Savills has revealed that 67% of countries have seen a “moderate negative impact” in their transactional and occupier markets amid the ongoing pandemic.
In its first of a series of global sentiment surveys, the group also found that 29% of countries cited a “severely negative impact” to real estate markets in light of the ongoing coronavirus crisis.
The Savills Global Market Sentiment Survey examined market conditions across 24 countries between 27 March and 31 March 2020, a time when the impact of the virus was accelerating across the globe.
Capital markets transactional activity was found to be one of the “most immediate casualties”, with falls in transaction volumes reported across 62% of all real estate sectors globally.
The sharpest falls were seen in retail, with activity down in 82% of the countries surveyed, while hotel transaction activity fell in 84% of countries.
Meanwhile, office space demand “hasn’t been severely impacted”, with a moderate fall in demand reported by 70% of countries.
Demand in the residential sectors has also fallen moderately, though the hotel sector has been “hit hardest” with 95% of respondents reporting sharp falls in demand in their countries due to travel and domestic lockdowns.
Savills said that the impact of changes in demand was not yet realised in rental values, which were reported unchanged in 51% of countries. In retail and hotel sectors, however, 30% and 63% of countries reported a sharp fall in rental values, respectively.
Paul Tostevin, director in Savills World research team, said: “Our survey is based on the sentiment of my research colleagues around the world who are talking to a range of clients on a daily basis.
“They report that disruption associated with Covid-19 is having a profound impact on global real estate: overall, 67% of countries report a moderate negative impact, while 29% cite a severely negative impact.”
He added: “In the short term we expect to see capital values and rents follow the falls seen in transaction activity and occupier demand.
“Covid-19 remains a near term challenge, but certain trends, such as the shift to online retail and changing working habits may be accelerated. This could have long term implications for markets as a whole.”
Mat Oakley, head of UK and European commercial research at Savills, said: “In the UK and Europe our experience so far is that under-offer deals have proceeded but most new deals are unlikely to be able to enter the pipeline for several months to come.
“In terms of buyers, core investors will remain motivated and there’s likely be a surge in demand from opportunistic investors. With all but essential development grinding to a halt, there’s likely to be a future shortage of supply.”