Friday 09 Jun 2023
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This article first appeared in City & Country, The Edge Malaysia Weekly on December 28, 2020 - January 3, 2021

This year has been like no other, with the Covid-19 pandemic sweeping through the globe and countries imposing stringent measures in an effort to contain the spread of the coronavirus. The world economy and business activities have been brought to a near halt, with the property markets in many countries coming to a standstill in the first half of the year.

The lockdowns resulted in a change in consumer behaviour, rocking the retail market as people increasingly shop online. However, when one door closes, another opens. Most countries have reported higher demand in the logistics and warehouse sectors, which is expected to stay strong going into next year. Investor interest is likely to be mantained as well.

Many countries are beginning to see a recovery as their economies reopen. There is pent-up demand and property market activities in some places have returned to almost pre-pandemic levels. With vaccines starting to be rolled out, economic growth is anticipated to improve gradually in 2021. Read on to find out what property consultants have to say about the coming year.


Anuj Puri

chairman, Anarock

Property Consultants


Anarock Research’s data shows that about 87,460 units worth INR88,730 crore (RM48.84 million) were sold across the top seven cities in India (Delhi-NCR, Mumbai Metropolitan Region, Bengaluru, Pune, Kolkata, Hyderabad and Chennai), while about 75,150 units were launched, from January to September 2020. Considering the current trends, we anticipate housing sales to rise by at least 35% in 4Q2020 against the preceding quarter, which saw housing sales of nearly 29,520 units.

Despite the spiralling Covid-19 cases in 3Q2020, we witnessed increased demand for residential properties across all major cities in India amid all-time low home loan interest rates and various offers and discounts doled out by developers. We anticipate this momentum to continue in 2021. This growth in momentum will be against the backdrop of receding Covid-19 cases, hopes of vaccines coming into the market and shrinking job loss fears. By end-December 2020, we anticipate housing sales to rebound to 90% to 95% of pre-Covid-19 (or 1Q2020) levels. This demand will be largely led by end-users who want to own a home of their own amid exigencies such as the pandemic.

For offices, the main theme of 2020 has been about being accommodative, collaborative and understanding. Developers have largely tried to retain their old tenants rather than get new ones. Rents for office space have more or less remained stable because developers would not want the market benchmark to change. Instead, they are offering discounts such as rent deferrals, camp discounts or rental waivers (for two to three months as the case may be) so that the overall rental outgo of their tenants is reduced, and they get some relief.

As for 2021, the leasing activity will fare better than 2020. Continued work-from-home culture will get compensated by the de-densification of office space and thus, we may see renewals happening. However, in terms of new leases, office space under construction will have to keep their rents at competitive prices to attract tenants.

Residential real estate will continue to be driven by end-users. Investors will largely focus on commercial, retail or other asset classes such as data centres, warehousing and logistics. Given the present trends, most investors are trying to value-pick options across these segments.

Given the size and population of the country, the Indian residential segment will continue to see increasing demand from end-users. More than anything, Covid-19 has changed buyer preferences. Homeownership is gaining preference among millennials. Anarock’s survey conducted during the lockdown highlighted that homeownership became a compelling priority for millennials facing uncertain times. Thus, they are the key drivers of demand today — their preferences are dictated by the prevailing uncertainties, stock market volatility and recent-past financial sector incidents. Many of them now prefer buying over renting homes.

As for commercial and other key sectors in the Indian real estate industry, investors will continue to value-pick properties. India continues to be a major attraction for investors looking at long-term investments. There is higher scope for growth in a developing nation like India and investors will want to have a share of this growth. This will drive the real estate market.


Lola Martínez Brioso

research director

CBRE Spain

Like most sectors, real estate has been affected by the global crisis caused by the Covid-19 pandemic. Nevertheless, the year started with a record 1Q, with more than €4 billion (RM19.5 billion) invested in the Spanish property sector. The availability of large amounts of capital, positive macroeconomic country forecasts and solid market fundamentals placed Spain at the top of the list of international investors.

After the halt in 2Q due to lockdown, Spanish real estate recovered momentum in 3Q, capturing more than €1.5 billion between July and September — 30% more than the previous quarter. Investors continue to study opportunities although, given the high level of uncertainty, they are focusing on assets that have stabilised in terms of income or prime assets which, due to their location and characteristics, offer security. In any case, we expect the volume of investment in 2020 to be below the figures reached in previous years, standing at around €9 billion or about 25% below the figure for 2019.

The capital-seeking investment opportunities remain very high but the recovery in activities in the sector will be closely linked to the recovery of the economy. In this sense, recent news in relation to finding an effective vaccine against Covid-19 allows us to be optimistic about the future, something that the stock markets and some companies that have been most affected in recent months have reflected. Unfortunately, it is difficult to forecast what will happen in 2021. Activity in the first half of the year will probably remain subdued (subject to pandemic and vaccine developments) while the second half will bring more activity.

Prime offices will remain in high demand. The retail sector is obviously accelerating the transformation it was already undergoing, but good assets will continue to attract consumers. Perhaps even more so than before the pandemic, after a long period of forced seclusion.

In the logistics sector, Spain still has great growth potential given that e-commerce penetration is still far from the European Union average. Similarly, there is a huge lack of quality rental housing, while demand has been increasing in recent years and the trend does not seem to be changing direction. The evolution of the Spanish population from a demographic point of view also points to a growing need for appropriate solutions for different segments of the population according to their degree of dependency, state of health and so on.

It is important that tenants in the most hit sectors are [financially] supported by the government. On the other hand, about €140 billion have been allocated to Spain by EU funds, of which 37% is aimed at the refurbishment of buildings and the transformation of cities to make them more sustainable. To take advantage of this opportunity, public-private partnerships will be key. Additionally, in order for such investments to be fully implemented and help boost the economy in the short term and create jobs, it is necessary to reduce regulatory barriers and speed up bureaucracy.


Tom Bill

head of UK residential


Knight Frank UK

The first quarter of 2020 started strongly following the decisive general election result in the UK in December 2019. New buyer registrations spiked in January and transaction numbers started to increase. Following the lockdown of the property market, demand responded strongly due to pent-up demand that had been building for several years.

There were high levels of activity through the summer months, with record numbers of offers across the UK, driven in part by a stamp duty holiday announced by the government in July. Supply and demand moved in unison, which means price movements were far less dramatic than during the 2008 global financial crisis. As summer moved into autumn, a degree of nervousness entered the market and new buyer registrations were high without being at the same level of July and August. However, the fact that it takes six months on average for a property to transact means there is a lot of momentum in the market in the final quarter of 2020, helped by the stamp duty holiday, which runs out in March 2021.

We foresee the strong momentum in the market to continue through to end-March, at which point the stamp duty holiday ends and a 2% overseas buyer surcharge comes into effect. Activity levels are likely to dip after that, but the extent to which that happens will depend on the emergence of an effective vaccine for Covid-19, which will allow the market to normalise from 2Q2021. That normalisation also assumes that the UK and EU will avoid a no-deal cliff-edge Brexit at the end of this year. If there is an effective treatment and some form of Brexit deal, the market should return to normal levels of activity by autumn.

London (Bloomberg)

Residential property investors looking for price inflation should remember that the performance of the prime central London market has been the weakest across the UK over the last five or six years. A period of price growth is overdue and we forecast prices to rise by 17% until 2024, outperforming the wider UK market. Its safe haven credentials are also enhanced during bouts of volatility, and once travel restrictions are relaxed, I would expect another release of pent-up demand from overseas buyers who have been unable to travel to London.

Victoria Ormond

partner in commercial


Knight Frank UK

Markets globally have been impacted by the pandemic and the UK has not been immune from a commercial real estate market perspective, with all property year-to-3Q volumes being 18% down from the same period in 2019. However, this decline is seen less than in some other geographies and provisional all property 3Q2020 investment volumes saw a 93% increase in 2Q2020. All major sectors saw an uplift in investment volumes over 3Q as the UK exited out of its initial lockdown, even as occupier markets remain relatively subdued. In terms of cross-border volumes, the UK was the leading destination for cross-border capital globally in 2Q and 3Q this year, illustrating that even though all geographies were impacted, the UK remains a draw for capital.

Using our Knight Frank Capital Gravity model, we forecast that the UK could be the second biggest destination for cross-border investment in 2021, after the US. We forecast that the UK will benefit from both investors looking for a safe haven location as well as an increase in “near-neighbour” intra-regional flows from within Europe, such as Germany, with overall investment volumes recovering from the levels seen this year.

Even prior to the pandemic, we were seeing a continued increase in investor appetite for segments that take advantage of structural changes, such as demographics and e-commerce. If anything, the pandemic has accelerated, rather than changed, these trends. The increase in technology and data-led decision-making also continue to make data centres increasingly attractive as a segment. No one sector will be out of bounds to investors.

We forecast that those locations that are underpinned by innovation will attract the wealth and population needed for well-functioning real estate across all sectors. We have analysed this using Innovation-Led Cities to benchmark 288 cities globally against innovation factors, and London is the standout city for innovation in our research.


Thida Ann

managing director

CBRE Cambodia

The Cambodian market has suffered the effects of the pandemic, especially in the hotel and hospitality sector. The second quarter of 2020 was the worst-performing quarter for the property market in Cambodia, but 3Q2020 and 4Q2020 have fared better.The residential sector — both landed and high-rise — is doing well and in high demand from local investors and users. Developers are still launching their projects, especially the mid-end and affordable projects. Prices in the residential sector went down about 4% in 3Q2020.

Office demand was 40% lower than in 2019 and tenants have moved to lower-grade offices with smaller sizes. The rental rate for offices decreased 4.3% in 3Q2020. Retail supply continues to increase, especially community malls, where supplies have increased by 26%. Even though seven brands have exited the country this year, there are 18 new brands — mainly from the F&B sector — coming into the country.

Although the market has been impacted by the pandemic, we have seen increased demand from local investors. Developers are also flexible and offering properties that suit local investors, making changes to the designs, payment terms and product types. The office and industrial sectors have recovered. The retail sector has suffered from the delay of construction and grand opening as well as high vacancy rate, while the hotel and hospitality sector will take longer to recover, possibly until 2022.

Mid-end and affordable residential landed property are still in strong demand. Parcels of land in the outskirts continue to see capital appreciation as the infrastructure is improving. Mid-end condominiums are still a good investment opportunity, even though we believe the yield will be reduced to 5% to 6%.

International investors help to boost market growth. Therefore, if flights continue to be restricted, some potential developments and large investments will suffer from delays. The pandemic impacts infrastructure spending and planning, so some parts of the country will not grow as expected due to the infrastructure delays. Wrong product, wrong price, wrong location and wrong scale will impact the outlook for property development.


James Taylor

head of research

JLL Indonesia

The pandemic has caused office demand to weaken as many tenants focused on cost saving in a time of unprecedented disruption. Some pockets of demand remain, particularly from the technology sector and tenants looking to take advantage of good value and upgrade to higher-quality buildings. Many tenants, however, are taking a wait-and-see approach for the rest of 2020.

The retail sector has been particularly challenging with malls and retailers restricted in their capacity to operate while in the residential market, end-user buyers are more active than those looking purely for investment opportunities. The logistics sector remains extremely strong, as has been the case throughout the pandemic, while the growing data centre market is a sector to watch in 2021.

We tentatively expect improvements in all real estate segments in 2021, but the timescale really depends on the broader pandemic situation and the availability of effective treatments and/or vaccines. The modern logistics warehouse market has been strong in Indonesia for a number of years and it has proved particularly resilient throughout 2020. This is also likely to be the case in 2021 and investors are likely to be increasingly looking to tap into the data centre market.

The major factor to consider at the moment is the pandemic and effective vaccines and treatments should go a long way in restoring confidence in the market. The broader economic environment and government policy are also key to boosting demand.


Khanh Nguyen

senior director of capital markets

JLL Vietnam

JLL observes that many Vietnamese developers are raising capital for large-scale development portfolios. These portfolios are attractive to investors because of the size of cash flow, high returns and growth potential of an emerging real estate market like Vietnam. Although these transactions are under negotiation and legal review, this is still considered a positive factor for Vietnam’s real estate market because of foreign investors’ confidence in the market recovery and improvement of buyer purchasing power in the coming quarters.

The industrial sector is the hottest real estate segment in Vietnam as the country is establishing itself as an industrial hub for Southeast Asia. With the EU-Vietnam Free Trade Agreement taking effect from August this year and buoyed by stable fundamentals, Vietnam has received strong interest from both investors and manufacturers for industrial properties.

Although the international travel ban in 1H2020 had some impact on initiating new transactions, as foreign investors could not inspect the assets, the recently resumed passenger flights for six Asian countries will help expedite the transaction process. Apart from existing industrial investors such as BW Industrial, Logos, Mapletree and Boustead, we have observed a number of local investors and most recently, Japanese investors, who are looking to tap into this lucrative segment.

In addition, international investors’ demand for hundreds of hectares of industrial development land to master-develop into industrial parks is increasing. However, finding opportunities with suitable zoning and “clean and clear” legal titles remains challenging, especially in the southern provinces such as Dong Nai and Binh Duong.

Ho Chi Minh City, Vietnam (Bloomberg)

Despite being an attractive segment, doing deals is still challenging for investors — from finding the right size of land suitable for a ready-built warehouse/factory for lease development at the right location to the increase in industrial land prices while ensuring the investment meets a certain return. These are the key concerns of investors, with competition arising from both existing and new players.

Investment activity in the residential segment has slowed this year, mainly due to Covid-19 and the investigations of the local authority since last year, together with credit quality control in real estate. One of the notable transactions that was publicly announced earlier this year is the joint venture between Mitsubishi Corp (40%), Nomura Real Estate Development (40%) and Vingroup (20%) to develop a 10,000-home subdivision in Vinhomes Grand Park, a residential township in Ho Chi Minh City’s District 9.

As the global economy remains uncertain, the office and retail segments have started to feel the heat. For offices, although rents have stabilised and occupancy remains high, the demand for office space acquisition and expansion has slowed. The retail segment has taken a hard hit as shopping malls are struggling to maintain footfall as end-consumers curb their spending in a time of global recession.

We observe that the demand to acquire operating assets is still high for core investors whose strategy is to hold the asset long term and who are very familiar with the market and deal structuring in Vietnam. Value-added investors are still actively looking for distressed opportunities to generate heightened yields.

New Zealand

Ankur Dakwale

research analyst-property

Bayleys Realty Group Ltd, New Zealand

Overall, New Zealand property markets seem to have performed well amid the Covid-19 pandemic. This is mainly due to the “go hard, go early” approach taken, which stopped the spread of Covid-19 in the community.

In the residential space, we have seen the market take off into another upward boom during the pandemic, following a period of strong growth; the lockdown meant people reprioritised their needs and wants in a home. The fiscal and monetary policy support provided by the government and the Reserve Bank has cushioned the impact of Covid-19 and resulted in record low-interest rates, the official cash rate being at just 0.25%. Returning expats are also active in the market, further boosting demand and increasing house prices across the country.

In the commercial space, we are seeing a divergence between the industrial and office markets. In the office market, there has been a rise of shadow space, as larger occupiers are having more staff working from home or from satellite locations. This has increased the level of available space in the office market as these occupiers reassess their space requirements. On the flip side, the industrial market has shown resilience to the impact of Covid-19. The vacancy rates across all major centres in New Zealand have remained at low levels and there has been positive demand for industrial space with strong tenant covenants and lease terms putting downward pressure on yields.

Over the next year, we might see investors adopt a wait-and-watch approach. Local buyers will face strong competition from overseas investors who will look to New Zealand as a haven from Covid-19. With banks offering record-low interest rates on deposits, many people will be looking to park their money in property either through direct purchases or syndicated property vehicles. Up to NZ$11 billion (RM31.5 billion) has been withdrawn from the deposit market and can now be used in other investment vehicles. The pandemic will slow down supply after a lot of speculative demands are put on hold.

The most attractive real estate segment continues to be the industrial segment backed by the strong market fundamentals and proven resilience through the pandemic.

Possible challenges for the property industry include the potential resurgence of Covid-19 cases domestically and internationally, resulting in subsequent lockdowns and resulting flow-on effect to the property markets in New Zealand. Even though the official cash rate is at a record low, with many major banks predicting for this to track into negative territory in 2021, they are still cautious about who to lend to and adopting a very risk-averse stance.


Ben Burston

chief economist

Knight Frank Australia

After a difficult 2020, Australia’s economy now appears to be recovering, with the hope of better things to come in 2021, provided the pandemic can remain contained. Consumer and business sentiment has rebounded strongly, reflecting the scale of fiscal and monetary support.

The impact of the pandemic on the property market has yet to fully play out and varies widely by sector. The retail sector has been badly affected, with capital values down by 9% since March, according to Morgan Stanley Capital International. The office sector has seen a small 1% decline in average values, while the industrial sector has been resilient and continues to grow, with values up by 2%.

Looking ahead, the pandemic clearly raises question marks over the strength of occupier demand in the office and retail sectors, with the shift towards more flexible working and acceleration of growth in online shopping. Given this high degree of uncertainty, investors are reassessing risk with a greater focus on covenant strength and length of income. We expect this trend to continue in the near term, with office yields likely to widen for secondary assets and those with shorter income streams, but potentially tightening for prime assets with long and secure income streams where lower interest rates are the dominant influence on pricing.

Reflecting rising demand for last-mile delivery services and logistics assets, the performance of the industrial sector will continue to be relatively strong. Industrial and logistics property is not perceived to be subject to income risk to the same extent as other sectors, and investors continue to seek higher allocations. We expect capital growth to continue in 2021, albeit at a slower pace than in recent years.

The sustained strength of industrial market performance means that investors are also aggressively pursuing assets in more niche segments of the industrial asset class such as cold storage facilities and data centres. While neither are new, government-imposed restrictions have forced consumers to change shopping behaviours and made business more dependent on digital infrastructure. That shift is providing investors with more opportunity to gain exposure to these niche segments, which offer diversification with defensive characteristics through their reliable and typically long income streams.

The same search for secure income returns and a generally more subdued outlook for capital growth is also driving greater interest in debt strategies. The number of non-bank lenders in Australia has grown as a broad range of global and local pension funds, insurance companies and asset managers have sought diversification and defensive returns in debt markets.

Non-bank lenders tend to offer greater flexibility and faster speed of execution than traditional bank lenders, and their entry into the market is broadening the scope of borrowing available to borrowers, including longer loan tenors and higher loan-to-values than traditional bank lenders.

Hong Kong

Antonio Wu

deputy managing director for capital markets and investment services

Colliers International Hong Kong

In general, the property market is going through some downward adjustments across all sectors in both rents and sale prices. Office rents in the central business district are likely to drop an additional 20% and we have seen capital values drop 20% to 30% in some locations such as Kowloon East.

The most resilient sectors include residential and industrial, which have been affected only slightly in terms of capital value, but overall transaction volume has dropped 60% to 70% y-o-y. Not surprisingly, the worst-performing sectors are hotels and retail, while neighbourhood retail has been performing well because of increased local consumption.

For investors, buying capacity remains strong, but there is high expectation for more discounts to be offered from sellers. We have seen a few first-time buyers from China buying office buildings and hotels in the last quarter. Chinese developers have also been active and successfully bought a few government land sites through public tendering. At the moment, the market is not offering too many distressed opportunities, but we anticipate an increase in stress sales towards end-4Q2020, moving into 1Q2021.

Hong Kong’s property market is expected to bottom out in 1Q2021 — highly dependent on when the border between China and Hong Kong will reopen. Without this, retailers and hoteliers will remain very much affected, putting the Hong Kong economy under pressure.

The rise in unemployment may hit the market, as we expect major employers such as Cathay Pacific to lay off some staff towards end-4Q2020. This will affect the economy and, in turn, demand for retail and required real estate space. The price for real estate should continue to fall. There are still cash-rich investors waiting for deeper discounts, however, and we expect them to start buying again when the market offers more distress or stress sales.

Transaction volume should start picking up in 2Q2021, while the third and fourth quarters should witness a strong rebound, hopefully aligning with the reopening of the border.

On the other hand, the hotel and retail sectors should perform well in 2021 after some serious correction in prices. Hong Kong’s hotel sector has a strong long-term outlook and is still very attractive, as the future supply of rooms is healthy, especially in core locations. Investors continue to see opportunities in the market, with three small hotel blocks changing hands so far in 2020.

Hong Kong is still the main financial hub for China and there is a strong platform for raising funds, offering initial public offerings and wealth management, and there are many other financial products with different backgrounds for investors to consider. If we can maintain and grow our position as the “Gateway City”, there will always be long-term demand for office space, with companies continuing to set up headquarters after taking new and secondary listings in Hong Kong, which will generate demand for other related industries.

The industrial sector has a lot of potential, especially for recovery, with a lot of value-added or redevelopment opportunities such as data centres and office conversion. The residential sector is the most resilient and has always been the most stable, as demand is still very strong, especially from China-based cross-border investors.


James Macdonald

head of research

Savills China

As with many other countries, the worst affected sectors in Beijing, Shanghai and the rest of China were the hospitality and retail sectors, with travel restrictions put in place in February and some lasting through to April. This pushed hotel occupancy rates into the single digits or low teens, while footfall in many malls was dramatically reduced. Both sectors have since recovered relatively swiftly, with domestic travel down just 10% to 20% from last year and hotel occupancy rates back to 60% to 70%, close to levels seen last year, while retail sales growth turned positive in August and footfall has largely returned to normal.

The office sector was less affected in 1H2020, though many companies postponed expansion plans, given the economic uncertainty, and a small percentage of companies closed offices or shrank requirements in addition to some project handover delays. Demand seems to be recovering well, supported by business resumption and new government initiatives to support key sectors.

The residential sales market was heavily affected by the closure of sales offices and transaction centres in the beginning but rebounded very swiftly, with sales volumes returning to last year’s levels by May and exceeding those figures by 10% to 20% by June. Volumes have started to fall in recent months, as pent-up demand has been spent and local governments have stepped in to cool overheating markets.

The property market is expected to slow down from the strong rebound in 2H2020 as the government reinstates the fiscal discipline that was present before the Covid-19 pandemic. Hopefully, there will be enough momentum built up in the final months of 2020 to carry the economy and markets to 2021.

Meanwhile, the markets that are likely to be most attractive next year will probably be the same as this year — the logistics and data centre markets — given the fundamental drivers and limited quality stock in the market. The challenge is finding investment opportunities, with most investors looking to partner with developers/operators to build portfolios.

There may also be countercyclical opportunities in some undervalued sectors such as hospitality, or more niche sectors such as education and healthcare, though there may be significant hurdles to execution.

The biggest obstacle for the growth in the commercial and residential markets is the government’s focus on reining in debt levels for developers, individuals and corporates. Though this is positive for the long-term health and stability of the market, it is likely to lead to slower growth in the short term.

There is encouragement for the development of logistics and data centres from the fiscal stimulus packages and recently established real estate investment trust regimes as well as the more general push to modernise and digitise China’s economy through 5G, autonomous vehicles, smart cities and other advanced technologies.


Hideaki Suzuki

head of research and consulting

Cushman & Wakefield Japan

Average Grade A office asking rent in 3Q2020 was ¥38,434 (RM1,500), up 0.79% q-o-q, the slight uptick driven by new availability in higher-rent offices. The vacancy rate rose 1.35 percentage point q-o-q to 3.09% — reaching a 3% level for the first time in 11 quarters.

Secondary vacancies in existing buildings are also on the rise and we are seeing a widening gap between achievable rents and asking rents. Although scheduled new Grade A supply is limited for 2021 to 2022, overall vacancy rates are expected to continue to rise, with firms seeking cost savings and greater adoption of remote working.

All 13 new Grade A office buildings scheduled for 2020 have been completed, with 10 fully occupied, thanks to successful pre-leasing activities pre-Covid-19. However, none of the new projects due after 2021 have achieved full capacity yet. In the aftermath of Covid-19, offices are changing from being “working places” to becoming “collaboration spaces”, with companies seeking to provide a comfortable environment for staff.

Tenants are demonstrating growing interest in smart buildings such as Port City Takeshiba — incorporating artificial intelligence and Internet of Things technologies to prevent worker congestion, as well as higher ceilings and more open spaces — and focusing more on the well-being of office workers. The workplace scene is likely to be transformed more towards an activity-based workplace from a traditional Japanese office setting.

In terms of the high street retail market, the majority of stores reopened in June, but footfall traffic remains well below pre-Covid-19 levels. Prime retail rents in Ginza dropped 5% y-o-y in 2Q2020 and still continued with the closed borders, while rents in Shinsaibashi continued their fall from 1Q2020, dropping 16.7% y-o-y.

Nagoya Sakae, Kyoto Shijodori, Kobe Sannomiya, Sapporo and Sendai also experienced rent declines. Prime retail rents in 3Q were flat in Shibuya, down ¥20,000 per tsubo (35.58 sq ft) per month in Shinjuku, and remained mostly the same in other markets.

New-format retail stores emerged in the quarter amid pressures over falling rents. Cosmetics brand Orbis opened its first concept shop in Omotesando, while Shiseido opened a brand flagship store in Ginza, with both new stores incorporating beauty experience features. The try-and-buy presentation retailer “b8ta” attracted attention with new stores at the Yurakucho Denki Building and the Shinjuku Marui Main Building.

The logistics market is enjoying a tailwind, with nest-dweller consumption driving a rise in e-commerce and fresh food deliveries during the pandemic. In the apparel industry, warehouse demand is on the rise, owing partly to inventory storage needs and a decline in in-store sales. While e-commerce channel sales performance is gaining momentum in the sector, the supply of logistics facilities is not keeping pace.

Prime rents at Kanagawa Inland rose to ¥5,100 in 2Q2020, up 2% q-o-q and 6.3% y-o-y. Asking rents were up across the market in the area, with bottom-end rents growing 4.9% y-o-y. In Fukuoka, prime rents jumped 9.4% y-o-y to ¥3,500, owing partly to new supply. Osaka Inland’s prime rent also rose 6% y-o-y, reflecting its growing importance  as a logistics hub.

Some firms are accelerating their efforts to automate material handling, from packaging to indoor short-distance transport, with robots. Logistics facility owners who have been among the first to innovate, such as providing services for tenants to install robotics technology, will reap the rewards. Next year will continue to see strong performance in logistics sectors, attracting investors to acquire new assets.


Lam Chern Woon

senior director of research and consulting

Edmund Tie & Company (SEA) Pte Ltd, Singapore

Commercial rents have softened as occupier and retail leasing demand turned negative in 2Q2020 when the country underwent a two-month lockdown, largely in April and May. In 3Q2020, absorption remained negative but to a lesser extent. Rents will end the year lower, with a wider disparity in retail rents as the majority of suburban footfall holds up better.

Residential buying demand rose after the lockdown, on the back of pent-up demand and other supportive factors, and prices are likely to end the year slightly higher. The introduction of a mortgage moratorium for the rest of the year has stemmed the tide of owners offloading their properties in an uncertain climate and likely unfavourable pricing.

We are cautiously optimistic about the outlook in 2021, expecting a slight increase in sales and pricing on average. Supportive factors include the wall of liquidity amid low interest rates, relatively benign employment situations in some better-performing sectors of the economy and continual upgrading demand from public housing owners.

Various policy stimulus measures will be gradually withdrawn over the course of 2021, however, including wage subsidies under a one-off Jobs Support Scheme, which will cease after March 2021. Homeowners will then have to resume making mortgage payments, although applications for a reduced mortgage are available. Small businesses will also have to commence mortgage payments with reduced terms available.

Singapore (Bloomberg)

The global environment continues to be fraught with uncertainty, and there will be greater clarity on the property outlook as dislocations in the labour market unfolds next year. The logistics segment will continue to benefit from the boom in e-commerce, which has been growing structurally, but Covid-19 has accelerated its growth.

Retail property investments could be another potential area in which more owners are putting out their assets for sale amid a difficult climate. Potential retail investors would need to be cognisant of the risks, however, and have a sound strategy to value-add to the purchase. There could also be more homes put up for sale by owners facing harsh economic realities amid future waves of job cuts.

Real estate is a derived demand and much depends on the state of the economy. Even as the economy is expected to open up, there are still significant risks to the overall economic picture that could curtail the property market’s expansion. Certain segments such as data centres, warehousing and logistics could benefit more from the relentless advent of technology and rising adoption of online purchasing.

Demographics could also affect real estate; for instance, stakeholders need to be mindful of the rising influence of the younger generation (such as the millennials) and should take into account their preferences, behaviour and thinking. There could be a greater acceptance of other segments such as senior living over time as the local population continues to age. Travel restrictions, e-commerce and the rising prevalence of co-working have brought into question the role and design of traditional, retail, hospitality, working and living spaces with implications for future design and business models.

New York

Wei Min Tan

licensed associate real estate broker

Castle Avenue Team, R New York

In the first 2½ months from January to mid-March, the Manhattan sale market experienced a surge in transaction volume. Then, Covid-19 happened, with a lockdown from mid-March until June 21. Post-reopening so far, the sale market has seen prices fall between 10% and 15%.

Because of the uncertainties, the best time for a deal was during that lockdown period. I represented a client for whom we knocked down the price from US$3.475 million (RM14.1 million) to US$2.8 million during this period. A decrease of 10% to 15% is significant for Manhattan. Post-reopening, we also managed to get a 12% discount from a new development, which typically does not even entertain discounts.

I saw many international buyers wanting a good deal, but I told them that, in Manhattan, they cannot expect to get 30% off, unless they are at the US$10 million price point and up. For the US$1 million-to-US$4 million segment, it is considered a very good deal if one can get 15% off.

In terms of data, the sales volume for Manhattan condominiums in 3Q2020 was down 43%. The average discount to the asking price was 10.3%, while the listing inventory was up 19%.

The Manhattan rental market suffered a lot more. When leases expired, tenants moved out of Manhattan. Rental price came down 25% to 30% and supply went up dramatically. This is because companies have work-from-home policies until 2021. Meanwhile, some buildings are giving a two- to three-month rent-free period — one even gave six months free — because their cost basis is a lot lower than that of a condo landlord.

When companies call their employees back to work — which is likely to happen in Summer 2021 — the rental market will surge, with rents up 25%, as all the renters who moved out of Manhattan will have to come back.

For the sales market, 2021 will be better than 2020. I am already seeing bidding wars and multiple offers in the US$3 million-to-US$4 million, 3-bedroom condo segment. In July, people were dipping their feet back in, and it is full-fledged buying now because people do not want to miss out on the Covid-19 opportunity. There is a ton of pent-up demand and supply from the lockdown period. Prices should improve, with fewer discounts as time progresses.

Residential condos are the most attractive segment because people need a place to live, socialise and entertain. Only 10% of Manhattan’s housing inventory is condos. Residential properties are the most important property for anyone, as it represents a person’s identity and status. Commercial retail is not as good because everyone buys online now. The same goes for commercial offices.

Companies have to realise that employees are fed up with working from home. Humans are social animals and need to be with other humans to drive one another and keep one’s sanity. Companies need to call employees back so things will get back to normal. We need the office crowd in the streets and this will drive retail businesses, restaurants and consumerism in general. When employees return to work, the market will be back to normal.

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