How the coronavirus crisis will affect EMEA markets
It is difficult to estimate the final impact of the coronavirus on the real estate market in the EMEA region at this point in time, but the tourism, trade and leisure industries are most affected. A best-case scenario for the EMEA would see zero economic growth over the year after a negative dip over Q2 and Q3, with real estate shocks limited primarily to the hospitality sector as well as logistics and retail assets that are dependent on discretionary spending or China.
Capital markets will be frozen, but the main players are still active especially for more resilient retail, logistics and industrial sector assets as well as for office and residential buildings. Investors will hold back their decisions until pricing and the availability of capital becomes clearer. For cross-border investors, capital markets uncertainty, liquidity issues, Q2/3 FX rate volatility and inability to physically visit assets will lead to reduced activity.
Some investors, especially those in need of capital, may have to revise their assets, leading to the sale of some properties to balance their portfolios. The second challenge is funding and exchange rate volatility, which make it difficult to estimate returns on investment, and the change in rates of return and pricing levels that may occur in the event of a prolonged downturn