HORIZONS | BDO'S GLOBAL VIEWOF MID-MARKET DEAL ACTIVITY 67
REAL ESTATE
IS INFLATION SENDINGTHE RED-HOT MARKET INTOOVERTIME?
ALEXANDRE AMPER
GUILLAUME SAVREUX
INTERNATIONAL REAL ESTATE ADVISORY AND VALUATION LEADER BDO SWITZERLAND
REAL ESTATE VALUATION & CAPITAL MARKET ANALYSIS MANAGER BDO US
alexander.amper@bdo.ch re
gsavreaux@bdo.com gsavre .
Now that 2022 is in full swing and everyone seems eager to leave COVID-19 in the past, there is a new global fear popping up – inflation. Following the supply chain disruption and consumption shifts associated with COVID-19, Western countries saw an uptick in inflation throughout 2021, mainly driven by slowing growth rates due to COVID and the massive amount of liquidity pumped into the market. We saw US inflation jumping to 7.9% as of February 2022 from 1.6% a year before. Such inflation has not been seen in more than a generation. Globally, this has pushed central banks to review and adjust their monetary policies to find ways to curb the inflation that is eroding consumers’ purchasing power. The Fed announced, after considering inflation not to be transitory anymore, that they would raise interest rates up to seven times throughout 2022. They have already shifted it up a 25 basis point in March 2022. On the European side, the ECB may raise their deposit facility interest rate from -0.50% back to 0.00%, which was last seen in 2013. There are further uncertainties to come with the situation in Ukraine and the full-scale disruptions resulting from it yet to be unraveled.
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