After the exceptional challenges brought by covid-19, the distribution of a vaccine brings new hope for 2021. Sustained economic recovery is now on the horizon, led by advanced economies where vaccines are being introduced first. This should fuel wider real estate investor confidence.
Global GDP growth in 2021 is forecast to be the fastest in 40 years, according to Oxford Economics, albeit only enough to return global GDP to pre-crisis levels.
Many advanced economies have taken a ‘whatever it takes’ approach to supporting economies, with ultra-low interest rates and quantitative easing programmes. These low interest rates will support real estate investment into 2021. Unlike during the global financial crisis, banks today are less geared, while non-bank lenders have expanded significantly. This provides borrowers with greater options in the recovery.
In spite of near-term uncertainty, the long-term appeal of real estate has held for investors
Travel restrictions and broader economic uncertainty led to a fall in deal volumes in 2020. In the 12 months to November 2020, global investment volumes were down by 28% compared with the same period in 2019.
Not all sectors felt this equally. The industrial and residential sectors saw more modest falls in volumes, gaining market share to capture 21% and 28% of total investment, respectively (see chart). The resilience of these sectors in the face of structural change means that’s a trend likely to continue in 2021.
