Research

Global Market
Perspective and
Global Capital Flows,
May 2020

JLL’s latest Global Market Perspective and Global Capital Flows looks at market dynamics during the first quarter and the impact of COVID-19

May 06, 2020

The COVID-19 pandemic is having a huge impact on the way people live and work and uncertainty is now becoming part of the ‘new normal’. The flow-through effects to the real estate market are undeniable and the full impact is yet to be reflected in quarterly performance data.

The retail and hospitality sectors were the most immediately hit with lockdowns and travel restrictions curtailing demand. Global office leasing activity was 23% down on Q1 2019, while demand for logistics space was also lower despite a spike in short-term requirements linked to the immediate impact of the pandemic. Businesses are now starting to prepare for market re-entry, and the safety and wellbeing of employees is a key focus.

Volatility and uncertainty are impacting real estate investment. REITs were among the first to experience declines, and direct investment in global commercial real estate decreased by 5% year-on-year in the first quarter. Capital flows varied by region, broadly tracking the evolution of the pandemic, and favoured defensive sectors. Despite ample liquidity on the sidelines, the effects of the COVID-19 pandemic will be realized in the short term and will result in a drop-off in capital flows into the sector. However, the overall trend has been for higher allocations to real estate, and we see no reason for this trend to reverse given the portfolio diversification benefits of the sector.

Key sector highlights:

Global Capital Flows: Volatility and uncertainty impact real estate investment

Corporate Occupiers: Operational resilience will be key for recovery

Offices: Global office demand slows amid uncertainty

Living: Defensive characteristics support resiliency

Logistics: Occupier demand on hold, but some sectors buck the trend

Please visit www.jll.com/gmp to explore the Global Market Perspective website.

Global Market Perspective is JLL's regular view on the impact of economic forces on property markets worldwide. It is a unique combination of updates from professionals on the ground and the insights of our leading research organization

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