| Deep impact: Global real estate markets feel full force of pandemic in Q2
With the global financial impact of the coronavirus pandemic becoming clearer almost day by day, governments around the world are focused on the delicate balancing act of allowing life to return to some kind of normal while avoiding the need to reimpose economically and socially damaging lockdown measures. And a couple of new reports out this week looking at how global real estate markets have fared, suggest that in the property world at least, the full force of Covid-19 is only now htiing home.
Both JLL’s report on the Asia-Pacific region and a study by CBRE into the state of the European market highlight that while the pandemic affected the real estate sector in Q1, the full impact wasn’t felt until Q2.
In Europe, total real estate investment reached EUR43 billion in the second quarter of the year, representing a decrease of 39 per cent on the same period last year, while in Asia-Pacific, first half investment volumes declined by 32 per cent year-on-year, with second quarter activity down by 39 per cent year-on-year accelerating from a 26 per cent drop in the first quarter.
Both reports are also cautiously optimistic about the future though, with CBRE’s Chris Brett pointing out that there is an “abundance of capital ready to be deployed as limitations continuer to be relaxed”, a sentiment echoed by Stuart Crow, CEO of Capital Markets for Asia Pacific at JLL.
“Liquidity remains very high, and we expect transaction activity is poised to rebound in the second half as economies further reopen and pricing expectations are adjusted in certain markets,” he says.
New data from Colliers International meanwhile seems to suggest that, for the UK at least, the recovery is underway. Commercial real estate broke through the GBP1 billion mark in June for the first time in three months, which according to Colliers could mean the transaction 'logjam' is easing. “Despite the slowdown in investment volumes in the second quarter, there are signs that activity is picking up again," says Oliver Kolodseike, an associate director in the company's research team.
A second report from JLL meanwhile, predicts that there will be a post-pandemic increase in demand for flexible office space fuelled by the need for employers to ‘de-densify’ working spaces and employees wishing to retain the option to work from home for at least some of the week.
"We anticipate a move towards a 'hubs and clubs' model that provides office locations closer to where people live," says Ben Munn, Global Flexible Space Lead for JLL. "These distributed locations, or 'clubs', are likely to lean heavily on flexible space arrangements."
Finally, we switch from the UK office market to the housing sector and a report from investment manager Seven Dials Financial which suggests that the UK residential market is missing out on billions of pounds of potential investment from smaller institutional investors because of a lack of suitable investable vehicles.
Property Funds World
|
