There was little good news to come out of the first quarter’s regional property markets where necessary government measures to protect lives have taken a heavy toll on economies, frozen local real estate investment markets and locked up cross border capital. Lower interest rates and extensive fiscal stimulus have prevented widespread distress for now, but uncertainties remain concerning the depth and duration of the downturn and the ways in which COVID-19 will reshape our industry.
Simon Smith, Savills Research
Australia
After achieving a combined cyclical high for sales volumes across the core institutional property markets for the year ending December 2019, the escalation of the COVID-19 pandemic in Australia during March 2020 has created greater uncertainty for the operating environment across all property sectors.
China
China gradually resumes business and a degree of normality but a slower global economy weighs on the recovery and may force the government to adopt more full-throated support for domestic demand.
Hong Kong
The hotel and retail sectors suffered badly through 2H/2019 as the social unrest unnerved mainland tourists and COVID-19 has now added considerably to the woes of both sectors. The office and residential markets are proving to be reasonably resilient and opportunistic investors have so far been disappointed.
India
The hotel and retail sectors suffered badly through 2H/2019 as the social unrest unnerved mainland tourists and COVID-19 has now added considerably to the woes of both sectors. The office and residential markets are proving to be reasonably resilient and opportunistic investors have so far been disappointed.
Indonesia
Government’s measures requiring large-scale social distancing and the closure of the offices of non-essential businesses have resulted in a significant drop in activity from both developers and investors.
Japan
With the adverse impact of the outbreak looming large, an economic slowdown is inevitable. With the nation still reeling from the consumption tax hike enacted in October, the already-fragile Japanese economy looks certain to head into at least a technical recession.
Malaysia
The political uncertainty, added to the pandemic and current economic woes, is expected to set the tone for the next quarter, with the full effect from recent events expected to play out over the remainder of 2020.
Singapore
While the investment sales market will be comprehensively disrupted over the first half of the year, opportunistic capital continues to build even if it remains largely undeployed for now.
Korea
Overall activity in Korea’s investment market is slowing and a greater preference for safe assets is expected to emerge as investors delay sales to the second half of the year.
Taiwan
In Taiwan, the central bank has cut the benchmark interest rate by 0.25 percentage points and lower mortgage rates have helped to ease pressure on home owners.
Thailand
Thailand is set to experience its lowest economic growth rate since the subprime crisis of 2008. It is anticipated that the tourism, retail and export sectors will be the most severely affected by the outbreak especially given Thailand’s growing reliance on visitors from mainland China.
Vietnam
Vietnam’s youthful population, the country’s growing strength as a regional manufacturing hub and its accessible real estate markets will see the country well positioned when the world finally emerges from the current crisis.