The real estate service provider CBRE ventures a forecast for the real estate market in 2021. Overall, a recovery is expected for the real estate market, provided that the lockdown measures can be relaxed next year.
Again more and higher real estate investments
The real estate service provider CBRE recently published its forecast for the real estate market in 2021. The company does not expect a drastic decline in rents, nor a rise in rental prices. CBRE is certain of one thing: in 2021, the European real estate market will go up thanks to the recovery of the overall economy. However, this is tied to the condition that the corona lockdowns are relaxed and vaccinations are made available to all.
In addition, the real estate market in 2020 was not as badly shaken as the rest of the economy by the outbreak of the corona pandemic. CBRE Head of Europe Continental, Jos Tromp, assesses the forecast as follows: “2020 was clearly a year of enormous changes for the real estate markets, as the COVID-19 pandemic ended the business cycle abruptly. As with all crises, the impact and recovery will not be consistent across sectors and regions, but it will also create new opportunities. Due to the foreseeable introduction of vaccines, we are assuming a sustained recovery from 2021 onwards. ”CBRE also expects property prices to return to pre-pandemic levels from the second half of 2022.
Logistics, Prime Office and Co. stronger
The reason for this is because property investor interest will pick up again in 2021 after plummeting a quarter in 2020, according to CBRE. In addition, CBRE assumes that interest rates will remain largely the same through 2023 and thus send positive signals for the real estate markets. Investments in commercial real estate, in particular, should recover again in 2021 after a decline in 2020 and increase by five to ten percent.
According to CBRE, however, the much-discussed break-ins in the hotel and retail sector should only be a short-term phenomenon. However, the interest of real estate investors would probably also focus on logistics, office properties in top locations and multi-family housing in 2021. PlanRadar, a construction management service provider, expects similar developments.
Hybrid office solutions
CBRE is forecasting a recovery for the office property market in particular. In the course of 2020, this fell by almost half, at 40 percent. However, this trend is not expected to continue in 2021, according to CBRE. Office properties in prime locations are still very much in demand. In addition, there is a shift in the office property market to very high-quality office properties with new IT standards and wellness.
It is also foreseeable that companies will increasingly commit to a combination of home office and office presence, which will lead to hybrid office solutions. According to CBRE, however, it is not yet foreseeable how exactly these will look. However, due to the increasing vacancy rate, including for office properties, prices are depressed and office space is available at lower rental prices than usual.
Retail real estate market continues to slide – also in 2021
Due to the increasing presence of e-commerce, the retail sector had to fight for its retail stores even before the corona pandemic. Due to the corona pandemic, the change has intensified, especially due to numerous lockdown measures. The future of retail is therefore critically dependent on the development of tourism and the return of workers to the offices. However, CBRE sees opportunities for the food retail sector in prime locations.
E-commerce stimulates interest in logistics real estate
While the future of e-commerce is still uncertain, e-commerce is bringing new investors to the logistics real estate market. CBRE assumes that the demand for logistics real estate will increase by 1.9 percent annually through 2024. This is due to the supply chains for e-commerce. In addition, CBRE predicts that more and more data centers will be built in Europe, a record year for data centers is expected for 2021, which is expected to be exceeded again in 2021.
Residential property prices will continue to stagnate
Deutsche Bank assumes that the Corona crisis will only have short-term effects on residential real estate and that demand will rise again from 2021. This is also to be expected through an expected increase in GDP in 2021. However, the price development for residential real estate could remain subdued in 2021, according to the Association of German Pfandbrief Banks. A forecast by bulwiengesa, Instone Real Estate and Warburg-HIH Invest Real Estate from the summer of 2020 expects developments similar to those of Deutsche Bank and CBRE.
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