Home Society Demand for office and retail spaces may never fully recover from the COVID

Demand for office and retail spaces may never fully recover from the COVID

The coronavirus pandemic may have far-reaching consequences for the demand for commercial real estate, such as office spaces and retail premises. The International Monetary Fund (IMF) warns of this, which also points out that this could affect global financial stability.

Due to strict measures, many office buildings are empty all over the world, there is much less on-site shopping and prices for hotel rooms are very low due to lack of demand. These are temporary symptoms of the coronavirus pandemic. But according to the IMF, the decline in demand for, for example, physical stores may take much longer.

With more and more shopping online and more people working from home, a lot is changing in society, making it possible that the situation will never come back to normal after the crisis. This would reduce the demand for properties, with the result that prices on the real estate market could fall significantly. According to the IMF, this may have an impact on financial stability as commercial real estate loans in many countries account for a significant proportion of banks ‘ loan portfolios.

The Washington-based organization advises policy makers to set mortgage limits, for example, to ensure that the financial risks associated with commercial real estate cannot become too high. Stress tests could also help to ensure that the banking sector remains strong. On that basis it is good to judge whether sufficient money has been set aside for when real estate suddenly turns out to be worth a lot less.

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