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Virus numbers have risen sharply in the past month, but the second wave has different characteristics from the first. It is concentrated in younger people, so hospitals are not being put under such pressure. One consequence is that the restrictions being …
19th August 2020
With accommodative monetary policy anchoring bond yields, we think that yield compression in the euro-zone is set to resume next year. But the balance of risks have clearly changed post-virus. Yield rises in the face of the COVID-19 shock were inevitable. …
13th August 2020
Despite sharply lower investment in Q2, solid Q1 activity and the faster-than-expected economic recovery means we now think that total pan-Europe (ex UK) investment in 2020 will be only around 15% lower than its 2019 level. The disruption from the virus …
12th August 2020
We expect office-based employment growth to be faster than total employment growth by around 0.3-0.5% ppts each year over the next decade in the US, the UK and the euro-zone. The coronavirus crisis will dampen the outlook in the short run, but the less …
4th August 2020
A more favourable economic outlook should support occupier demand and thereby prime Dutch office rents over the next few years. And while the shift to more remote working poses a risk, we think that the Netherlands might be better placed to deal with the …
31st July 2020
A combination of official travel restrictions and caution from holidaymakers is likely to hit Spain, Greece and Portugal particularly hard. Germany should get off lightly thanks to its comparatively small tourism sector, relatively small number of foreign …
30th July 2020
Spain’s economic recovery was already set to be one of the weakest in the euro-zone but the resurgence in virus cases over the past week and subsequent re-imposition of restrictions deals a fresh blow to the outlook. A return to normality looks even …
29th July 2020
Although banks expect to tighten lending standards, we think that the underlying situation is much better than pre-GFC and that government schemes will continue to provide support, which should limit financial strains for European property owners. Given …
23rd July 2020
At the press conference following today’s Governing Council meeting, ECB President Christine Lagarde dampened any suggestion that the Bank may not use the full €1.35 trillion in its emergency purchase programme. In fact, we still think it is likely to …
16th July 2020
Despite the apparent strength of the euro-zone labour market in early Q2 data and the office sector’s inherent resilience, we still expect prime rents to fall this year on the back of the weak economy and uncertainty surrounding the virus. With …
Global property markets are expected to see a lasting impact from the effects of the COVID-19 outbreak. Over the coming weeks, we will publish a series of pieces looking at the post-pandemic future across the main property types. We start this by …
15th July 2020
The hit to the luxury retail market and prolonged weakness in international tourism will cause Paris prime retail rents to decline this year for the first time since 2009. Although some rental recovery is expected next year, the virus outbreak has …
2nd July 2020
While the proposed joint EU fiscal response has been hailed by some as a “Hamilton moment”, the central budget will be just one-quarter as large as a share of GDP as US federal firepower was in the 1790s. In the absence of greater tax-and-transfer powers, …
29th June 2020
Even though working from home has meant business as usual for many office occupiers, weak activity elsewhere has still caused euro-zone office output to fall. With the economic recovery expected to be gradual, these linkages to the wider economy will …
11th June 2020
Timely activity indicators suggest that the Scandinavian economies are already on the gradual path to normality, which will provide support to occupier demand and, in turn, prime office rents this year. Scandinavian economies appear to be holding up …
10th June 2020
On the face of it, the surge in unemployment in the US implies that households are being hit harder by the crisis than those in Europe. But much of this reflects differences in the way that furloughed workers are being treated in the data. Taking this and …
3rd June 2020
Markets that are most reliant on international capital will inevitably bear the brunt of the collapse in cross-border flows as investors remain very cautious in the face of COVID-19-related uncertainty. But the relative stability and liquidity of the core …
2nd June 2020
Now that restrictions are being lifted, governments are inevitably facing calls to ensure that firms emerging from virus-imposed stasis have sufficient demand to stay open – not least in the German car sector. However, government support for autos will …
13th May 2020
Data from Europe suggest that the relationship between working from home and office space per worker is weak. And even if working from home becomes more prevalent in the next few years, we think that the most important driver of occupier demand will be …
11th May 2020
The lack of clear movement in the Q1 commercial property data has put other indicators into focus. These paint a much bleaker picture, particularly for the retail sector. The key Q1 commercial property data have so far held up well. Indeed, prime rents in …
7th May 2020
Despite reasonable levels of capital ready to invest and an expected loosening in credit conditions, the sharp deterioration in investor sentiment reinforces our view that euro-zone investment activity will drop by around 40% over the rest of this year. …
30th April 2020
We think that, for the industrial sector, any short-term gain from an increase in online shopping will be outweighed by the plunge in demand and subsequent collapse in global trade. While the industrial sector appears to be more insulated from …
24th April 2020
While COVID-19 has forced consumers in southern Europe to shop online, we think that e-commerce penetration will remain lower for structural reasons, which is one reason why prime retail rents in these markets will be more resilient in the long-term. …
14th April 2020
The ECB is using its balance sheet aggressively to provide cheap funding to banks and support peripheral government bond markets. But there is no guarantee that banks will maintain their volume of lending to the real economy, and there is a risk that the …
8th April 2020
Although property valuations and rental prospects remain supportive, the higher risk premium associated with CEE markets means that property yields are likely to increase more in the near term and to unwind more slowly than in Western European markets. In …
Government loan guarantees will help to limit the damage to banks from defaults in the short term. But the banks will inevitably be weakened by the crisis, leaving them with more non-performing loans and less capital. This will constrain their ability to …
7th April 2020
While COVID-19 related delays to construction might reduce supply in some markets, we think that the drop in occupier demand will far outweigh any potential benefits to rents. The euro-zone headline construction PMI for March, revealed that the index fell …
While COVID-19 will hit co-working hard, given the relative size of this subsector, we don’t think it will be large enough to impact rents in the overall office sector. WeWork has been gracing headlines again this past week as the co-working firm is …
2nd April 2020
The past relationship suggests that the recent 10% to 50% fall in real estate equity prices provide an indication of the direction values will move in the direct market, but not the likely extent of the falls. Over the past month, real estate equity …
1st April 2020
Property has generally been at the centre of the most severe economic downturns in recent decades. But this time it is different. Although we think the commercial market is likely to experience a sharp jolt in 2020, provided the spread of the virus can be …
26th March 2020
We think the unemployment rate in the euro-zone will surge to about 12% by the end of June, giving up seven years’ worth of gains in a matter of months. Much of this may prove temporary if the economy rebounds in the second half of the year, as we assume, …
24th March 2020
The ECB announced late yesterday evening a new €750bn programme of bond purchases which is intended to contain borrowing costs for southern economies. This gives it a lot more firepower which should help to contain financial stress in the near term, but …
19th March 2020
Last week’s ECB decision gave it more ammunition to combat the fallout from the coronavirus, but it will not be enough. We now think the Bank will soon make an explicit commitment to keep sovereign bond yields low for all governments at least for the …
16th March 2020
As a share of the population, Italy already has double the number of coronavirus cases as China, and the entire country is now in quarantine. (See Chart 1.) We think that this is likely to cause its economy to contract sharply in Q1 and Q2, and now …
10th March 2020
The recent market meltdown reflects concerns about the economic impact of the COVID-19 virus. This will inevitably hit commercial property, but in our view, the downside is likely to be relatively modest. The spread of the coronavirus from Asia into …
6th March 2020
The response by policymakers, households and firms to the spread of the coronavirus looks set to take a heavy toll on Italy’s economy. We suspect that GDP will contract in both Q1 and Q2, and that over the year as a whole it will shrink by about 0.5%. It …
5th March 2020
The stronger-than-expected increase in Swiss GDP growth in Q4 provides a higher base for annual growth rates at the start of this year than we had previously assumed. Nonetheless, following the surge in coronavirus cases, we now expect the economy to …
3rd March 2020
Following the surge in Covid-19 cases over the past week, we are cutting our forecast for euro-zone economic growth to 0.5% for the year, from 0.7% previously, due to a sharp drop in household spending in Q2. For now, we are assuming that the economy …
2nd March 2020
The possibility of the Olympics and/or the European Football Championships being cancelled as a result of the coronavirus poses downside risks to headline Swiss GDP growth this year. Nonetheless, this will not trouble the SNB, whose focus will remain on …
27th February 2020
The outsized importance of cross-border commuters to the Swiss economy means that it is particularly vulnerable to any disruption to flows of people within Europe as a result of the coronavirus. Partly because of this, the chances of a rate cut by the SNB …
26th February 2020
Portugal’s economy has been a relative bright spot in the euro-zone in recent years and we think it will fare better than average again this year. Nonetheless, quarterly GDP growth looks set to slow from Q4’s stellar pace as investment eases and slower …
25th February 2020
The account of the ECB’s January meeting suggests that the ECB was becoming a little more positive on the economic outlook. But weak data and the spread of the coronavirus since then will have surely added to the downside risks. We are sticking to our …
20th February 2020
While the euro has already fallen to its lowest level in nearly two years against the US dollar, we think that it will drop a bit further during the rest of 2020, pushed down by several factors including a weaker economic outlook and looser monetary …
19th February 2020
While we suspect that the SNB has intervened to slow the rise of the franc in recent weeks, it has not prevented it from reaching a multi-year high against the euro. At the margin, an increased tolerance for a stronger currency argues against the Bank …
18th February 2020
After Italy’s economy shrank at the end of last year, it looks set to continue to struggle in 2020. In fact, there is a clear risk that it falls back into recession for the fourth time since 2008. The 0.3% q/q contraction in Italy’s economy in the final …
The recent election result in Ireland has made the prospect of reunification slightly less remote. In this Update , we answer four political questions and four economic questions about what it might mean. Although Sinn Féin won the highest share of the …
17th February 2020
Softer office occupier demand is expected to weigh on German prime office rents this year. But we still think that rents can grow at a decent pace because, even though office supply is expected to increase significantly, office occupier demand will still …
14th February 2020
This morning’s decision by the Riksbank to leave its repo rate on hold at zero percent was never in doubt. While policymakers appear happy to stay in wait-and-see mode for the time being, we suspect that they will come under pressure to loosen policy …
12th February 2020
The latest data revealed that commercial property investment in the euro-zone held steady at a record high level. And with favourable relative pricing and capital readily available, we think that investment will reach a similar level this year. Following …
6th February 2020
This morning’s decision by the Central Bank of Iceland (CBI) to resume its easing cycle came as no surprise to us following the recent fall in inflation. Given the potential for the coronavirus to exacerbate the deep downturn in the tourism sector, the …
5th February 2020