Key messages
PLANS TO GRADUALLY RESTART ACTIVITY
Some countries should relax their measures soon but it will be a gradual process. We assume that the measures will last for about eight weeks in most countries, at least in their most stringent form, with a slow subsequent recovery.
GROWTH OUTLOOK DARKENS FURTHER
A change for the worse in some of our assumptions on the Covid-19 shock has prompted us to revise our already low GDP growth forecasts. Even with the 2020 global growth revised to -2.5% from 0.5%, the risks remain skewed to the downside.
CONTROLLED INCREASE IN VACANCY
The increase in office vacancy is not expected to be substantial in most markets. Most central business districts should maintain high rental values. The average rents could moderately decrease in some districts where the structural vacancy remains high.
FALL IN INVESTMENT VOLUME
The investment market works slowly despite severe external difficulties. Financial conditions seem to be tightening so far and cash is increasingly king. Total investment volume is expected to significantly fall in 2020 across Europe.
LIMITED PRESSURE ON YIELDS
We expect very little upward pressure on prime yields in most markets, but there may be more general upward tensions on secondary segments. In general, the risk premium between core and non-core assets could come under pressure.