As the sluggish business environment continues onwards, most companies are taking more time to wait and see action in lease activities. Reimplementation of physical distancing has caused work-from- home policies to be extended. Likely, lessors will analyse and recalculate office space needs for the purposes of renewing lease agreements.
Presently, tenants prefer to extend at their existing buildings rather than moving. The problem today is tenants expect to reduce their office space although the lease period still remains long. Landlords and tenants need to reach mutually beneficial agreements if business performance of the tenants and the leasing activities on the landlord side are to continue to survive. Landlords must take a creative approach such as providing smaller office space. More companies will be more concern on flexibility and will likely apply efficiency in terms of space, costs and business models.
The relaxed large-scale social restriction (PSBB) regulation has brought some good news for developers. Offline channels can be enacted again, as marketing galleries and show units are allowed to be open. However, sales performance has remained dull since the conditions continue to be uncertain as the daily COVID-19 cases have been increasing and the economic growth in Q2 2020 plummeted - 5.32%. Potential customers have continued to adopt wait-and-see action, although currently it is still a market that favours buyers.
These uncertain conditions create hurdles for developers too. Some developers have decided to hold back sales activities and construction progress on relatively newly introduced projects. Thus, they have to focus on finishing their current projects to survive during this time period. However, we believe after this pandemic ends, the economy will recover and so will the market.
COVID-19 has created a tough situation for both landlords and retailers. All methods and channels of integration between both online and offline must continue to be used to generate sales amid the pandemic. Sales gradually improved previously but tightening of physical distancing (PSBB) once again will apply pressure on retail business. Restrictions and limitations will greatly affect the number of customers.
COVID-19 will adjust business models for retailers in the future by reducing retail space and developing productivity with technology. Suggestions for upcoming malls indicate a preference to postpone openings. Landlords are advised to secure at least 70% of commitment occupancy in order to give a good impression.
Industrial land sales dropped in 2020 YTD, as predicted earlier in the year particularly when the pandemic started. It will, in fact, be a tougher time for the industrial market to surpass last year’s performance, despite the hope to see more transactions in Q4. Companies tend to take a wait-and-see stance before deciding to make any investment.
Industrial landlords should anticipate more enquiries from the growing sectors (e.g., health sector and food industry) as a result of the pandemic. In the era where movement is limited, e- commerce-based trading companies will ask warehouse facilities for more requirements. Furthermore, we also anticipate a growing demand from high-tech companies.
The pandemic is not yet over, and hoteliers have adopted so many adjustments to run their business. There was a transition from the Large-Scale Social Restrictions started in July, which drove economic activities. One of the impacts was increased activity in hotels, but due to the increasing number of COVID-19 cases, the Large-Scale Social Restrictions were re-applied in September, thus constituting another hit to the hotel business.