CBRE: The potential impacts of Covid-19: What Does it Mean for Real Estate?
The outbreak of COVID-19 began in December 2019 and has spread to many European countries. The most exposed countries to supply chain disruption are Germany, France, Italy and Spain. There are some downside risks in the near term and policy responses are looking to mitigate these. Travel restrictions and fear of exposure to COVID-19 will primarily affect face-to-face meetings and conferences.Real estate may see some impact in the short-term, the overall outlook, however, remains positive.
- The consensus is that COVID-19 has yet to peak and will continue to spread. Multiple cases have been confirmed across Europe in recent weeks.
- The net drag on European GDP growth should be limited, conditional on a temporary disruption to global supply chains. However, recent developments, such as the cancelation of major trade shows as well as travel restrictions, present an increased short-term downside risk.
- The most exposed countries to supply chain disruption are Germany, France, Italy and Spain. Highly exposed sectors are those linked to motor vehicles, machinery and chemicals.
- Travel restrictions and fear of exposure to COVID-19 will primarily impact the hotel and retail sectors.
- While real estate yields may be marginally impacted in the near term, the long term outlook remains positive. Investment volume likely to be negatively affected, albeit they are traditionally low in the first quarter. Growing calls for additional interest rate cuts could further support the low yield environment.
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