Potential impacts of COVID-19 on EMEA real estate

The general consensus is that COVID-19 has not yet reached its peak and will continue to spread. Several cases have been confirmed across Europe in recent weeks. The net drag in European GDP growth must be limited if global supply chains are to be temporarily disrupted. However, recent developments, such as the cancellation of major trade shows as well as travel restrictions, represent an increased risk of a short-term downturn. The countries most at risk of supply chain disruptions are Germany and France, Italy and Spain. They are highly exposed to sectors related to cars, machinery and chemicals. Hotel and retail sectors are primarily affected by travel restrictions and fear of COVID-19. While property yields may be slightly affected in the near future, the long-term outlook remains positive. The volume of investment is likely to be adversely affected, although it is traditionally low in the first quarter. Growing calls for an additional reduction in interest rates may further support low yields.