2020 Outlook

We look forward to a year full of achievements and would like to share our outlook for 2020 with you:

Political and economic risks

There are currently many political and economic risks that may afflict GDP growth in 2020: ongoing uncertainty concerning the outcome of Brexit, the continuing trade war between China and the US and the slowdown of the German economy. The latter is certainly the most concerning for the European real estate market. The German economy’s heavy dependence on exports has exposed it to the slowdown of one of its main growth drivers in the aftermath of the Global Financial Crisis, namely the Chinese economy. Moreover, the German economy is also facing a supply-side shock i.e. the shift towards electric cars. This might pose a serious threat to the growth prospects. 

Central bank policy

Interest rates in the two main economic areas, i.e. the Eurozone and the United States, are set to remain low for the time to come. Against the backdrop of a slowing economy, Mario Draghi, resumed the quantitative easing program and cut the deposit rate to an all-time low. This decision was heavily criticized among some members of the Governing Council of the ECB, showing that the consensus for an extremely dovish stance is diminishing. This will certainly put some pressure on president Christine Lagarde’s future moves. More surprisingly, The Federal Reserve, which was expected to increase interest rates, decided to cut rates. This move was mainly driven by political pressures and concerns about the ongoing trade war and potential implications on the economy. The signal this sends about the economy is certainly not a good one, considering that the US economy’s healthy state led the FED to increase interest rates over the past years. 

Given the uncertainties lying ahead of us in 2020, TCP recommends an anticipated exit strategy for planned dispositions.