PART 1 – What will be the consequences of Covid-19 on the Belgian real estate markets? | Written by Cédric Van Meerbeeck

At the time of writing, Covid-19 is part of everyday life. The virus has taken over the minds of people, had a dramatic impact on the stock exchange and is also making a serious dent in the economy, to which the real estate sector belongs. The situation is evolving quickly. Over the last several days, governments, communities, employers, and citizens all over the world have taken extraordinary actions to contain the pandemic. Social distancing, working remotely, travel restrictions, and physical stores being closed for an unknown period of time are some of the measures affecting the global economy and the real estate industry.

COVID-19 updates and insights from Cushman & Wakefield

Our different teams, both globally and locally, are following the situation closely and put all their efforts and expertise to provide appropriate solutions. At the international level, a new landing page has been created and will be updated on a frequent basis.

According to our 23 March webinar (Covid-19: Implications for real estate investors and occupiers), the global economy will be severely challenged in Q2 though there is a consensus view for a rebound in the second half of the year. Of course this is dependent on how long the crisis lasts.

In Belgium however, the picture for 2020 is still very uncertain though latest forecasts suggest a GDP decline of 0.6% for the full year (and a 1% growth in 2021) while governments are stepping up support.

The ECB is ramping up € 750 billion in quantitative easing aimed at Eurozone sovereign and corporate debt and Eurozone members are ramping up fiscal policy such as aid to SMEs, deferral of tax payments, guarantees…


Impacts on the real estate sectors

At the time being and given that most commercial real estate metrics are reported quarterly, there is limited official data to gauge the impact of COVID-19 on the property markets. Clearly the most visible impact has been on the hospitality and retail sectors. With physical stores now closed for an unknown period of time, we observe an even stronger shift to online retail. For example, Amazon is hiring more than 100,000 people around the globe. Or Coolblue, one of the largest webshops in the Netherlands and Belgium, is experiencing impressive growth in Belgium.

Recessionary conditions will have an impact on the coworking sector.  Whilst the flexibility is appealing to many, they are naturally vulnerable in the short term. As companies review relocation processes and planning there may be requirements for additional space at short notice. Data centres seem to be the only ones not negatively impacted by Covid-19. Indeed, the huge volume of online schooling, the number of people working at home are increasing the demands on capacity and bandwidth. The industrial sector is also less impacted despite supply chain disruptions.

On the investment market, there is an important problem according to Marc-Antoine Buysschaert, Head of Capital Markets Office Belgium.

No more visits are being made and the symbolic handshake to seal a deal can no longer happen. People are avoiding physical contact as much as possible. The consequence is that it is almost impossible to start any new sales campaigns. Only the ongoing case files that have already made sufficient progress can be completed. Nevertheless, we will experience our first pitches by Skype and the start of a new due diligence in the coming days, so activity is continuing.

Marc-Antoine Buysschaert, Head of Capital Markets Office Belgium

Furthermore, local players, who know the market and the buildings, can gain an advantage over their foreign competitors who are now dropping out in hordes. If you can act fast and are prepared to take a certain amount of risk, you might be able to do a great deal. Although cases like these will be restricted to the assets of owners in situations where they are forced to sell. In other circumstances, the case files will simply end up suspended for six months.

On the other hand, we expect the demand for core product to be even greater in the coming months, so there could be even more pressure on yields. In the current circumstances, looking at the situation objectively, real estate will remain a class of assets that is relatively crisis-proof and less volatile.

Our C&W experts at your service even during these special times

As the context is evolving constantly, all our teams are joining efforts to get a more global view of what is happening around the globe in order to provide you with the best answers.

So, stay tuned for further updates on the consequences of the Covid-19 on the Belgian real estate markets. See how our teams are adapting to these new conditions! You could also learn more about the development and implementation of our most innovative solutions to help you in your real estate decisions. We help you to be prepared for what’s next.  

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