You are here
UK property could slump 12% on pandemic impact, warns Aviva
[LONDON] One of the UK's biggest real-estate managers is predicting gloomy times ahead for bricks and mortar.
Insurance giant Aviva expects residential property prices to drop 12 per cent and commercial real estate to decline by 15 per cent because of the impact of the pandemic, it said in an earnings update on Thursday. On a slightly brighter note, it sees long-term growth for house prices after they trough.
The coronavirus is threatening property values as businesses are forced to close to limit its spread and unemployment rises. The amount of rent collected by landlords in the UK fell sharply in March and is likely to plunge further after the government limited landlords' ability to evict tenants.
Aviva's real assets platform, which includes real estate and infrastructure investments, managed £45 billion (S$77.67 billion), as at September last year.
The insurer also said it expects to pay out around £160 million in coronavirus related claims.
Insurance firms can expect to face at least US$203 billion in losses this year as a result of the virus, according to Lloyd's of London. Claims relating to business interruption and event cancellations have already begun to be filed, and firms including Allianz, Munich Re and Swiss Re, have all warned that their profits will be hit.