The region presents a very mixed picture in combating the virus. As some jurisdictions struggle to contain the outbreak, others are faring better while some are losing ground which had previously been won. For investors, this means that opportunities are beginning to emerge but at a much slower pace than many had expected and volumes have slumped as a result. Having moved well beyond trade, US-China tensions are also fraying nerves as outcomes are hard to predict. With governments spending billions to support businesses and livelihoods, a lot will also depend on their resolve over the second half of the year.
Simon Smith, Savills Research
Australia
Despite the current economic climate, assets in Australia continued to trade over the first half of 2020 with strong investor demand still apparent. The 12 months to June 2020 saw AUD31.8 billion of sales (AUD5m+) across the office, retail and industrial asset classes.
China
The majority of the country's commercial and retail markets recorded declines in the second quarter, accelerating the trends that some cities were already seeing even pre-COVID. The residential and land markets have remained strong with a good rebound in volumes, though the pace of sales is likely to slow in the second half as the government looks to cool the market. Investment activity remains quiet as sellers hope for a swift recovery in demand to support current pricing, while buyers are asking for deeper price cuts for the added uncertainty and risk that they are taking on. More structured deals and quasi debt arrangements are likely to be seen in the coming quarters.
Hong Kong
While there are early signs of returning demand in the commercial sector with an improvement in business activity and a slower rate of rental and price declines in the second quarter, the recent resurgence of Covid-19 has pushed back the economy’s recovery. A deterioration in US-China ties has added another layer of uncertainty to the city outlook.
India
India has announced a substantial package of measures in ongoing efforts to shore up the flagging economy. Office markets have experienced pressures like other segments, but expectations of a post-pandemic rebound persist.
Indonesia
While most players in the retail and hospitality sectors remain cautious, the office market in the Jakarta CBD continued to see positive take-up albeit at a slower rate. Lower rents with attractive terms offered by landlords attracted tenants to move into newer, better quality buildings in prime locations.
Japan
After nearly seven years of economic growth, the combination of a consumption tax hike and the global pandemic have finally disrupted Japan’s historic bull run, placing the country into a technical recession. Core property markets are maintaining sound fundamentals, however, ensuring some resiliency for the time being.
Malaysia
To support the domestic property market, the government has re-established the Home Ownership Campaign under the PENJANA Stimulus Package, including exemption of stamp duty on instruments of transfer and a full exemption on loan agreements, exemption of Real Property Gains Tax, and lifting the gearing limit of 70% on third housing loans.
Singapore
While the desire to invest remains strong, travel restrictions are disrupting the deal process.
Korea
Despite a weak quarterly volume, the annual deal total is likely to rise to levels reached in previous years given ample liquidity, historically low interest rates, limited outbound investment opportunities, and the completion of new buildings with forward commitment.
Taiwan
The land market remained active as the residential sector recovered in Q2. The trade tensions and the COVID-19 pandemic are motivating manufacturing to move back to Taiwan which should support demand for industrial properties.
Thailand
Whilst Thailand has managed local rates of coronavirus infection well, the economic outlook has become increasingly bleak, with 2020 now looking to be the worst year for GDP since the Asian Financial Crisis in 1997.
Vietnam
The Government’s swift response to the pandemic has delivered benefits as the domestic economy has rebounded and early export figures show firm growth. Most sectors have held up well, the exception being city and business-based hotels. Industrial continues as the poster child, with a growing number of enquiries and heightened capital market activity.