With global housing markets roiled by the Covid-19 pandemic, investors are weighing options in key residential hubs. One market on the radar is London. The United Kingdom’s capital entered the coronavirus-induced lockdown in a strong position. Last December’s election gave confidence to investors for the first time in several years. Prices and sales volumes had begun to rise in January and February – before the pandemic essentially closed the market. After the lockdown - the question was whether the market would recover. Since late May, all our indicators have shown a strong revival in demand and supply - with sales volume beginning to rise. Prices had fallen by around 5 per cent during the lockdown, but have since bounced back. The new UK stamp duty holiday - which runs until March 31 and which means anyone spending more than £500,000 (US$653,600) will save £15,000 in tax - has been a huge positive for the market - leading to a surge in demand. The overseas market has come back strongly - with 30 per cent of all transactions in prime London coming from overseas buyers since the beginning of July - up from the more typical 20 per cent. Indicators point towards a strong period for the London market over the next few months. Our expectation is for price performance to be muted at best for the rest of 2020, followed by a notable comeback in 2021 with growth of between 5 and 10 per cent. Bearing in mind in Hong Kong dollar terms the London market is currently priced just below 40 per cent of the level it reached in 2014 – the rationale for investment is clear. Looking across the world and not surprisingly, we expect most prime investment markets to see prices decline in 2020. However, one market which is likely to see continued growth this year is Lisbon. It has seen a demand boost from an expanded visa scheme - for which property investment is an acceptable strategy. With low entry prices and an investment migration option, this is a market to watch. Of the cities to see a decline in prime prices, those likely to be hit hardest are either emerging markets or cities that were already seeing weak price growth at the end of 2019. Key Asian markets we expect to see relatively large price falls this year include Singapore and Hong Kong. We predicted prime prices would rise by 3 per cent throughout 2020 in Singapore but the fallout of Covid-19 and the length of time the city has been affected, changes the prediction to a decline of 5 per cent. Singapore has, however, seen a very strong economic story recently - with positive noises from the financial sector - this has helped support the super-prime market here. The shift in the economic outlook is the main driver for market performance. In Hong Kong, for instance, in late 2019 the expectation for 2020 was growth of 1.5 per cent from the International Monetary Fund, which has been slashed to minus 4 per cent. Our expectation is that there will be a recovery in many major markets next year, although growth in prices is likely to be capped at 5 per cent. Of the US cities targeted by investors, Miami is likely to perform most strongly, the market was already strengthening last year, in part due to the SALT (state and local tax) deduction which heightened Florida’s appeal but the Covid-19 crisis has also underlined Miami’s lifestyle advantage. The lack of new prime supply in Los Angeles should cushion price falls there, while in New York , like London, we have seen prime prices decline in recent years and transactions were picking up early on in 2020. Critical to the prime markets’ recovery will be the relaxation of travel restrictions. We are beginning to see airports and airlines open up and this will aid demand. However, it is likely to be 2021/2022 before air travel returns to pre-Covid-19 levels. Thinking ahead - the main issues likely to be weighing on investors’ minds will be the cost of money - with rates set to remain at historic lows in most advanced economies - some investors are looking to take advantage by refinancing or releasing equity to buy elsewhere. The dollar remains strong and this provides the US but crucially, Hong Kong and many Asian market buyers with an advantage. I’m positive about the outlook for the market. I think it’s clear the recent uptick in markets like London is more than just a bounce. There will be risks down the road and the pandemic isn’t beaten. But, we are in a world where low interest rates will remain in place and demand will be supported by investors looking to secure income-producing assets for the long term. Liam Bailey is global head of research at Knight Frank