Research

Global Real Estate Perspective November 2020

JLL’s latest Global Real Estate Perspective looks at market dynamics during the third quarter and the impact of COVID-19

November 09, 2020
Signs of improvement in third quarter but outlook uncertain

The global economy rebounded in Q3 but a resurgence of COVID-19 cases in parts of the world highlight the ongoing uncertainty of the outlook. Reflecting this, decision-making processes remain protracted as companies continue to be cautious and review long-term strategies.

In Q3 2020 global office leasing activity was 46% lower than a year ago – an improvement on Q2 where volumes were down 58% on the previous year. Retail and hospitality, as the sectors most reliant on consumer spending and mobility, continue be the most significantly impacted. Meanwhile demand for logistics space has bounced back sharply, hitting record or near-record levels in several major global markets during the quarter. E-commerce companies have been particularly active, supported by increased consumer demand for online shopping.

Liquidity beginning to recover as investors adapt

Early indications point to the third quarter as an inflection point in real estate capital markets. Following the sharpest drop-off in transaction volumes in recent history, direct transaction volume declines decelerated during the quarter, down 44% from Q3 2019. Markets of scale with access to capital in Asia Pacific and Western Europe are leading the recovery. Although the U.S. is lagging, it remains the most active market globally with high investor interest. Record low interest rates, government intervention and a diversification of lender profiles continue to support real estate debt markets globally.

Transaction pipelines are rebuilding globally and are offering a sense of optimism for the quarters ahead. Investors remain cautious with many preferring defensive, income-oriented assets. Opportunistic and high-net-worth investors are poised to capitalize on market fragmentation while institutions remain critical of pricing. Markets are firmly in price discovery, and value transparency is expected to rise as activity steadily increases.

Key sector highlights:
  • Investment: Liquidity beginning to recover as investors adapt to the ‘new normal’
  • Offices: Despite a pickup, demand remains subdued
  • Corporate occupiers: Office requirements evolve as new ‘future of work’ scenarios emerge
  • Retail: Resurgence of COVID-19 stalls recovery in retail sales
  • Logistics: Robust activity as e-commerce drives demand for logistics space
  • Hotels: Hotel markets navigating uncharted waters amid uncertainty
  • Living: Continued resilience as stable cash flows attract investors

Please visit www.jll.com/gmp to explore the Global Real Estate Perspective website and data visualization tools.

Global Real Estate Perspective is JLL's regular view on the impact of economic forces on property markets worldwide. It is a unique combination of updates from professionals on the ground and the insights of our leading research organization.

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