TRD Insights: International real estate investment tumbles in Q2 with US hardest hit

Americas CRE deal volume collapses to $43B in Q2 2020 from $141B in Q2 2019


Real estate markets worldwide saw investment sales fall in the second quarter, but none as much as the U.S.

The Americas region saw deal volume fall to $43 billion in the second quarter of 2020, a 70 percent drop from $141 billion a year ago, according to a new CBRE report. That’s the biggest drop of any major market.

Hotels were the hardest hit sector in the Americas, with deal volume collapsing by 90 percent. Even the relatively resilient industrial sector saw a 50 percent decline. Deal volume in the office and apartment sectors both fell by 72 percent.

Globally, commercial real estate deals totalled $109 billion in the quarter, a 57 percent decline from the total of $251 billion a year ago, according to the report.

“The continued surge of Covid-19 cases in the U.S., Brazil, and parts of Latin America will hinder the rebound of investor activity in those areas,” the report says, although “as testing, tracking and treatment capacities grow, and confidence improves, H2 is expected to be stronger. Increased clarity on pricing and the rental outlook will also tempt discount-seeking investors to re-enter the market.”

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In the Europe, Middle East and Africa (EMEA) and Asia Pacific (APAC) markets, where initial waves of infection were more successfully suppressed, CRE investment saw a somewhat less severe slowdown. EMEA deal volume fell 38 percent year over year in the second quarter, while the APAC region saw a 46 percent decline.

Outcomes also differed at the country level, with markets like Germany and Poland declining less than the U.K. and France in Europe, and markets like Australia and South Korea outperforming China, Japan and Singapore.

For the full year, CBRE has revised its global investment forecast downwards from a 32 percent decline to a 38 percent decline, “in light of recent sluggishness in the Americas pandemic control and economic recovery.”

But “a global rebound of activity is still expected to arrive before the end of year, given the general improvement in the ability to manage Covid-19,” the report concludes.