Logistics a bright spot amid falling global property transaction volumes: Savills

/ EdgeProp Singapore
April 9, 2020 7:58 AM SGT
Source: Savills Research
Amid falling real estate transactions worldwide, logistics remain a bright spot, with 57% of markets recording either no change or rises in transaction activity, as opposed to 43% seeing falls, says real estate consultancy Savills in its global market sentiment survey.
Transactional activity has been one of the most immediate casualties of the disruption caused by Covid-19, as buyers and sellers take stock and await greater market clarity, says Savills. A decline in transaction volumes were reported across 62% of all real estate sectors worldwide.
In the office market — the largest real estate sector — a moderate fall in office transactions has been the most common result, reported in 45% of countries.
Unsurprisingly, the steepest falls in transaction volumes were in retail, down in 82% of countries surveyed. Hotels suffered from severe contractions in occupancy levels as global travel has been shut down across most countries. Transaction activity for that sector fell in 84% of countries.
Savills surveyed 24 countries for the results from March 27 to 31, taking into account the current market conditions and the aggregate of all countries and sectors.
When it comes to real estate debt, the global picture is mixed. European and North American countries reported the tightening of availability and worse terms, most notably in the US and the UK. Meanwhile. availability and terms remain favourable in emerging markets such as Indonesia, the Czech Republic, Taiwan and the Middle East.
Source: Savills Research
Occupier terms more favourable
Despite the majority of companies implementing work-from-home directives, Savills finds that office space demand has yet to be impacted as severely. A moderate fall in demand was reported by 70% of countries; just 13% of countries stated a sharp fall.
Likewise, demand for the residential sectors has fallen moderately.
Occupier demand for logistics has once again, bucked the trend, benefitting mainly from an increased demand from food retailers.
Occupier demand in the hotel sector has been hit hardest — 95% of countries reported sharp falls as international travel and domestic lockdowns prevail across the globe. Retail paints the same picture, with 74% of countries experiencing large declines.
Source: Savills Research
The change in demand has yet to translate to rental values, which remain unchanged in 51% of countries. The exceptions are the retail and hotel sector, in which a respective 30% and 63% of countries reported sharp declines in rents.
Ironically, the change in market sentiment has translated to beneficial terms for retail tenants, with favourable terms reported in 86% of countries. In comparison, just over 50% of countries reported favourable terms for office tenants, while 23% of countries experienced similar sentiments in the logistics sector.