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Global MarketFlash:
COVID-19 Weighs Heavily on Q2 Commercial Real Estate Investment

5 minute read time
July 31, 2020

Executive Summary

Much weaker commercial real estate investment volumes in Q2 reflect the impact of lockdown measures and border controls enacted to combat the COVID-19 crisis. Global investment volume fell by 57% year-over-year to $109 billion, the lowest quarterly total since 2010.

The Americas region was hit the hardest, with a 70% year-over-year decline mainly due to fewer large portfolio transactions and the absence of entity-level deals. EMEA and APAC had 38% and 46% declines in total volume, respectively, as uncertainty and restrictions hampered investor sentiment.

The strength of Q1 led to a relatively moderate 21% decrease in H1 2020 investment volume. Q2 may have marked the low point as countries reopen their economies and business activity resumes. Investors are looking for a gradual recovery beginning in H2 2020.

Figure 1: Global Commercial Real Estate Investment


Source: CBRE Research, RCA (Americas), Q2 2020.


Americas investment volume fell to $43 billion in Q2, the lowest level since 2010 and only 30% of the Q2 2019 volume. The U.S. accounted for 93% of the region’s investment activity. The Americas saw a 77% decline in portfolio sales year-over-year and had no entity-level transactions.

Industrial assets demonstrated resilience despite having a 50% year-over-year decline in Q2 investment volume. Two Prologis M&A deals in Q1 pushed industrial investment up 17% year-over-year in H1 2020. Excluding the two Prologis transactions, industrial investment declined by 18% in H1, still outperforming all other sectors in the same period. Retail investment volume fell by 74% year-over-year in Q2, followed by a 72% decline for both the office and multifamily sectors. Hotel assets were the most severely impacted, with a 90% drop in volume and the lowest quarterly total since 2003.

Americas’ city level decline in investment activity seems correlated with the level of new COVID-19 cases (Figure 2). Cities suffering from the worst infection rates saw some of the steepest declines in Q2 investment volume, including Seattle (-84%1), Orlando (-81%), Los Angeles (-80%) and New York (-71%). The continued surge of COVID-19 cases in the U.S., Brazil and parts of Latin America will hinder the rebound of investment activity in those areas.

If testing levels, tracking and treatments improve as expected in H2 2020, so will business confidence and investment activity. Increased clarity on pricing and rental rates should tempt discount-seeking investors to re-enter the market.


EMEA investment volume fell by 38% year-over-year to $48 billion in Q2—a significantly less severe downturn than for other world regions and accounting for 44% of total global investment volume in Q2 (relative to its average share of 33% over the past five years). EMEA’s Q2 slump was fully offset by a record Q1 this year, resulting in a 2% year-over-year increase in H1 2020 investment volume.

Figure 2: EMEA & Americas Investment Activity Correlates with COVID-19 Control


Note: APAC as defined here includes Australia, Cambodia, China, Guam, Hong Kong, India, Indonesia, Japan, Malaysia, Maldives, New Zealand, Philippines, Singapore, South Korea, Taiwan, Thailand, Uzbekistan and Vietnam.
Source: CBRE Research, RCA (Americas), European Centre for Disease Control, Q2 2020.

Economic uncertainty will continue to temper investment in 2020 but signs of recovery were seen in June. The industrial (-34%) and multifamily (-29%) sectors remain attractive, with core industrial yields expected to reach record lows. Value-add office assets are vulnerable to repricing. Retail investment had a smaller-than-expected decrease of 23% in investment volume year-over-year, thanks to large-ticket deals in Germany and France. Hotel investment volume fell by 83% to its lowest quarterly level in nearly a decade.

Germany (-20%), Netherlands (-23%) and Poland (-22%) saw relatively modest year-over-year declines in Q2 investment volume compared with the rest of Europe. Switzerland (+174%) bucked the trend and nearly doubled its volume year-over-year, in large part because Thailand’s Central Group and Austria’s Signa acquired Swiss department store chain Globus. The U.K. (-56%), France (-57%) and Sweden (-45%) were hit hard by the pandemic and registered sharp declines in Q2 investment volume. As European economies move ahead with staged reopening, further rebound is expected in H2 2020.


APAC investment volume fell by 46% year-over-year to nearly $18 billion in Q2, the lowest quarterly total since 2012. The resurgence of COVID-19 cases in China, Japan and Australia, and the ongoing first wave of infections in India, raised concerns over the region’s economic outlook and lengthened the recovery timeline of investment activity.

Following the global trend, APAC industrial investment volume decreased by only 17% year-over-year in Q2 and by 8% in H1. Office investment volume, which accounted for 56% of all APAC transactions in Q2, fell by 46%, as investors turned to smaller deals or partial stakes in highly priced assets. The retail and hotel sectors remained under pressure, reporting their lowest quarterly totals since the Global Financial Crisis. However, retail assets with residential components showed improved investor interest. In the Pacific, domestic investors showed interest in big-box retail assets with long-term leases from grocery tenants.

Among the three regions, APAC had the smallest quarter-over-quarter decrease in Q2 investment volume at -23%. Sizeable deals in Australia (-21%) and South Korea (-36%) helped limit their declines in volume. Greater China2  (-49%), Japan (-48%) and Singapore (-57%) fared worse due to reduced activity in gateway markets like Tokyo and Beijing. Investors appear willing to re-enter the market if price discounts are provided.

2020 Forecast

CBRE’s full-year global investment forecast has been adjusted down slightly to -38% from -32% due to the resurgence of COVID-19 cases in the Americas, which could delay economic recovery. A global rebound in investment activity is still expected to begin before year-end given the general improvement in containing COVID-19.

Figure 3: Total Value of Commercial Real Estate Investment Transactions


Source: CBRE Research, RCA (Americas), Q2 2020.
*Values include entity-level transactions and exclude development sites.
**In order to calculate global totals, local currency values are converted to US$ using the most recent quarterly FX rates of Q2 2020. This calculation eliminates currency impacts over time and generates the same growth rates as in local currencies.


The seasonally adjusted volumes are shown in Figure A1. These give a more accurate picture of transaction activity from quarter to quarter across any one year.

Figure A1: Seasonally Adjusted Investment Volume


Source: CBRE Research, RCA (Americas), Q2 2020.

1 Year-over-year change in fixed exchange rate in Q2, unless otherwise noted.
2 Including Mainland China, Hong Kong and Taiwan.

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Richard Barkham, Ph.D.
Global Chief Economist, Head of Global Research & Head of Americas Research
+1 617 912 5215
Wei Luo, Researcher
Wei Luo
Global Associate Research Director
Capital Markets
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Daniel Chang
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