kgCO2e)
Transport emissions versus packaging and all other emissions in food production
Source: Our World in Data, Aviva Investors. Data as at November 6, 2019

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