The COVID-19 pandemic continues to have a severe impact on European real estate markets. While the world has received a vital boost from the deployment of vaccines, most of Europe has been in a renewed lockdown over the late winter and early spring months. As a result, the recent economic recovery will undoubtedly be halted over the near term.

Pleasingly, many major government employment support schemes have been extended and the central bank response has been robust. These actions will provide some support for asset prices in the short term.

The pandemic has been felt differently across countries and sectors in Europe. Nations experiencing a deeper medical crisis, such as France, Spain, Italy and the UK, are suffering diminished confidence. For example, investment volumes in Spain have fallen 69 percent year-on-year, while numbers in Germany are, astonishingly, up 5 percent.

As the lockdowns continue, downward pressure on rental income is likely to weigh on cap