Connect with us
Welcome to Long An

Real Estate

What does coronavirus mean for Asia Pacific real estate?

While it’s too early to know exactly how commercial real estate markets could be affected, the increasingly important position of China on the world stage means economic repercussions are likely, according to a JLL report on the topic.

Avatar

Published

on

Real estate investors in Asia Pacific are steeling themselves for impacts stemming from the coronavirus, the threat of which would add to existing economic headwinds in the region.

While it’s too early to know exactly how commercial real estate markets could be affected, the increasingly important position of China on the world stage means economic repercussions are likely, according to a JLL report on the topic.

“The virus is untimely for China given that it’s the start of a new calendar year and the spread escalated during the country’s most important holiday of Chinese New Year in late January,” says Roddy Allan, chief research officer, JLL Asia Pacific. “This has made it more difficult for the Chinese economy to reopen fully.”

The coronavirus virus – which originated in Wuhan, China, in December late last year – has spread globally, with cases reported in Southeast Asia, Europe and United States. In China, factories, malls and tourism have been affected, adding to strains from trade tensions with the U.S. last year.

“The Chinese government understands the central role it plays to keep the global economy stable and has moved swiftly and decisively to manage the fall-out, avoiding a sharp correction,” Allan says.

Adding to the strain

While the final 2019 figures aren’t yet out, Asia Pacific’s gross domestic product likely slid to 5.8 percent last year compared to 6.3 percent in 2018, according to a World Bank report in October, due to the trade war and lower global demand for exports.

While the region’s real estate had a strong showing overall in 2019, rental declines were evident in key markets such as Hong Kong and Beijing.

“Even before the coronavirus crisis, investors were already exercising caution and seeking out sectors and markets which show signs of resilience amid ongoing political uncertainty and a gradual slowdown of the global economy. The outbreak has put this demand clearer into focus.”

Roddy Allan, chief research officer, JLL Asia Pacific

While looking to the outbreak of Severe Acute Respiratory Syndrome (SARS) in 2003 for hints on how markets could perform this year, investors should be cautious on reading too much into it, Allan says.

Mainland China’s economy is nine times larger now than it was in 2003, just before SARS hit Hong Kong in March 2003.

The country is also now the world’s top exporter and the second-largest importer, not to mention the world’s second largest economy; when SARS hit, it was the sixth largest.

Still, Allan foresees the coronavirus having a similar “sharp but short-lived” impact on the region’s real estate investment market.

“The impact on deal volume should be limited if the outbreak dies down in three to six months,” he says.

Transaction volumes may pull back slightly in the first half of 2020 as some investors take a wait-and-see approach and delay deals, but should be back on track by the second half of the year due to accommodating policies.

Roddy Allan, chief research officer, JLL Asia Pacific

Retail and hospitality vulnerable

Service industries have been among the first to feel the impact. On the hospitality front, the coronavirus has hit hotels in Hong Kong, Malaysia, Philippines, Singapore and Thailand and Australia, where Chinese tourists are among the biggest groups of visitors. Major airlines such as Cathay Pacific, Singapore Airlines and AirAsia have scaled back flights to and from China.

Retail in China, Hong Kong and Singapore is also expected to feel the impact as consumers avoid crowded places such as shopping malls, while major brands including Nike, Apple and Starbucks are closing outlets across China to prevent the spread of the virus among employees and customers, according to JLL.

“There is no escaping the fact that investor sentiment will be affected in the short-term, but we do not foresee a lasting negative drag on Asia Pacific’s real estate,” Allan says. “Risk premiums will recede once the virus is under control.”

Advertisement
Comments

Real Estate

Where to live in Thailand ? The best places for residential properties

From villas for sale in seaside resorts to condos for rent in Bangkok, the real estate market in Thailand is characterized by its many and varied offers.

Avatar

Published

on

The real estate market of the Land of Smiles is characterized by its many and varied offers. It is hard to decide between the many villas for sale in the seaside resorts or the condos for rent in Bangkok. 

(more…)

Continue Reading

Real Estate

Asia Pacific to outperform other regions in 2020 for real estate investment

Investment in Asia Pacific real estate has reached US$125 billion in the first three quarters of 2019, up 10 per cent year-on-year, and is set for another strong year in 2020, says JLL.

Avatar

Published

on

According to the real estate consultancy, foreign investments into Asia Pacific are at a decade-high, making up 35 per cent of total volumes, mostly driven by private equity funds and large-scale transactions.

(more…)

Continue Reading

Investment

Asia Pacific REITs raise a record amount of US$14 billion in 2019

REITs in APAC have raised over US$14 billion so far in 2019, surpassing the previous record of US$13.8 billion in 2013, according to JLL data.

Bahar Karaman

Published

on

Real Estate Investment Trusts (REITs) in the Asia Pacific region have raised a record amount of capital this year, as investors sought more defensive, yield-based stocks amid growing global economic and political uncertainty.

(more…)

Continue Reading

Must Read

Upcoming Events

Mon 06

26th World Cardiology Conference – Bangkok

April 6 @ 8:00 am - April 7 @ 5:00 pm BMT
Wed 08

Global Public Health 2020

April 8 @ 8:00 am - April 9 @ 5:00 pm BMT
Mon 13
Fri 17

2nd International Conference on Nanomedicine and Nanotechnology

April 17 @ 9:00 am - April 18 @ 5:00 pm BMT
Aug 21

16th International Expo on Recycling and Waste Management

August 21 @ 8:00 am - August 22 @ 5:00 pm BMT

Press Release

Subscribe via Email

Enter your email address to subscribe and receive notifications of new posts by email.

Join 12,288 other subscribers

Trending