The year ended on a generally subdued note in a region beset by a growing number of challenges at a point where values are testing record highs in many jurisdictions and underlying weaknesses are becoming harder to ignore. The COVID-19 outbreak has come at a particularly vulnerable time for local markets and it will be interesting to see how successfully governments navigate what looks likely to be a very choppy 2020.
Simon Smith, Savills Research
Australia
Australian property continues to see yield compression fuelled by a weak Australian dollar and above world average cap rates, providing global investors superior running yields and further capital appreciation. We continue to prefer CBD offices in Sydney and Melbourne, although there are green shoots in Perth as the Western Australian economy begins to improve from higher resources prices.
China
Covid-19 and the government's response has rattled many cash strapped firms which were already dealing with the fallout from the nation's financial de-risking and trade dispute with the US. The economy is expected to make a swift recovery once the virus is under control and businesses resume work.
Hong Kong
Hong Kong’s investment markets ended the year not with a bang, but a whimper as volumes and values both slipped further against a generally testing macro environment.
India
India witnessed a year of interesting contrasts in 2019, evident in Q4 as well. Amid ongoing economic stress, the government’s INR 250 billion fund for residential projects was a positive step. Office markets meanwhile surged further to an historic high of 57.7 million sq ft absorption in 2019.
Japan
Japanese economic resilience surprised on the upside in late 2019. That said, the full impact of the October 2019 consumption tax hike is still unknown. The underlying fundamentals continue to appeal, but global macro uncertainty is looming larger.
Malaysia
2019 ended on a hopeful note, as the government announced the revival of Bandar Malaysia, and the KL Singapore High Speed Rail project.
Singapore
Even though we expect investment sales volumes to fall this year, prices will remain elevated and even rise as too many buyers chase too few sellers.
Korea
Backed by strong demand from investors seeking development opportunities and end-users, the 2019 investment market marked another active year. With the Korean economy forecast to grow at around 2% and the base rate to remain low in 2020, we expect more activity thanks to tax benefits in favor of public offering REFs and REITs.
Taiwan
Taiwan’s GDP is projected to grow by 2.64% in 2019 and 2.72% in 2020. The stable economy and the return of supply chains should help to underpin demand in the local property market in the coming year.
Thailand
Despite weaker interest from Chinese buyers and a glut of condominiums in the capital, Bangkok remains a popular choice among foreign investors and the number of well-planned large-scale mixed-use projects bodes well for the future.
Vietnam
Whilst foreign interest remains high, strong domestic consumption is also helping to generate demand across multiple asset classes.