Europe commercial real estate outlook: Near-term uncertainty to prevail with recovery on the horizon

Despite the severe impact on economic activity triggered by the COVID-19 pandemic, the European commercial real estate market is well-positioned for a recovery, with investment volumes expected to return to pre-pandemic norms by 2022, according to the EMEA Real Estate Market Outlook 2021, published today by global real estate advisor CBRE.

CBRE predicts euro area GDP will contract by 7.3 percent in 2020, before recovering by 4.6 percent in 2021, assuming the lockdowns ease and a broad-scale vaccination becomes available. Short-term interest rates are not expected to rise until 2023, and CBRE expects monetary policy to remain very accommodative for at least the next 18 months, which is positive news for the real estate market.

CBRE forecasts aggregate European commercial real estate investment to fall by 25 percent in 2020, increase by between 5 percent and 10 percent in 2021, and return to pre-COVID norms by second half 2022, providing the current vaccine timelines rem