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The property market’s resilience in Asia’s major cities is evident in total investment volumes, which registered only a 3% dip in the 10 largest urban property markets compared to a 13% fall in the overall regional market in the first nine months of 2019. This is a healthy outcome in light of the challenges of the past year. While growth continues to decelerate modestly, low to negative interest rates should help raise total investment volumes by 7% to USD124 billion in 2020.
COVID-19 continues to affect markets across borders, multiple real estate sectors and people in our communities across Asia Pacific. We’re here to help you be enterprising, to navigate the impacts of the novel coronavirus and make the most of opportunities in this challenging time.
Colliers is providing you insights and recommendations from across APAC in a single resource, to help you continue to accelerate your success through property.
Read on for recommendations from our market leaders and workplace experts.
COVID-19 will cut 2020 growth across Asia, but less so Australia. Asian retail has been hard hit. If the outbreak peaks in H1, with a rebound in H2, investors can pick up assets at good prices now.
We expect the outbreak of COVID-19 to continue to affect APAC markets in H1 2020, with a recovery in H2 2020. What does this scenario imply for office occupiers in Asia Pacific? We recommend:
The outbreak of COVID-19 has strained most manufacturing and service industries in China. Whilst the broader economic effect on China is still hard to gauge, there are steps which can be taken to support your real estate performance and action opportunities.
Based on Colliers’ survey of over 700 landlords, tenants and investors in February 2020, we recommend:
After shutting down most manufacturing and service sectors for three weeks, China has officially resumed work on Monday (February 24). As the factories rumble back to action, China is also faced with the challenge of striking a balance between virus containment and getting its economy back on track. In the midst of one of China’s most acute economic setbacks and concerns on the lingering effects from the coronavirus, Hongkong Land surprised the market on February 20 with a record land bid of RMB31.05 billion (USD4.48 billion) for a development site in Shanghai’s Xuhui West Bund area.
The site, which was listed for sale in December of last year, is 231,300 square meters and is located in the south of Shanghai’s traditional downtown area between Huangpu river’s west bank and Longhua Middle Road. Reportedly, the site would be fully developed in a few phases by 2027 with a total gross floor area (GFA) of 1.09 million square meters (11.73 million square feet), of which 650,000 square meters would be allocated for office space, 210,000 square meters is planned for retail, and the remaining would be used for a hotel, high-end residentials, affordable housings and long-term lease apartments. Hongkong Land’s record breaking land acquisition is a vote of confidence to the real estate market, as it is a clear indication that foreign investors are still planning to invest in China for the long-term. In open statements, Hongkong Land said: “the land acquisition provides the Group with an attractive opportunity to develop and operate a commercial complex of scale in a prime location in Shanghai, the predominant commercial hub of the Chinese mainland.”
While Hongkong Land’s record high price tag may raise eyebrows, our Research survey in the past has shown that even with near-term political or economic uncertainties, both domestic and foreign investors have held a positive long-term outlook towards China’s economic growth. Based on Colliers Pan-China investment survey published in July 2019, 68% of the respondents expressed their willingness to continue investments into China, as investors are adopting a long-term view to avoid missing out the huge potential demand. Also, in Colliers most recent survey on the coronavirus impact on China’s real estate market, most investors believe real estate valuations will probably be depressed in the near term but should rebound in H2 2020, and the current market weakness should provide an opportunity to hunt for bargains.
Market players in Hong Kong generally expect the history of SARS in 2003 to be repeated, as COVID-19 poses downside risks to China, as well as Hong Kong SAR which faced a tough year in 2019. We see opportunities for investors to enter the market, landlords to focus on growth sectors and occupiers to expand at lower rental costs.
On top of efficient containment measures since the Disease Outbreak Response System Condition (DORSCON) alert level was raised to Orange on 7 February, the Singapore government has announced a SGD4 billion support package in the recent Budget 2020 for sectors most affected by the COVID-19 outbreak during this challenging period.
While we continue monitoring the evolving situation closely, we make the following recommendations:
The outbreak of the Novel Coronavirus (COVID-19) has resulted in increased adverse impacts on the Japanese economy. As China is Japan’s largest trading partner, representing 29% of imports and 22% of exports, we expect both demand and supply impacts in coming months. Based on Colliers’ research, we recommend,
Korea’s robust and consistent standard operating procedures (SOPs) in identifying and containing the spread of the virus has led to a slowing of the spread of COVID-19, a benefit of the country’s significant investment in infectious disease control following MERS and SARS. With many impacts on retail, office and hospitality in a fast-evolving environment, we identify areas of change and opportunity for occupiers and investors:
The outbreak in India accelerated rapidly in March leading the government to announce a national lockdown until 15 April 2020. The government also announced a stimulus plan for the most impacted strata of people, reduced interest rates among other relief measures. While all real estate segments have been affected, we identify certain opportunities, and make the following recommendations:
Developers: Landlords and developers should place importance on wellness, and sustainability in buildings.
Investment: Recommend investors scout for assets in data centres, warehousing and logistics, given strong potential in terms of cloud infrastructure, and robust domestic demand. Investors to also look for opportunities in cold storage facilities.
Logistics: Recommend developers to invest in modernizing their warehousing facilities and improve wellness and safety norms.
The Philippine economy grew by 5.9% in 2019, the slowest pace since the 3.7% recorded in 2011.The economic growth potential for 2020 will be clipped by the impact of COVID-19. In our opinion, a coordinated policy and monetary response from the Philippine government and central bank is likely to instill confidence in the property market before the end of 2020, assuming the outbreak peaks in H1 2020.
As telecommuting and remote working become the norm for affected workforces, we look again at how best to “cloud your workforce”, enhance productivity of your people and maximise your real estate.
Read Flex, Core & The Cloud
Contact our Expert: Abhishek Bajpai
Managing Director, Corporate Solutions APAC
Health and connectivity can both benefit from wellness tech. We recommend to identify key technologies that can support the health and wellness across workspaces, remote workers, and the organisation.
Read How? Where? WELL!
Contact our Expert: Victoria Gilbert
Associate Director, Wellness Consulting, Asia
In this challenging time as COVID-19 impacts workplace operations globally, we advise how occupiers can engage with flexible workspace operators, as both a near-term business continuity solution and longer-term way of working for enterprises.
Contact our Expert: Jonathan Wright
Director, Flexible Workspace, Asia
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