Prominent real estate advisor Savills pointed out in its Asia Pacific Mid-Year Regional Roundup that the economic damage of COVID-19 is proving to be extensive with only China and Vietnam expected to post modest positive growth this year of 1.5% and 2.7% respectively. However, most regional economies are expected to report positive year-on-year growth from the first half of next year.
Prominent real estate advisor Savills pointed out in its Asia Pacific Mid-Year Regional Roundup that the economic damage of COVID-19 is proving to be extensive with only China and Vietnam expected to post modest positive growth this year of 1.5% and 2.7% respectively. However, most regional economies are expected to report positive year-on-year growth from the first half of next year.
Asia Pacific real estate investment volumes into income-producing properties saw only a small decline of 2.4% QoQ in the second quarter, and the industrial sector is leading the comeback with a large number of data centre portfolio deals in the pipeline.
Office vacancies have begun to trend up, although increases over pre-COVID levels have so far been muted. First half rents saw small rises in Taipei, Tokyo, Seoul and Ho Chi Minh while Sydney, Hong Kong and Shanghai all recorded heavier declines.
Travel restrictions have been particularly harmful for cross border trade, tourism and capital flows, but closely monitored ‘air bridges’ are opening up for business travelers.
China had an active second quarter in terms of deal volume. Elsewhere, Japan attracted a significant amount of cross-border capital from both the US and Europe, and South Korea posted a substantial number of smaller deals with more under negotiation presaging an active second half.
COVID has also increased demand for e-commerce and pushed it into a broader range of products from (traditionally) fashion to groceries, medicines and other perishables. Geographically, secondary markets are becoming more popular with investors and these include Taiwan, New Zealand and some Southeast Asian countries.
Mr. Simon Smith, Senior Director, Research & Consultancy commented: “Opportunities are starting to emerge as the regional economies recover gradually from the pandemic. Most, if not all are expected to report positive year-on-year growth from the first half of next year.”