Without a vaccine or successful treatment for COVID-19, the recovery is likely to be slow and pro-longed. In the worst case scenario a second outbreak could result in 4 more years of economic decline.
Risk free rates are near zero and equity markets have bounced back strongly. Liquidity for direct real estate is weak. But publicly traded REITS have successfully raised equity for investment in logistics.
All Property capital values in the UK’s direct real estate decreased by -3.6% in Q2 and are down 6.2% since the start of the year. But the pace of decline is shallower than at a similar stage in the GFC.
Cluttons central forecast indicates that capital values could fall by -13% over the whole of 2020 giving a total return in the current year of -10% and an income return of 3% which reflects an element of missed rental payments.