Here’s how much Covid has crushed global RE investment

Worldwide decline in real estate investment tallied 33%, though industrial and residential sectors have been weathering storm

TRD NATIONAL /
Jul.July 20, 2020 01:00 PM
The coronavirus has been crushing global real estate investment for months, but there are a couple of sectors weathering the storm (iStock)
The coronavirus has been crushing global real estate investment for months, but there are a couple of sectors weathering the storm (iStock)

Global real estate investment was slammed over the first six months of the year, falling by a third compared to the same period last year.

But amid the coronavirus-fueled hurricane a couple of sectors have been holding up, according to a new report from Savills, cited in Bloomberg.

First the bad news: The Asia-Pacific region, where the virus first flared, saw real estate investment fall 45 percent from January through June, according to the report. In the Americas, investment dropped by 36 percent and in the Middle East, Europe and Africa, the overall decline was 19 percent.

Simon Hope, head of global capital markets at Savills, said investment is “expected to remain well below pre-pandemic levels for the rest of 2020 as investors wait for market clarity.” Overall, the International Monetary Fund predicts a decline in global GDP of 4.9 percent this year. Through the end of 2021, the IMF estimates a loss of $12.5 trillion globally.

Still, as bad as things have been, declines have been less severe than the January through June period in 2008, when global real estate investment fell by 49 percent, according to Savills. That number kept falling through the middle of 2009.

And despite the grim outlook, “certain sectors are expected to outperform as investors focus on secure assets, namely logistics, residential and life sciences,” Hope told Bloomberg.

Industrial and residential properties have fared better than hotels and retail, where investment declined 59 and 41 percent, respectively, since government lockdowns halted the global travel industry and forced stores to close down.

In late February, the Blackstone Group agreed to buy a $3 billion portfolio of Japanese rental properties from Anbang Insurance, boosting the market there, according to Savills.

While Congress gears up to debate another massive stimulus bill — potentially including low-cost loans for real estate companies — the European Union remains divided over its latest spending plan, and British Prime Minister Boris Johnson has promised new infrastructure spending, potentially creating more opportunities for real estate investors. [Bloomberg] — Orion Jones


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