The coronavirus (COVID-19) outbreak that is sweeping across the world is expected to put a dent on global economic growth and its impact will be felt in many sectors, including real estate.
Colliers REview asks Tang Wei Leng, Managing Director of Colliers International in Singapore, for her views on what investors should do in this time of market uncertainty.
1. THERE IS A LOT OF VOLATILITY IN THE MARKET RIGHT NOW. TELL US ABOUT YOUR CONCERNS AND WHAT HAS BEEN THE IMPACT OF COVID-19 ON SINGAPORE?
COVID-19 is now a pandemic and the outbreak has global impact and consequences. This virus outbreak has disrupted not just business and world travel, but our very way of life as well.
The world has seen various crises and I would say every crisis is different. Compared with the Global Financial Crisis in 2008 or the SARS (Severe Acute Respiratory Syndrome) outbreak in 2003, I am more concerned about the COVID-19 outbreak because it is unprecedented in its geographic reach and will no doubt hit global economic growth. Notably, this pandemic also highlighted China’s growing clout as an economic powerhouse and its influence on the global supply-chain. The lockdown of China cities caused massive supply-chain disruptions and has affected the manufacturing sector globally.
In Singapore, the government has been quick to act and in so doing, curtailed the rapid spread of COVID-19 in the population. In fact, its containment and contact tracing efforts have been held up as a gold standard in tackling the outbreak. These measures will build tremendous confidence across different sectors and it will auger well for Singapore in the coming years. Confidence in public health, crisis management, the government’s foresight and response, as well as the ability to effectively communicate measures clearly to its people are factors that will attract talent, travelers and businesses to Singapore. In the near-term, however, the market outlook is dimmer due to the COVID-19 outbreak.
2. WHAT IS YOUR ADVICE TO REAL ESTATE INVESTORS AND ARE THERE ANY REASONS TO BE HOPEFUL?
As they say there is opportunity in every crisis. While investors need to be aware of the pitfalls, they should also look out for potential opportunities that may surface. In times of great uncertainty, I believe two precepts prevail: cash is king; and I would add that information is king too. Therefore, it is all the more important to remain engaged with the industry and market players to better understand evolving needs and to be in a position to spot opportunities as they arise.
When markets are volatile, cashflow is the most important. Revenues could become uncertain and hence it is important to manage costs. With good financial prudence and discipline, investors could quickly redeploy their war chest to invest when there are first indications of market recovery. What goes down must go up – at some stage – and the question is whether investors are ready to take advantage of the upturn when it happens.
Beyond real estate, I reckon that all companies could take this time to evaluate their technology strategy as part of business continuity planning. The COVID-19 outbreak has forced firms to embark on remote working, conduct meetings via teleconferencing, or host webinars etc. Having the right technology in place can be very empowering in these times. I believe all these tech measures will be a new normal going forward and will transform the way we work.
3. THE HOTEL AND RETAIL SECTORS APPEAR TO BE MOST DEEPLY AFFECTED BY THE COVID-19 OUTBREAK. ARE THERE ANY OPPORTUNITIES IN THOSE SECTORS?
It is March and we are two months into the COVID-19 outbreak. My sense is that it may be early days yet to highlight specific investment opportunities even as we continue to assess the full measure of the economic fallout from this outbreak. Many observers, including Singapore’s Prime Minister Lee Hsien Loong are anticipating that the pandemic could stretch for a year, maybe longer.
There have been lots of discussion on the impact of the COVID-19 outbreak on hotel and retail sectors, but I believe there may be potential opportunities beyond those sectors – particularly if the virus outbreak is protracted and leads to a severe downturn. By and large, businesses are still holding on, but cashflow/bottomline will heavily influence business and investment/divestment decisions. An economic tailspin, should it happen, will dent market confidence, put a strain on businesses’ cashflow, and have an impact on property values. Those who are on an investment hunt would do well to monitor the ongoing situation closely.
4. ON A PERSONAL NOTE, HOW HAS THIS VIRUS OUTBREAK CHANGE YOUR DAILY LIFE OR THE WAY YOU WORK?
My hands are really dry from the constant washing and regular use of hand sanitiser. Jokes aside, I think the virus outbreak has refocused everyone’s attention on personal hygiene. I have developed newfound habits of washing my hands frequently (perhaps too frequently), keeping a safe distance from others in public places, and popping the extra vitamins. I see it as playing my part in our collective fight against COVID-19. To this end, with a greater awareness of personal hygiene, I think it may well help to prevent the spread of influenza in the future.
In terms of work, since meetings are discouraged, there has been a greater use of technology – such as video/teleconferencing, webinars - to communicate with employees who may be working from home and our business partners. Interestingly, during these conference calls, we quickly learn how to listen intently for cues which previously would be guided by a reading of body language. In a nutshell, I would say we remain resilient and are adapting the best we can to the rapidly changing situation with this virus outbreak.
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