Investors are expecting only a slight decrease in the demand for offices this year and around half of them say they expect a dip of only around 10%.
Pricing in the office sector is also expected to remain stable and while 99% of investors are looking for discounts for hotel purchases, 95% expect discounts on high street retail, a somewhat smaller proportion, 39%, are looking for discounts on prime, stabilised office assets.
The picture is less bright for value-add office opportunities where 86% of investors are looking for discounts, however.
These findings appear in CBRE’s Investor Intentions Survey 2021.
“Given the uncertainty around the pandemic and its impact on economic and real estate fundamentals, investors showed a preference for core strategies,” the survey report points out.
CBRE does also point out that the search for yield is driving interest in value-add opportunities and alternative real estate assets. Student housing and senior housing are the categories that top that list.
60% of respondents to buy more in 2021
Overall, the survey found that almost 60% of respondents expected to increase acquisition this year and more than two-thirds expect purchasing to be greater or equal to their activity last year. This has lead CBRE to predict a 5% year-on-year increase, “provided vaccination campaigns remain on schedule”.
The survey found that investors expect Germany, The Netherlands and France to recover from the current recession fastest.
Meanwhile, the firm said London was named “the most preferred city for investment,” followed by Berlin, Frankfurt, Paris and Amsterdam.
CBRE adds that the survey was conducted in December 2020, just prior to the UK and EU reaching agreement on the terms of the post-Brexit relationship. The firm said that the uncertainty about whether an agreement would be reached, and under what terms, is likely to have negatively impacted investor expectations of the UK’s recovery.