Led by The Americas, Global CRE Investment Plunges 57% in Q2
Europe and Asia weather the COVID-19 chill slightly better, according to CBRE. The firm is looking for "a gradual recovery" in the second half.
CBRE isn’t going to sugar-coat it. Global investment in commercial real estate was down in Q2—way down—according to the company’s latest Global MarketFlash.
Hit especially hard were the Americas region, which saw a 70% decline year-over-year to $43 billion, the lowest level since 2010, according to CBRE. Declines in the Americas tended to be steepest in cities hit hard with COVID-19 infections, such as Seattle (-84%), Orlando (-81%) and New York (-71%). Hotel assets were the hardest hit class, with a 90% drop in volume.
CBRE is hopeful going forward, though. “If testing levels, tracking and treatments improve as expected in H2 2020, so will business confidence and investment activity,” the company forecasts. “Increased clarity on pricing and rental rates should tempt discount-seeking investors to re-enter the market.”
The Asia-Pacific region fared only slightly better, with a 46 percent decline to $18 billion, the lowest level since 2012. Sizable deals in Australia (-21%) and South Korea (-36%) helped limit the overall damage. Retail and hotels took big hits, but retail assets with residential components showed improved investor interest, as did big-box retail assets with long-term leases from grocery tenants.
But, the CBRE report cautioned, “The resurgence of COVID-19 cases in China, Japan and Australia, and the ongoing first wave of infections in India, raised concerns over the region’s economic outlook and lengthened the recovery timeline of investment activity.”
Europe, the Middle East and Africa proved the most resilient. EMEA investment volume fell by 38% year-over-year to $48 billion, according to the report. Factoring in a record-breaking Q1, the region actually saw a 2% year-over-year increase over the first half of the year. Germany (-20%), Netherlands (-23%) and Poland (-22%) saw relatively modest year-over-year declines in Q2, while Switzerland was +174% thanks largely to Thailand’s Central Group and Austria’s Signa acquisition of Swiss department store chain Globus.
At a global level, investment volume was down 57% in Q2, resulting in what CBRE called a relatively moderate 21% decrease for H1. “Q2 may have marked the low point as countries reopen their economies and business activity resumes,” the report states. “Investors are looking for a gradual recovery beginning in H2 2020.”