Commercial Real Estate Prices and Covid-19

31 Pages Posted: 26 Jan 2021

See all articles by Martin Hoesli

Martin Hoesli

University of Geneva - Geneva School of Economics and Management (GSEM); Swiss Finance Institute; University of Aberdeen - Business School

Richard Malle

Conservatoire National des Arts et Métiers (CNAM); BNP Paribas - Real Estate

Date Written: January 26, 2021

Abstract

The article analyzes the effects of the Covid-19 pandemic on commercial real estate prices. We start by highlighting caveats to bear in mind when referring to direct real estate indices. We then analyze the behavior of commercial real estate prices during the pandemic, emphasizing differences across property types. For that purpose, we use data for both direct and listed real estate. We further discuss changes in the main factors affecting commercial real estate pricing. The article then turns to discussing the likely trajectory of commercial real estate prices in the future. We report that retail and hospitality properties and to a lesser extent office buildings have been affected the most by Covid-19. The other sectors, in particular the residential and industrial sectors, have shown more resilience. We maintain that the future trajectory of real estate prices will vary across sectors and that the type and location of assets will become increasingly important in their valuation.

Keywords: Commercial real estate prices; Covid-19; Pandemic; Office; Retail; Hospitality

JEL Classification: R33; G12; G23

Suggested Citation

Hoesli, Martin Edward Ralph and Malle, Richard, Commercial Real Estate Prices and Covid-19 (January 26, 2021). Swiss Finance Institute Research Paper No. 21-08, Available at SSRN: https://ssrn.com/abstract=3773532 or http://dx.doi.org/10.2139/ssrn.3773532

Martin Edward Ralph Hoesli (Contact Author)

University of Geneva - Geneva School of Economics and Management (GSEM) ( email )

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Geneva 4, Geneva 1211
Switzerland
+41 22 379 8122 (Phone)
+41 22 379 8104 (Fax)

Swiss Finance Institute

c/o University of Geneva
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CH-1211 Geneva 4
Switzerland

University of Aberdeen - Business School ( email )

Edward Wright Building
Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom
+41 22 379 8122 (Phone)
+41 22 379 8104 (Fax)

Richard Malle

Conservatoire National des Arts et Métiers (CNAM) ( email )

292, rue Saint-Martin
Paris cedex 03, 75141
France

BNP Paribas - Real Estate ( email )

France

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