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Perspectives in today’s real estate market

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Global research update

Our market-leading global real estate research team is working daily to assess global real estate markets and provide insights from both a long term and immediate viewpoint, taking recent coronavirus developments into account. Below are our current highlights, while the full report can be downloaded above.

U.S.:

  • The trajectory of the coronavirus will continue to determine the trajectory of the U.S. recovery. Real-time mobility data points indicate that mobility has stabilized despite rising coronavirus cases. In the near term, Trump and Congress’ failure to execute on additional fiscal stimulus will significantly hinder the U.S. recovery. It is highly unlikely that a fiscal stimulus package is passed before Election Day.
  • The September jobs report indicated a decelerating labor market recovery. Total nonfarm payroll employment rose 661,000 in September, below the past three month average gain of 1.3 million. Mass layoffs and furloughs recently announced, most notably by airlines, will weigh on the labor market’s recovery.
  • According to Green Street’s Commercial Property Price Index, aggregate U.S. real estate values were down 10% in September since the beginning of the pandemic. Alternative housing and healthcare real estate property types including manufactured housing, life sciences and medical offices have been the most resilient and have fallen less than 5%.

Europe:

 
  • The V-shaped recovery on display over the summer has run out of steam in the first weeks of autumn. After most of the lockdown induced lost output has been recovered, European economies are finding it increasingly difficult to get fully back to 2019 levels. Forecasts suggest it may take up to end of 2022 to fully recover in some regions, while others may get to that position by mid-2021. The main contributors to relative performance remain relative dependence on the service industry and government competence in controlling coronavirus.
  • One of the key factors for short term city performance is the dependence on tourism and business travel. In particular cities, which usually attract a large number of international business and leisure tourists are affected as domestic travel is holding up much better. Cities like Prague, Paris, Florence, Geneva, Dublin and Vienna suffer from empty hotels, which has knock on effects on retail, restaurants and travel service businesses.

Asia Pacific:

There are renewed negotiations for air travel bubbles between regional countries with low or contained infections. Australia is in discussion with Singapore, Japan and South Korea to reopen borders for reciprocal travel. A bilateral travel agreement between Singapore and Hong Kong without mandatory quarantine is also under discussion. But hopes for a quick and widespread resumption of air travel to revive the hospitality sector is unlikely, given the indeterminate duration of Covid-19. Hong Kong for instance is warning of a fourth wave as winter approaches. Consequently, following a pent-up bounce in regional third quarter growth from an exceptionally depressed outcome in Q2, growth is likely to turn uneven around the year-end.
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Wendy Pryce
Wendy Pryce
Real Estate Product Specialist