Covid-19 pandemic might cause a "quick" global recession in 2020

Covid-19 pandemic might cause a "quick" global recession in 2020

This is one of the conclusions from Kevin Thorpe, Chief Economist and Global Head of Research at Cushman & Wakefield who, during last Monday’s afternoon, spoke to the world during the online conference "Covid-19: Implications for Real Estate Investors and Occupiers".

There are several economic indicators that show signs of the probable recession. Data from Oxford Economics shows that the Global GDP should drop significantly, and Europe will be no exception. For Kevin Thorpe «this will not be a recession like the one in 2001, nor like the one in 2008, but somewhere in between the two of them» in terms of economic costs and he further added that this year’s second quarter will be «ugly».

Purchasing operations should drop between 30% and 40% this year, according to the consultant, but not all real estate segments will react in the same way to this crisis. The hotel sector, which saw its occupancy rate drop around 70% worldwide is, according to Cushman & Wakefield, the most vulnerable, followed by retail, which saw a massive disruption due to the social distancing imposed by governments. Amongst the most resilient segments are logistics, which even saw a «strong» change in e-commerce and data centres. Then there are those segments which have some resilience, but are not immune, such as the housing segment, which saw «big pauses in house sales» and the office segment. Doug Harmon, Chairman of Capital Markets at Cushman & Wakefield, alerted for the impacts on alternative segments such as student housing, coliving and coworking.

The way investors deal with the pandemic might determine the future of the current economic situation, which is filled with uncertainty. Carlo Barel di Sant'Albano, Chief Executive, Global Capital Markets & Investor Services, Chairman, EMEA at Cushman& Wakefield, revealed that investors should respond to the current crisis in accordance with 3 well defined moments. First, efficient communication not just with workers, but also with the building’s occupants, should be assured by investors so that there is more protection for all parts. Then, there should be the management and mitigation of risk, by taking decisions over active transactions and, on the other hand, adapt and evaluate the current portfolio. Lastly, determine the risk profile and actively evaluate the investment strategy. What might be determinant, alerted Carlo Barel di Sant'Albano, will be «the right timing for each of these stages to be activated».

World Governments and the World Bank have also created responses to the current crisis, with restrictions to circulation and support to companies and to each country’s economy. The positive results of these containment measures carried out in the Asia-Pacific region are a fresh breeze for the mid-term predictions, bringing «hope» for next year to carry a «robust recovery globally».

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