What the numbers say: According to McKinsey, the fall in valuations represents a 26% slump from values seen in 2019. The change in employment trends has also impacted retail and residential real estate, as footfalls in metropolitan areas have dropped 10%-20% below pre-pandemic levels. Asking rent for office spaces in U.S. cities like NYC and San Francisco has taken a bigger hit than Paris, London, and Munich counterparts. Relevance: The report warned that the decline could steep to 42% if interest rates continue to increase and financial institutions decide to reduce the value of properties they finance or own. McKinsey recommends developers adapt to the change in trend by creating adaptable buildings built with infrastructure modifications for versatile use. |
What happened: A report published by McKinsey Global Institute this week claims that the value of office buildings in major cities across the globe would be cut by $800B by 2030. The report highlights the potential losses landlords face from changing employment trends after the pandemic. The report modeled the impact on valuations in nine major cities globally.