RCA Insights

Price Recovery and Liquidity Parallels From the GFC

By on April 2nd, 2020

During these early stages of the COVID-19 crisis, there has been a huge demand for data and analysis that can help people navigate these uncertain times. The RCA Capital Liquidity Scores illustrate how markets behaved with respect to capital liquidity during the last global downturn and can serve as a guide during this current period of heightened uncertainty.

Today’s turmoil is very different to the Global Financial Crisis, and it remains to be seen whether property pricing will be affected in the same way that it was during 2008-09. However, our analysis of global office markets shows that, on average, markets with higher average liquidity tended to be the first to recover their pre-crisis pricing. This should provide a level of comfort to owners in these markets and also justify the higher prices paid for assets in the most liquid markets.

Instinctively, the relationship between price recovery and liquidity makes sense: the liquidity scores reward markets which have larger investor bases, a heavy proportion of institutional capital and are attractive to cross-border buyers, and those that maintain these characteristics will see higher prices.

For example, Manhattan has proven to be the most liquid market globally and despite logging a peak-to-trough office price decline of 30% – higher than the average of the markets analyzed – it was one of the first to see prices recover that lost ground. Manhattan prices recouped losses in 66 months, ahead of U.S. cities with lower liquidity scores such as Chicago or Boston.

Interestingly, there are examples that do not conform to the trend. In the U.S., Austin saw a very sharp drop in office market liquidity during the GFC but prices proved to be stickier and managed to quickly recover. Structurally, the market is oriented towards private capital and attracts relatively little overseas money. This is penalized in our liquidity methodology, resulting in a lower score than the rate of rebound suggests.

These differences serve to illustrate another important point: that while there are commonalities and trends that work across multiple geographies and sectors and help with decision-making, every market is subject to different forces, whether political, economic or financial and understanding these is also a vital piece of the puzzle.


A version of this article appears in the newly-released edition of the RCA Capital Liquidity Scores. If you are a Real Capital Analytics client you can access the latest report and data file for 155 global markets on the RCA website. Readers who aren’t yet RCA clients can learn more about the advantages of RCA data, tools and reports by contacting us

Also on RCA Insights:

Commercial Real Estate Moves Into Uncharted Territory

Chart: APAC Risk Aversion Evident Before Virus Spread

Tom Leahy

Tom Leahy

Executive Director, MSCI Research

Tom leads European commercial property real estate research, focusing on capital markets. A regular speaker at industry and client events, he is the chief author of quarterly reports on European and global market trends and capital market liquidity. He joined MSCI in 2021 through its acquisition of Real Capital Analytics. Based in London, he previously he worked in research at two U.K. property consultancies. He holds a bachelor’s degree from Durham University.