From a transactional side we are seeing decisions being deferred until more is known about how the Government and the banks are going to react. So far we have had several new packages announced by the Government and measures put in place that only two weeks ago would have seemed implausible, however there have been less concrete measures from the banks. Any owners who have to refinance in the near future may find this challenging.

This slowdown is different, it hasn’t been caused by financial policy or a bubble but by circumstances out of our hands. Much of the uncertainty arises from the fact that no one knows how long this will last, but whether it’s over in six weeks, 12 weeks or six months people will go back to work and start socialising again. Once this happens there should be a spike in GDP, which means we could be looking at one of the best buying opportunities in real estate since the Global Financial Crisis.

The majority of deals that are advanced in due diligence are proceeding and banks do not appear to be changing the terms on these transactions. However, most transactions that were, or are, in the early stages of the marketing phase are being delayed due to travel bans, access to site visits and investors taking stock and monitoring the current state of affairs.  In the past week we have witnessed bids being received on assets but there will be delays to obtaining investment committee approvals.

Everything will come down to what the banks are going to do going forward. They are likely to be cautious and could raise margins on lending. Interest rates have been lowered, and in theory this could lead to yield compression, however there is no guaranteeing anything over the next couple of months.

With the current volatility in the stock market, several institutional investors may have to rebalance their portfolios, some of the retail funds are gating their funds but investors in every property sector will have to look at their portfolios in a very different way. What was previously an undoubted covenant will now be less certain.

If funds do decide to sell, they will have to assess which assets are liquid in the current climate and this landscape will have changed from a couple of months ago. They may have to decide to sell their more defensive assets.

Global capital flows are at different stages in general we are seeing caution from European and North America capital; however, Asian capital appears more positive as they move away from the peak of COVID-19 and returning to their offices. With current travel bans in the West this will still delay transactions, but their optimism is welcomed.