2020 is going to go down as a year to remember if the mid-year state of APAC property markets is any indication.
2020 is going to go down as a year to remember if the mid-year state of APAC property markets is any indication.
It's coming up to mid-year and to no one's surprise, COVID-19 is still making headlines. The virus discovered in late 2019 has wreaked havoc on stock markets, employment statistics, summer travel plans and school exams. It's also made itself known to property markets, with varying degrees of negative — and occasionally not so negative — results.
The Landscape
Since Wuhan went into lockdown on January 23, real estate activity has been at a virtual standstill. With funds, people and goods barely moving, by mid-year most sectors had been impacted, even as markets in Asia Pacific were well ahead of North America and Europe of the recovery curve. Research by Knight Frank indicates a swing in favour of tenants and purchasers, and investors with a high tolerance for risk and a good deal of patience (recoveries are predicted for 2021) could benefit from the current environment. Markets including Sydney, Jakarta, Shanghai and Hong Kong are favourable to commercial tenants right now, residential prices in Singapore, Manila, and Guangzhou are dropping, while sky high Sydney and Hong Kong, as well as Kuala Lumpur, Bangkok and Beijing are holding steady.
Nonetheless caution was the word of the day by May, and though many locations in China, Japan, Taiwan and South Korea had eased lockdown measures, developers across the region were postponing residential project launches; secondary market viewings were also a challenge. The silver lining, however, is China, whose early recovery will hopefully be a beacon for Asia Pacific. Shanghai recorded 260% more sales transactions in March than in the first two months of the year, and that figure was 262% in Shenzhen.
Disaster Relief
Of course with crisis comes myriad forms of opportunity; purchasers were laughed at during SARS and 10 years later it was they who were doing the laughing. Colliers International in Hong Kong named the hotel sector the most affected across five key APAC locations (Hong Kong, Singapore, China, Japan, Australia), but other sectors are scattered. Colliers' data suggests that at mid-year the strongest investment markets for the immediate future are Singapore, Australia and Hong Kong itself. All three make good arguments for investing before GDPS return to a positive 4% (approximately) in '21. Ideal assets include offices, hotels, biomedical property and industrial spaces. Residential investors are facing discrete challenges.