Gradual exit from lockdown
Numerous European countries are ready to ease lockdown restrictions, allowing a gradual return to work and a progressive re-opening of different sectors. This aims at restarting the economy while avoiding a significant second wave of outbreak
Downside risks to growth outlook
While the bold policy responses to the Covid-19 pandemic are promising, risks to our base case for GDP contraction are decisively skewed to the downside. We do not see a V-shaped recovery in economic activity during H2 2020.
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 effective rents are expected to decrease in districts where the structural vacancy remains high.
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 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.