The COVID-19 pandemic is now a truly global phenomenon with 2.6 billion people (a third of the world’s population) now living under some sort of lockdown quarantine. The short-term human and economic impact is undeniable as people stay home, offices and shops close, and production stalls. Once the risk to human life has reduced and steps are taken back toward a fully productive economy, it is worth spending some time envisaging what this ‘new normal’ might look like. China is offering us some visibility on what this might be.
The level of uncertainty in the economy is currently at an all-time high with the trajectory of the recovery difficult to forecast. Although there has been no global joined-up policy response, individual countries have taken major steps to try to cushion their people and economies through this difficult period. We look to the economic outlook and policy steps, but would advise against putting too much weight on a specific-point forecast until the future pathway becomes clearer.
In the real estate sector, we can see that the pandemic has accelerated some trends already in evidence, whereas other trends may reverse. For example, demand for online shopping has increased and will likely continue, while the ongoing trend for the densification of work and living space is now under scrutiny. Across sectors these trends differ and have varied implications for real estate demand. We examine each sector to see what their future characteristics may look like.
For our clients we continue to monitor the rapidly evolving situation and have compiled an assessment of the longer-term structural changes that may come out of the pandemic, as well as an economic update and some thoughts on what our ‘new normal’ might be.