ERA says rental proved agile in Covid response

The European Rental Association (ERA) has updated its 2020 Market Report and said Europe’s rental markets proved more resilient to the Covid pandemic than originally thought, although still severely impacted.

ERA has kept its forecasts for 2021 and 2022 similar to those published in its report late last year, but has reduced the declines in rental activity during 2020, with the single exception of France.

It said companies had been agile in adjusting their costs and adapting to the challenges, so “the overall impact has proven to be less significant than what was expected in September last year.”

The association also found that the gap between different regions of Europe was larger than expected.

Within Western and central Europe, better than expected construction activity helped rental, with the Netherlands rental market seeing a -2.3% fall compared to the previous estimate of -5.3%. Rental activity in Germany was estimated at -3.1%, lower than the original -4.7% estimate.

In the UK, the fall in rental activity in 2020 is now estimated to be -14.8% compared to the previous -16.3%. The upgrade related to an improved construction performance in 2020, from -9% to -5.6%.

In Northern Europe, rental activity in Denmark is now thought to have declined by -2.3% last year rather than -5.5%, and in Sweden by ‑2.2% compared to ‑4.2%. In both cases the construction markets performed better than expected. In Finland, rental activity in 2020 was down ‑4% compared to the previous estimate of -5.3%, because of improved GDP estimates.

There has been little change in ERA’s estimates of rental activity in Italy and Spain during 2020. In France, however, ERA has estimated even lower rental activity in 2020 than previously estimated, now at -15% compared to -14.3%. This is mainly due to construction activity being revised down from -7.6% to -10.1%. As a consequence, ERA now gives France the strongest growth in 2021 at +9.5%.

ERA said pro-cyclical policies from governments this year will result in a better-than-expected outlook for the equipment rental industry; “The expectation is that any shock to private sector investments will be offset by more resilient segments, such as infrastructure and renovation.” Europe’s construction sector is expected to recover slowly in 2021 following a collapse in 2020.

Michel Petitjean, Secretary General of ERA, said: “The impact of the first wave of the pandemic varied significantly across the different parts of Europe and related directly to the responses of each country to the sanitary crisis, especially lockdown measures.

“Although the second part of the year saw a recovery in most countries, estimating the whole of 2020 was difficult. This update gives a much clearer picture of the impact of the pandemic on the rental industry and how it relates to both construction activity and government policies.”

The update, developed with IHS Markit, will be attached as an addendum to the ERA Market Report 2020 and sent to all companies and/or associations that have already received and/or purchased the report.

The report is available digitally for ERA members (€500) and for non-members (€1,200). To order a copy, please contact the European Rental Association at [email protected].