In the first half of 2020, commercial investment fell by 32% year on year. عقارات
The full effect of the COVID-19 pandemic was felt in Asia Pacific real estate markets in the second quarter of 2020, according to global property consultancy JLL, and led to a drop in investment volumes and rental prices across most major commercial asset classes in the first half of the year.
According to JLL, investment volumes in Asia Pacific fell 32% year over year in the first half of 2020, with the second quarter operation falling 39% year over year, up from a 26% decrease in the first quarter.
As more economies implemented lockdowns and travel limits, the drop in investment volumes accelerated, affecting investors' short-term capital allocation plans. In the second quarter, the largest year-on-year investment declines were reported in Singapore (-68%) and Hong Kong (-65%), while declines in Australia (-58%), South Korea (-45%), and China (-15%) were partially offset by a resumption of activity in the third quarter. Due to transactions in the multi-family sector and high domestic liquidity, investment activity in Japan (-20%) remained resilient.
"The lack of willing sellers and the general uncertainty surrounding market recovery are reflected in the sharp drop in deal activity in the second quarter." "We expect transaction volume to recover in the second half as economies continue to reopen and pricing preferences in some markets are modified," says Stuart Crow, CEO of JLL in Asia Pacific's Capital Markets.
The office sector in Asia Pacific continues to have the highest investment value, owing to strong institutional investor demand for core markets. Investors are also paying attention to defensive and operation-critical properties, such as logistics, education, and data centers, resulting in a flurry of fund raisings and new joint ventures. In the first half of the year, deal operation in retail and hotels stayed flat.
With interest rates falling in most major markets, JLL data show a healthy gap between prime and bond yields in most sectors in Asia Pacific, creating an appealing environment for global investors looking to deploy $40 billion* in dry powder into the area.
Leasing activity has slowed.
Across Asia Pacific, office leasing was generally quiet in the first half, with just a few markets reporting price rises from quarter to quarter. With that vacancies and weaker leasing demand, office rents in Hong Kong's Central district experienced the most significant drop (-9.3%). Office rental rates fell significantly in Beijing (4.1 percent), Melbourne (3.9 percent), Sydney (3.5 percent), and Singapore (3.3 percent). The CBD office markets of Osaka and Seoul defied the trend and outperformed in the second quarter, with rents increasing by 1% to 2%.
"Office leasing activity across Asia Pacific's major markets was relatively subdued during the second quarter, as heightened economic uncertainty affected decision-making and lockdowns raised inspection challenges," says Jeremy Sheldon, Head of Markets at JLL in Asia Pacific. "While there were some relative bright spots in a few places, the market remains volatile, and both sides will be keeping a close eye on how the second half plays out."
Lockdowns, travel bans, and social distancing had the greatest effect on retail, which slowed demand in the second quarter. The retail leasing market in Hong Kong (-13.3 percent) experienced the steepest decline among major Asia Pacific markets. Rents fell across most of Southeast Asia, with Singapore (-8.5 percent) seeing the most substantial decrease.
In the second quarter, the logistics and industrial sectors proved to be the most resilient in the country. In Shanghai (+1.2 percent) and Sydney (+1.0 percent), rental growth remained positive, while in Singapore, Beijing, Sydney, and Melbourne, it remained relatively stable.
"Amid the COVID-19 pandemic, there is still a lot of doubt about growth and the shape of recovery." Supply and demand continue to drive leasing efficiency, and as markets continue to experience cycles of lockout, demand will eventually suffer," says Roddy Allan, Asia Pacific Chief Research Officer at JLL. "While COVID-19 will continue to have an impact, our research suggests that investors will approach the market in the second half with cautious optimism, which we expect will intensify in early 2021."
"The uncertainties in the property market persisted as Hong Kong is now facing the third wave of COVID-19 infection," said Nelson Wong, Head of Research at JLL in Greater China. Housing prices will be weighed down by rising unemployment, bleak market prospects, and ongoing economic strains."