Q1 2020 | Asia Cap Rates Report

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Market activities slow down across the region due to the unprecedented government effort put to contain the COVID-19 outbreak. Such measures range from travel restrictions and social distancing to complete lockdown in some Asian cities. Uncertainties fill the air. Businesses are adjusting their ways of operation including switching to online platforms to maintain productivity.

Asian major stock markets including Hong Kong, Japan and Singapore have seen drops over Q1 of more than 17%.  Many industries have been hard hit and hotel and retail sectors are in limbo. Rentals are under pressure. Various governments have introduced initiatives to support businesses and employment including tax reductions and direct subsidies. Some banks offer deferment of capital repayments, and there have been more enquiries on refinancing cases.

Cap rates in general held steady from a valuation perspective in most Asian markets, although market sentiment is soft. Retail sector has been hardest hit with increases in cap rates from 0.125% to 1% noted in some 50% of the cities covered in the survey. Office and industrial sectors have remained relatively stable.

Investors are actively looking for opportunities but expecting to buy at discounted prices. The gap in price expectations is likely to continue in many markets.


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Q1 2020 | Asia Cap Rates Report

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