Asia Pacific property markets continue to generate long-term opportunities despite COVID-19 outbreak

- Government policies to help Chinese markets recover from the coronavirus outbreak
- Property markets in Hong Kong and Singapore offer value-buying opportunities for long-term investors amid uncertain outlook
- Japan’s logistics segment expected to benefit; office segment retains appeal; hotel and retail sectors hit hard by the virus, but 
- Seoul’s office sector performed well, but a prolonging of the virus outbreak could hurt sentiment 
- Resilient property markets in Australia and New Zealand face a temporary slowdown

 

Hong Kong, 22 April 2020 – Colliers International (NASDAQ: CIGI; TSX: CIGI), a global leader in commercial real estate services and investment management firm, today released its Asia Pacific Market Snapshot Q1 2020 report. This multi-sector report examines the prior quarter’s property market performance in 19 Asia Pacific markets and provides forecasts for the quarter ahead.

Terence Tang, Managing Director of Capital Markets, Asia commented: “Even though signs of the pandemic weighing on sentiment were seen across the region, opportunities are emerging across some markets and industry sectors in Asia Pacific. While the full extent on regional property markets is still unclear, robust government stimulus packages and solid economic fundamentals are cushioning impacts. 

Chinese cities see development and fast-tracking for growth
Several policy initiatives have been introduced by national and local governments to support China’s property markets, including facilitating cash flows to developers in Guangzhou and Shenzhen; promoting the simultaneous development of districts and counties surrounding Beijing; and fast-tracking the growth of Shanghai as a global financial hub. China, as one of the first markets in the region to be affected by the virus outbreak, is now gradually returning to normal.

Japanese logistics sector sees e-commerce expansion
Japan’s hospitality and retail property markets bore the brunt of the pandemic’s impact in the first quarter; however, Tokyo’s office sector, where pre-commitments for 2020 account for 85% of supply, held firm, and the logistics segment is expected to perform well as virus containment measures lead to growth in e-commerce.

Offices and industrial conversion opportunities showing appeal in Hong Kong
Investors in Hong Kong’s property market, beset by a succession of challenges – from last year’s protests and the US-China trade dispute to the coronavirus outbreak – remained understandably wary in the first quarter; however, long-term investors should find attractive opportunities with capital values expected to decline over the next quarter across several sectors, with offices and industrial conversion opportunities showing appeal and hotels for rebound uplift.

Singapore opportunities expected to emerge in the logistics and premium office sectors
The city-state’s residential sector performed relatively well in the first quarter, but an unpredictable economic outlook could limit home sales and new projects. A slowdown is also expected in the commercial sector as remote working measures gather pace to contain the virus; however, opportunities are expected to emerge in the logistics, premium office building, hotel segments and CBD residential. 

Seoul office sector going strong
The South Korean capital saw office transactions worth nearly USD2 billion close in the first quarter, helped by votes of confidence from big-name foreign investors such as KKR. The office sector should remain upbeat with further deals expected throughout 2020 unless a prolonging of the virus outbreak affects sentiment.

Positive response to government action in Australia, New Zealand
Although property markets in Sydney, Melbourne, Brisbane and Auckland, which are among the region’s most desirable and cost-competitive, faced a slower first quarter, markets still saw some transactions and settlements. Government policies and planned investments in infrastructure have been viewed favourably by the global investor market and the expectation is that the slowdown should only be temporary.

Download Asia Pacific Market Snapshot Q1 2020 report.