According to initial assessments by the German real estate association IVD, the Corona crisis will affect the real estate market in the short, medium and long term. While the IVD is relatively optimistic about developments due to the Corona crisis on the residential property asset class, it sees negative effects in the office property and retail and commercial property asset classes.
According to the IVD, residential real estate is still considered a safe form of investment. Even if at the present time the purchase of residential real estate stagnates and neither small private buyers nor capital investors make large investment decisions, the IVD sees only a postponement of the purchase decision to a later time. Still and especially in times of crisis, according to IVD, the investment in a residential property is a safe form of investment. Because residential real estates and the demand for dwelling will always exist. Similarly, the IVD does not see any extreme price collapses in the residential real estate market. There may merely be a slowdown in growth in the area of rental and purchase prices.
In the office property asset class, however, a decline in the number of office employees and thus also in the amount of office space required is to be expected. According to the IVD, demand for office properties will fall, with the result that fewer leases will be signed and new tenants will no longer want to commit to lease terms of five or ten years. An even greater decline is expected in commercial real estate and retail. Due to the lack of turnover triggered by the Corona crisis and the continuing costs, there will be numerous insolvencies in the retail, restaurant and hotel sectors and thus vacant commercial space. It will also be difficult for landlords to conclude new leases, especially with longer terms.
Source: IVD
© photodune.net
