Expectations of normality within a year

Readers of PropertyEU have delivered their latest assessment of the market.

Hundreds took part in the latest PropertyEU Market Barometer – the third since nations adopted a lockdown policy.

There is a sign that a little bit of confidence might be returning to those in the European real estate industry. Asked the usual question, ‘How strongly concerned are you about the impact of coronavirus on your job and/or firm?’, the average response was a ‘6’. That is down from a ‘7’ that readers have posted twice in a row up until now.

The vast majority want to resume their office-based working life. Over 70% said they were ‘keen’ or ‘very keen’ to resume; 23% were ‘neutral’; 10% unkeen; and 2% very unkeen.

The PropertyEU Market Barometer 3 used questions that readers had asked us to put to their peers. As ever, the answers were illuminating.


Asked when will the market resume to normality, just 2% said 1-3 months. Some 18% believe normality will be restored in 3-6 months; 24% in 6-9 months; 24% in 9-12 months; and 31% +1 year.

That means almost a third of people are working on a feeling that the market will not return to normality for at least a year. On the other hand, two thirds say it will be normalised within 12 months.

Perhaps strongly linked to these guestimates is how tenants and landlords will perform.

Lack of confidence in speed of help

Asked how confident they were in government financial stimulus leading to cash-in-hand quickly enough, on a scale of 1-10 readers said only ‘4.5’. This indicates worries over the financial predicament of tenants but also perhaps of property owners too.

Next, when asked to what extent they believed problems between landlords and tenants were yet to fully materialise, 71% said problems are still down the road.

There is some confidence in banks working in agreement with real estate borrowers on solutions to debt repayments, but not a huge amount. Asked on a scale of 1-10 to what extent they believed banks and landlords were working in agreement, they said ‘5.5’.

Concerns or challenges

As always, the open box questions asking respondents to state their primary concern or opportunity at this time led to numerous pointers as to how market participants feel. With only a few exceptions, subscribers overwhelmingly noted their concerns rather than opportunities.

Comments included getting deals done, keeping tenants whatever it takes, underestimation of economic carnage ahead, inconsistent approaches by European institutions and governments, recapitalisation of tenants’ operating businesses, banks failing to step up to the challenge, cross-border travel restrictions, and unemployment.

One reader said, ‘Uncertainty regarding trends in long-term office demand.’ 

There were hundreds more comments besides.

Europe recovery threat

Answers are provided anonymously. One reader said their primary concern was a US and China slowdown becoming a major headwind for Europe’s recovery. The reader continued, ‘At a local Europe level, EU and UK government debt and funding is a concern. Any further delays in negotiations on Brexit will further dilute UK and European recovery.’

Another was worried about understanding tenant defaults and what guidance could be given to investors about likely distributions over the next four quarters.

In logistics, a reader said pricing had been driven by a wave of Asian capital but now this was on hold.

Double dip

A second spike in infections is worrying readers as well. One reader quipped, ‘SURVIVING!’ as their biggest concern.

There were too many comments and points to list here, but it is clear that while some might sense an opportunity, this will depend on price discovery.

Said one subscriber, ‘We see new business opportunities such as digitalisation and potential chances to acquire assets or businesses at a more adequate value.’

Another said there was the possibility of land prices reducing hence more developments being possible.

We thank our readers for taking part and guarantee that each and every comment has been read. These inform us of questions for the next survey – PropertyEU Market Barometer 4 - and of themes you want our editorial team to address.




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