Difficulty in recycling capital will cause reluctance to divest

2020 sales volumes are expected to be lower than 2019 as owners remain reluctant to divest prized assets as recycling capital is proving difficult due to this unwillingness to sell. The dollar value of transactions in 2019 was 35% above 5-year average, but the number of deals was 20% below.

Pricing levels are at historic highs for office and industrial assets due to the low cost of debt and strong investor appetite which will result in further yield compression in 2020.

However, investors remain wary of acquiring retail in the current climate so we expect 2020 to be subdued with some expansionary pressures on non-core retail assets. There may be an impact on real estate transactions until the coronavirus is contained, with some investors preferring to defer sales until travel restrictions are lifted and confidence returns to normal.