IMF forecast of deep global recession will send investors fleeing the property market, say analysts
- The IMF’s recent prediction of a global slowdown worse than anything since the Great Depression will hit demand for real estate, says Knight Frank
- The economic downturn brought on by the coronavirus outbreak ‘will have a significant impact on deal volume in 2020’, warns property consultancy Cushman and Wakefield
The International Monetary Fund’s forecast of a deep global recession is likely to send investors fleeing the property market in the foreseeable future, analysts say.
The IMF said last week that the global economy would probably shrink 3 per cent this year, a much deeper slump than during the financial crisis in 2009 when growth contracted by 0.7 per cent. The downturn this year is likely to be the worst since the Great Depression almost a century ago.
The grim outlook means investors will be cautious, dimming demand for real estate.
“Unsurprisingly, the latest IMF forecasts paint a challenging picture for Asia-Pacific real estate markets in 2020,” said Kevin Coppel, managing director for the region at Knight Frank.
“With growth expected to be in negative territory for most markets, there is likely to be a contraction in demand for commercial real estate, impacting vacancy rates and rents. A heightened level of uncertainty, as well as concerns about cash flow and supply chains, may also exacerbate the projected fall in demand.”
More mainland Chinese investors, for one, are reducing their investments this year. A survey by property consultancy Cushman & Wakefield found that nearly half of them were looking to cut the size of their investment in 2020, while only 13 per cent would be raising it. The rest – 39 per cent – was intending to keep the amount unchanged.
