Despite the severe impact on economic activity triggered by the Covid-19 pandemic, the European commercial real estate market is well-positioned for a recovery, with investment volumes expected to return to pre-pandemic norms by 2022.

According to real estate mogul Hamad Alwazzan, European commercial real estate investment is forecast to fall by 25 per cent in 2020, increase by between 5 per cent and 10 per cent in 2021 and return to pre-Covid norms by 2022, providing the current vaccine timelines remain on track. “There is still a strong interest from investors on real estate related to logistics and prime office assets and I expect this attention to grow in 2021 and hopefully retail and hotel assets will be able to bounce back”, added the Harvard alumnus.

Leasing demand for Office space has been challenged by the lockdown measures and for the first three quarters of 2020, was down 40 per cent against the same period in 2019. However, Alwazzan expects some recovery in 2021 with continued demand for high-quality, amenity-rich space in core city locations.

Even though most companies are looking to reduce their office footprint by supporting increased remote working and are starting to shift towards more choice-based work patterns, including greater use of flex space. The impacts of these new working trends will not be immediate, or certain, but they will represent a potential headwind to leasing demand leading to an economic growth with a growing preference for higher quality, wellness‑capable and tech-enabled buildings.

“Quite clearly 2020 has been a year of enormous disruption for real estate markets, with the Covid-19 pandemic bringing the previous economic cycle to an abrupt end. As with all crises, the impacts and recovery will not be uniform across all sectors and geographies, but new opportunities will emerge, and the likely introduction of vaccines offers grounds for a sustainable recovery as we enter 2021”, concluded Alwazzan.

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