Key messages
SEEKING TO END LOCKDOWN
The initial total lockdown is largely over. Many European countries have relaxed some of the most extreme curbs on activity. We expect further albeit gradual normalisation over the next few weeks, thanks to an improvement of the pandemic.
EUROPE IS GRADUALLY MOVING AGAIN
As most countries begin to relax restrictions, early signs indicate a pick-up in visits to parks, residential, grocery stores and pharmacies, while the use of public transport; visits to retail and workplaces remain well below normal levels.
TOWARDS A QUIET RECOVERY
We have lowered our growth forecasts and now expect a shallower recovery. Our base case is for 3.3% contraction in global GDP in 2020 to be followed by a bounceback to 5.4% growth in 2021. Risks remain skewed to the downside.
FALL IN TRANSACTION VOLUME
Total investment volume is expected to significantly fall in 2020 across Europe. Financial conditions seem to be tightening so far and cash is increasingly king. The fall in office take-up is likely to be more severe than the peak to trough during the GFC.
VARIED 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 should come under pressure.