European real estate reels as lockdowns drags on

Real estate finds itself at the center of the storm once more. In 2008, overstretched homeowners, speculative property developers and loose lenders combined to trigger the most severe economic downturn since the Great Depression. This time, the rapid spread of the new coronavirus is forcing the shutdown of spaces upon which the real estate industry relies to survive. Much of Europe, which the World Health Organization now describes as the epicenter of the pandemic, is locked down. Citizens have been instructed or strongly advised to stay in their homes, "nonessential" businesses ordered to close. European stock markets highlight the scale of the disaster for the real estate sector — not only for landlords, but also for their tenants. The total return in euros from the S&P Europe Broad Market Index, which tracks the share prices of more than 1,500 listed European companies, has fallen by 33.3% since Jan. 1, around the time the virus was first officially identified in the Chinese city of Wuhan. The S&P BMI for the real estate sector has fallen 38.4% in that time. As the crisis in Europe escalates, the scale of the losses is dumbfounding stock watchers. "Company fundamentals have almost become irrelevant given where prices have moved in the last couple of days," Colm Lauder, a real estate equity analyst at stockbroker Goodbody, said in an interview. "It's phenomenal."