A survey of CBRE investment and valuation professionals conducted between March 20, 2020, and March 31, 2020, has found that two-thirds of respondents have seen investment enquiries deteriorate following the onset of COVID-19. Mild cap rate expansion has been observed since the outbreak – a trend expected to continue for the remainder of the year.
Although 50% of respondents observed no change to pricing, a third of those surveyed stated that prices had contracted by 10% or less since the outbreak.
Recent interest rate cuts are not translating to lower borrowing costs. However, borrowing costs in Australia have risen as banks factor a risk premium into commercial loans and adopt a lower LTV ratio of 50% to 55% for new loans.
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