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Global Real Estate Market Outlook 2020 Midyear Review
August 4, 2020

In the past two U.S. recessions, multifamily rents declined less and recovered faster than those of other asset classes. CBRE expects a similarly solid performance throughout the COVID-19 downturn, particularly in the less mature EMEA markets, that will boost investment allocations to the sector.


Substantial job losses in the U.S. and very high unemployment (13.3% in May) led to a significant decline in multifamily demand and rents in Q2. Effective rental rates (including rent concessions) fell an average 1.0% in Q2.

From the cyclical peak in Q3 2019 to the expected trough of the market cycle in Q4 2020, the average rental rate should drop by 8.8% and the vacancy rate should increase by more than 3 percentage points. Most of the deterioration in market performance will occur in Q2 and Q3. Steady recovery is expected through 2021 and full recovery by early 2022.

A high level of unemployment brings a degree of uncertainty about the multifamily outlook but the same was true during the Global Financial Crisis, after which demand grew strongly.

So far, weakening fundamentals have not had much impact on the multifamily property market. Mortgage delinquencies, defaults and requests for forbearance were minimal in Q2. The only notable increase has been for small multifamily assets (less than 50 units).

In terms of investment, 2020 began strongly with $39.8 billion of total multifamily investment in Q1, up 2.9% year-over-year. Sales activity declined significantly in Q2, though did not totally halt given the large capital pipeline for financing. Private buyers stayed in the game, while public companies, international capital and institutional buyers moved to the sidelines.

The government-sponsored agencies (Fannie Mae, Freddie Mac and FHA) remain very active, giving multifamily a significant advantage over other asset types. Banks and life companies have also stayed active in financing multifamily, though are less aggressively seeking business.

Investor appetite for multifamily product remains high. Once rents stabilize by the end of the year, investment will steadily rise. Total investment volume for the year, however, is expected to be half of last year.


Source: CBRE Research, Real Capital Analytics, Q2 2020.


Europe’s multifamily sector saw record investment of more than €15 billion in Q1, more than double the Q1 volume of a year ago and boosted by several large portfolio trades. In addition to continued investment in well-established multifamily markets like Germany, several transactions occurred in relatively new markets, such as Heimstaden’s €1.4 billion acquisition of the Residomo portfolio in the Czech Republic.

Although the widespread shelter-in-place rules hindered new sales, many of those that were already underway have proceeded to closing. Nevertheless, investment activity declined in Q2. Current forecasts are for investment volume to fall this year, followed by a modest 2% increase to €53 billion in 2021 and a more significant rebound from 2022 onward.


Pricing for stabilized multifamily investments in Europe has remained largely stable over recent months. This is particularly evident in the more active and established markets of Germany, the Nordics and the Netherlands. Rent collection rates have been generally stable. For example, Grainger PLC reported a 94% rent collection rate in H1 its U.K. properties, while Germany’s Vonovia reported a 99% rent collection rate in April.

There may be short-term risks to rents as some COVID-related government stimulus measures end. The sustainability of rents in the medium term will clearly be scrutinized, particularly in markets where unemployment remains high. Nevertheless, in many core European markets, residential rents should perform well over the medium and longer term, particularly in those markets that are undersupplied. However, more conservative rent growth projections, particularly for non-core assets, combined with higher financing costs may lead to a mismatch in pricing expectations of buyers and sellers.


Source: CBRE Research, Q2 2020.

For the remainder of this year, investors likely will primarily target existing properties with high occupancy and sustainable rent levels, as well as forward funding developments in well-established residential locations. The flow of new supply should begin again in Q3. High-quality assets will continue to attract investors and support core-asset pricing.


Residential property markets are seeing early impacts of COVID-19. For example, in the U.K. there has been an 80% increase in searches for garden apartment rentals. The pandemic may lead to more people working from home (WFH) as employers adopt a hybrid model (see Figure 10). Current location preferences are largely dictated by employment prospects, with well-established trends of migration to cities and surrounding commuter hubs by professionals. However, WFH means employees are less geographically constrained, especially as companies look to add satellite or suburban locations (see Occupier Section). While cities won’t lose their wider appeal, particularly for young professionals, WFH may deepen the “commuter hubs” as households that are less constrained by travel time look further afield. The layout of homes also will change from the need for more designated office space. A more flexible approach will be required of multifamily housing operators to appeal to a broad range of occupiers.

Global Real Estate Market Outlook 2020 Midyear Review

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Richard Barkham, Ph.D.
Global Chief Economist, Head of Global Research & Head of Americas Research
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Spencer Levy
Global Chief Client Officer and Senior Economic Advisor
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Dr. Henry Chin
Global Head of Investor Thought Leadership
& Head of Research, APAC
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Jennet Siebrits
Jennet Siebrits
Executive Director, Head of UK Research
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Jeanette Rice
Head of Multifamily Research, Americas
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