The value of Europe’s listed real estate firms dropped by a third during the start of the year as the coronavirus pandemic began to spread.
The market capitalisation of the European listed real estate market stood at $382.5bn (£312.3bn) at the end of March, according to new figures from the European Public Real Estate Association, down roughly 32% from $563.8bn at the end of 2019.
Dilek Pekdemir, research manager at EPRA, pointed to the UK, France and Germany as among the “hardest hit nations”.
“The heavy losses can be seen as a product of the uncertainty across the region due to strict lockdown measures and restrictions on movement as a result of the Covid-19 outbreak,” Pekdemir said. “The sector faces difficulty right now, but could prove a good hunting ground for investors looking for high-quality, liquid assets at attractive prices, should lockdown measures prove successful and result in a significant bounce back.”
In the UK, the market dropped from $108.8bn at the end of December to $73.6bn. “Major declines in the UK’s retail sector and concerns over the relevance of prime office space during Covid-19 have seen the UK’s listed sector lose over a third of its total value this quarter,” Pekdemir said.
She added: “Since healthcare and logistics, as emergent sectors, have been viewed as safe havens by investors and provided portfolio diversification with higher returns, they look promising for long-term investment strategies and tactical allocations.
“While the impact of the pandemic on the UK listed real estate sector could be long-lasting, healthcare and logistics businesses offer a glimmer of hope to investors seeking attractive, liquid real estate investments during uncertain times.”
Belgium proved the most robust European market, dropping by only 15% quarter-on-quarter to $23.8bn.
“Belgium has proven to be the most resilient developed European market in the first quarter, having seen the smallest relative declines across Europe,” Pekdemir said. “The market is characterised by a unusual diversity of investment opportunities and strong healthcare and logistics sectors, which has seen Belgian real estate businesses maintain stable cash-flows that have been attractive to investors seeking safe assets.”
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