Publications

- April 1, 2020: Vol. 32, Number 4

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Ground-up economics: Uncertainties around COVID-19 loom, but ultra-accommodative central banks and occupancy gains should support a respectable year of real estate performance

by Indraneel Karlekar

The world economy, having started the year on a reasonably robust note, is facing a growing challenge from the spread of the novel coronavirus disease known as COVID-19. Risk assets have come under pressure as investors grapple with the extent of the potential damage caused by this new pathogen, though so far commercial real estate investment fundamentals have not materially shifted. In this environment of uncertainty, careful asset selection is even more imperative.

COVID-19 likely to impact growth but outlook for 2020 is unclear

The global economy is expected to slow at least in first half 2020, with economic output likely to diminish as a result of COVID-19. Given the uncertainties, we hope that the expansion will continue through the next 12 months but are prepared for a hit to growth. For real estate investors, an accommodative monetary policy environment, and reasonable occupier demand (because labor markets typically lag), should support income

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