Global survey sees slight improvement on COVID-19 impact on markets

In its latest global sentiment survey among its researchers around the world of the impact of Covid-19, Savills says that the outlook has improved slightly, with 19 percent of countries reporting a severe negative impact on their real estate markets due to the pandemic – an improvement compared to 29 percent in its previous survey – and 74 percent describing a moderate negative impact (opposed to 67 percent at end of March).

The key findings of the latest Savills survey are as follows:

• Rental values: Rents remain unchanged across 60 percent of sectors and countries globally, rising to 71 percent of countries in the case of offices, supported in part by the extensive use of concessions. Retail tenants have been the greatest beneficiaries, with 80 percent of countries reporting retailers receiving some form of rent relief. Deferred service charges and changes in payment structures are the next most common, with 40 percent of countries reporting their use by retail landlords in each case.
• Occupier demand: Occupier demand altered virtually overnight in many markets. But with early indications that many countries are now at the peak of the epidemic, signs of stability can be seen in some sectors. Demand for offices is reported to be stable in 42 percent of countries, while 55 percent reported moderate falls in occupier demand. This is a significant improvement from the 70 percent that reported moderate falls at the end of March, says Savills.
• Capital markets: The survey indicates that transaction volumes are down but no longer falling as sharply as in March. In the first half of April, 44 percent of countries noted no change in transaction volumes. In the office market, nearly half of the countries surveyed reported no change in transaction volumes since the end of March, whereas earlier 73 percent of countries were reporting moderate or severe declines in volumes.
• Capital values: Capital values continue to be largely unaffected with 63 percent of countries surveyed reporting values in their markets to be unchanged, albeit on thin volumes. Unsurprisingly, logistics and healthcare continue to fare well, with 87 percent and 95 percent of countries respectively reporting unchanged or increased capital values. Both sectors will continue to be in high demand for the foreseeable future, which should help support values. Over two-thirds of countries report offices and residential capital values to be unchanged.

• Government assistance: Government intervention, such as reduced property taxation or temporary bans on evictions, were reported in 59 percent of the countries surveyed.