Key Trends

KEY observations

1st April 2020

Colliers has collated key data to provide an outline of the measures that have been taken by governments across EMEA, to counteract the negative economic consequences created by the COVID-19 pandemic.
Please
see here​ for the full paper, including force majeure impacts and government support package details.

31st March 2020

  • Governments offering an effective People’s QE, however, the response across countries differs markedly in terms of the depth and breadth of fiscal support on offer. We will publish a summary of government packages on this microsite and what this means for leasing and capital markets – directly and indirectly. ​
  • Based on the packages announced to date, the UK, Netherlands, Germany and the Nordic countries have established the most comprehensive cover for businesses and households. Most importantly, businesses are directly supported with government funding to maintain ‘furloughed’ employees at a high proportion of their salary (typically 65%+), in addition to cash grants and tax deferrals.
  • Elsewhere the response is mixed, involving a combination of deferred taxes (VAT, corporation tax, business rates/local taxes), and social security contributions, plus cash grants for specific businesses. Diminished cashflow support for households will weaken the economic recovery rate, which is becoming visible. ​ This is generating a conflict across the EU with Germany and northern states rejecting calls for joint ‘Coronabonds’, or a common debt instrument to bankroll spending on healthcare and post-corona economic restructuring. The level of government debt to GDP, as of 2019 by country (below), highlights the dilemma.
  • Significantly revised economic forecasts are due out on April 1st. We expect a very sharp reduction in GDP for Q2, and 2020 as whole (-10%). The UK stimulus packages are worth an estimated 15% of national GDP for good reason. We also expect the divergence in recovery rates will also start to show up in the latest forecasts. Germany, which is highly export-oriented, is exposed to both supply chain disruption and weak global demand. As a result, the recovery may materialise slower than other European economies which will affect EU growth.

Capital Markets

  • Investors are generally well capitalised, have sensible leverage and are more prepared than they were before the GFC. This will contribute to a quick recovery when certainty returns. Investment Committees will be scrutinising the occupational market in greater detail going forward.

The Coronavirus Cycle

Global GDP/Investment Tracker

EMEA Economic Context

Government Stimulus Response

China is now ahead of the cycle, having put effective measures in place to quell the spread of the virus at the start of the outbreak, with active cases rescinding after week five. The European curve is looking a lot sharper, given the delayed government reaction across Europe. For over a week many national borders have been restricting travel and almost all countries have closed schools, universities, restaurant, bars, gyms and ‘enclosed spaces’ to encourage social distancing and cap the spread of the virus. Italy is far ahead of the rest of Europe, with a peak in infections expected over the next 1-2 weeks across Europe. However, the peak coming with an evident delay in Europe compared to China, the initial expectation that the European outbreak can be managed down to a 3-month period to the end of May are already being revisited, with a recovery period up to six months now in the cards.

As global investment activity tracks GDP, this points to a reduction in volumes during 2020, with expectation of a recovery at end 2020 / H1 2021.

Even as global economic growth drops, economic output will remain robust supporting some activity short-term.

The forecast 2020 growth rates as of early March were depicting a contraction in activity relative to 2019 – for both employment and economic output. The latest forecasts as of 22nd March 2020 show a significant contraction in economic output for the year, with most national economies now pushed back to negative growth rates.

Government Debt % GDP

The level of government debt to GDP, as of 2019 by country (below), highlights the dilemma for governments in terms of the stimulus packages they can provide. ​

If you have any questions, please get in touch with the contacts below or email us at emea@colliers.com.

Director | Head of EMEA Research
Director of PR & Communications| UK & EMEA

#ColliersEvent | ​ Contact:  events@colliers.com

DISCLAIMER
The analysis and finding reported on this microsite is based primarily on Colliers International data, which may be helpful in anticipating trends in the property sector. However, no warranty is given as to the accuracy of, and no liability for negligence is accepted in relation to, the forecasts, figures or conclusions contained in this report and they must not be relied on for investment or any other purposes. The outbreak of the Novel Coronavirus (COVID-19), declared by the World Health Organisation as a “Global Pandemic” on the 11th March 2020, has impacted market activity in many sectors, creating an unprecedented set of circumstances on which to base a judgement. ​ This report does not constitute and must not be treated as investment or valuation advice or an offer to buy or sell property. Given the unknown future impact that COVID-19 might have on real estate market supply, demand and pricing variables, we recommend that you recognise that our research and analysis is far more prone to market uncertainty, despite our endeavours to maintain our robust and objective reporting.