Covid-19 has strongly impacted the European real estate investment market. As a reaction, investors will move down the risk spectrum and seek an upside during the economic down-turn.
Latest investment data for the first half-year of 2020 suggest widespread uncertainty in the market, which leads to decreased investment activity in 2020. However, the uptrend in investment that began in June indicates that a recovery is picking up momentum. There is plenty of capital ready to be invested assuming a quick economic recovery after Covid-19 and we have seen very little movement in the pricing of prime assets, especially in the major gateway cities.
Prime assets sought after by investors: Well-located and fully occupied properties are currently in greater demand than ever. On the back-end of Covid-19, single tenant properties and sale-leaseback transactions are increasing as they offer the potential to minimize the risk for landlord and tenants.
Focus on asset classes which are attributed as more resilient: At the sector level, multi-family, office and logistics as investors were looking for stable income streams in the face of increasing economic uncertainty.
Stability becomes increasingly popular again: in response to Covid-19, investors are actively seeking investment opportunities in more stable markets.
Markets such as Germany, Austria and the Netherlands recorded the lowest declines in investment activity and the most stable yield levels across Europe during the first half of 2020.
To minimize the impact of Covid-19 restrictions, over 50% of occupiers have held discussions with landlords about aspects of their existing lease agreements, but only about a third have been offered relief measures by land- lords and the majority of these are unsatisfied with the concessions offered.
Occupiers highlight the longer- term shift in strategy towards an increased adoption of home working and the subsequent review of their locational footprint. Consequently, and in view of the still rather uncertain recovery forecasts, it is in the landlords’ own interest to closely analyze the tenant structure and actively approach tenants to find a balanced solution for both sides.