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Macro and capital markets

A look back at 2020

January 1, 2021
  • And a look forward to 2021

    Historians have plenty of material now to try to put the events of 2020 into perspective. Even without a global pandemic to contend with, the past year of shared calamity included political upheaval, wildfires, climate risk, social unrest, disputed elections, as well as trade relationships broken and re-formed. 


    The 2020 time warp created vast differences in the pace of national economic rebounds.


    A man jumping on the rocks where the big numbers 2020 and 2021 stand

    Yet, the year will only make sense when it is placed alongside whatever happens next in 2021 and 2022. Telling the 2020 story without the next two years would be like stopping at episode 5 of a ten-part mini-series. In our Macro Indicator monthly reports in 2020, we found ourselves returning to the theme of the time-bending effects of the pandemic, touching on everything from our daily routines, to financial markets, and to the accelerating pace of change in tenant preferences and demand for different types of real estate. The shocking events at the U.S. Capitol on January 6th add to this unsettling sense that time simultaneously stands still and races ahead when so much history occurs in a compressed period.

    Financial and capital market valuations are the ultimate time distortion field, distilling all expectations about the present, near-term and long-term future cash flows into a “spot price.” Early in the pandemic, global financial markets focused overwhelmingly on the negative short-term economic fallout of COVID lockdowns – with global equities registering a -30.1% YTD decline as of March 23rd. Then, in a record-breaking turnaround, the world’s largest “continuous auction” stock markets looked beyond the short-term abyss to a brighter, long-term outlook underpinned by central bank support, fiscal stimulus, a healthy digital economy, and high expectations for vaccine rollout.

    The 2020 time warp created vast differences in the pace of national economic rebounds. Most of Asia Pacific cautiously and carefully re-opened stores, offices, and public places in the weeks and months that followed the end of the Wuhan lockdown on April 8th. In the West, the process of closures and re-openings were more sporadic, inconsistently enforced, and adherence was haphazard. And now, large parts of Europe and North America are going back in time, with countries accounting for 15% of global GDP back under strict lockdown at year-end (see page 10 of this month’s deck).

    Our January Macro Indicators deck provides a summary of relative real estate performance in 2020 and an update on the pandemic, vaccine, and financial market indicators likely to drive real estate demand and pricing in 2021. The tug of war between long- and short-term drivers is itself driven by expectations for permanent vs. temporary pandemic impacts. These expectations will drive movements in the yields, prices, and indices we track each month. These macro themes are also the focus of the 2021 edition of the Investment Strategy Annual (ISA).

    We highlight five key ISA themes for real estate investment in this Macro Indicators deck:

    • Expect the dispersion of sector returns to continue
    • Invest in the rise of alternatives
    • Anticipate changing mobility and density preferences
    • Differentiate and separate permanent changes from temporary shifts
    • Balance three styles: growth, income, and dislocation
Oct 30, 2024 ISA Focus: Rebalancing past and present Understanding what past occupier market dislocation can tell us about today’s outlook for global real estate markets, in particular the office sector
Oct 15, 2024 ISA Focus: Transparency and strategy Transparency is the foundation which allows real estate occupiers, investors and lenders to operate and make decisions with confidence.
Oct 08, 2024 ISA Portfolio View 2024 LaSalle’s ISA Portfolio View is our guide of things to consider for institutional investors seeking to diversify portfolios with real estate.

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