RCA Insights

First Signals on Deal Activity Amid Virus Disquiet

By on March 13th, 2020

How is the coronavirus pandemic affecting transaction activity? That is the question commercial real estate market participants globally are asking Real Capital Analytics amid unprecedented current events.

Firstly, we should recognize that the time it takes to purchase real estate directly means that there is a structural lag: deals closing in the first quarter of 2020 will have started in the fourth quarter of 2019 or even earlier. That means it may take time for the current dislocation to impact transaction activity.

The phenomenon of COVID-19 is more recent in Europe and the Americas than it is in Asia Pacific. This is reflected in the charts above, which show cumulative activity recorded in the first eight full weeks of 2020 versus the same periods in 2018 and 2019.

Data indicates that for the first eight weeks of 2020 European activity is off 18% compared to 2019 and in the Americas deal volume is 10% higher. In Asia Pacific activity is 50% lower. (February deal volume data is a preliminary reading.)

Many of the networking events cancelled across the globe (such as MIPIM) have traditionally kicked off the sale processes and it remains to be seen how the curtailment of face-to-face meetings between brokers, buyers and lenders will impact transaction activity. We expect any disruption to be recognized in second quarter numbers in Europe and the Americas.

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Data analysis by Beatrice Ginieis

Real Capital Analytics clients can access the first full reading and analysis of U.S. transaction data on March 25 with the release of US Capital Trends. Interested to learn about becoming an RCA client? It’s easy to contact us.  

Also on RCA Insights:

The Show Must Go On: CRE in a Coronavirus Slowdown

Chart: Global Commercial Property Price Trends Since ’07

Simon Mallinson

Executive Managing Director, EMEA & APAC
smallinson@rcanalytics.com

Based in London, Simon Mallinson joined Real Capital Analytics in January 2013. Simon has board level responsibility for EMEA and APAC, with a particular passion for the continued development of RCA’s industry-leading client service and capital markets analytics.

Previously, Simon was Senior Director leading European Research at Invesco Real Estate. Prior to Invesco, Simon held a number of roles with IPD (now part of MSCI) in London and the United States. As Head of US Services, based in Chicago, he established IPD’s first North American office.

Simon is a Board Member of US association NCREIF, a member of RICS and is active across a number of other global real estate associations. He holds degrees from both Leeds and Manchester University, UK. Simon has set foot in 48 U.S. states and is looking for an excuse to visit Maine and Alaska.