Virus hits regional commercial property

INVESTMENT in Asia-Pacific commercial real estate fell 26 percent in the first quarter as a result of the COVID-19 outbreak, according to a research released by international property adviser JLL.

Real estate transactions dropped to US$34 billion during the three months ending March, with the Chinese mainland, Hong Kong and Singapore seeing the biggest falls.

“The Q1 decline was widely expected as many investors have paused activity due to the uncertain economic environment,” said Stuart Crow, CEO of capital markets, JLL Asia Pacific. “Reduced activity will continue into Q2, with trading volumes likely to bounce back more strongly in the second half of this year.”

Across the region, the Chinese mainland, Hong Kong and Singapore, where investment activity plunged by at least 60 percent year on year, were the worst hit.

South Korea and Japan, however, felt the least impact, finishing at either similar or slightly higher levels compared with a year ago.

While the coronavirus pandemic reverberates across industries and asset classes, retail and office investment seemed to feel the hardest blows, with transaction volume dropping 39 percent and 36 percent from same period a year ago.

Hotel transactions, partially aided by select deals finalized in the earlier part of the quarter in Japan and

South Korea, fell 22 percent.

Bucking the trend, the region’s industrial and logistics investment market grew 9 percent year on year.

On the Chinese mainland, investment dived 62 percent year on year as many investors held off while sellers deferred selling.

An earlier forecast by property services provider Colliers International also said that logistics facilities, together with business parks and data centers, are highly recommended for major real estate investors.