CONV IMMO EUROPE Octobre 2019 - header

Real estate convictions Europe

3rd quarter 2020 and outlook

CONV IMMO EUROPE novembre 2020 - pétale

Just as the global economy was beginning to recover from its historic post-lockdown drop,

uncertainty surged with the enacting of tougher measures to slow the spread of new Covid-19 infections in many countries. However, a major turn in fighting the pandemic may have occurred with the announcement early this month by Pfizer and BioNtech regarding the likely efficacy of their vaccine candidate, which is currently in phase 3, the last stage before certification. For the moment, the latest projections are for a 4.4% global contraction in 2020, slightly better than expected, thanks to the strength of the recovery after the lockdown and during the third quarter. But pandemic uncertainties in the fourth quarter of 2020 could undermine the recovery in 2021 (projected at +5.2%).

With 160 billion euros invested in the first nine months in 2020 (-19% year-on-year), including 99 billion euros in the euro zone (-22%), the European commercial property market* did shrink but is still above its 10-year average. This shows that it remains attractive in the long term. Germany (41 billion euros, -2% year-on-year) is a resilient market; France (21 billion euros, -23%), the Netherlands and Belgium (15 billion euros, -25%) are still far above their 10-year average; and while Spain (6 billion euros, -51%) and Italy (5 billion euros, -34%) have dropped precipitously. On the whole, most prime office, residential and healthcare yields were stable between the second and third quarter 2020. Second-generation shopping centres and retail parks continued to widen but at a slower pace than previously. High street shops have been mostly spared, especially in prime locations of large metropolitan areas. Lastly, after a correction early in the pandemic and during the second quarter, hotel yields levelled off in the third quarter 2020.

* Commercial property means offices, retail shops, logistics, real-estate services
and residential property for institutional investors.
Source of quantified data: CBRE, RCA, Oxford Economics.

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Daniel While Research & Strategy Director

Henry-Aurélien Natter Research Manager

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