Country for PR: Hong Kong
Contributor: PR Newswire Asia (Hong Kong)
Wednesday, March 04 2020 - 13:03
COVID-19 impact: APAC markets present value-buying opportunities with rebound expected in H2 2020
HONG KONG, March 9, 2020 /PRNewswire-AsiaNet/ --

-APAC property markets to recover in H2 assuming COVID-19 outbreak peaks in the 
first half of 2020 
-Investment opportunities emerge in offices and industrial property across Asia 
and Australia; in mainland China we highlight logistics assets and data 
centres; hotels offer rebound opportunities in Hong Kong and Singapore 
-Shifting office market dynamics in mainland China, Hong Kong, Singapore and 
Japan create opportunities for occupiers to negotiate favourable new deals, 
adopt new strategies and consider relocation 
-Colliers' survey shows landlords in mainland China retaining a positive 
outlook; demand expected to pick up in the second half of 2020

Real estate markets across the Asia Pacific region, hit hard by the COVID-19 
outbreak, are poised for a rebound in the second half of 2020, according to two 
new reports assessing the impact of the virus from leading global commercial 
real estate services and investment management firm, Colliers International 
(; TSX: 

Assuming the spread of COVID-19 peaks in the first half of 2020, the current 
slowdown presents property investors a window of opportunity to pick up assets 
at attractive prices, occupiers the chance to negotiate favourable leases and 
landlords the opportunity to build lasting relationships with clients, the 
research shows.

"COVID-19 will hit GDP growth across Asia (but less so Australia) in the first 
half of 2020, and investment property sales may weaken as a result. 
Nevertheless, if the outbreak peaks in H1, we foresee a rapid recovery in 
sentiment in H2, offering investors the chance to buy assets at favourable 
prices now," said Andrew Haskins, Colliers' Executive Director of Research in 

"The economic pressures created by COVID-19, combined with aborted events, 
travel bans and enforced home working, may result in reduced office leasing 
activity in H1 in many markets. From the perspective of property occupiers, 
this creates opportunities for the more resilient and nimble organisations to 
negotiate favourable tenancy deals, while others can adopt a 'wait & watch' 
approach as the situation fully unfolds," said Andrew Haskins.

Following are key findings and recommendations for major APAC markets from the 
two reports released by Colliers International – "COVID-19: Impact on APAC 
Occupier Property Markets" and "COVID-19: Impact on APAC Real Estate Capital 

Mainland China market down but not out

In mainland China, which has been particularly hard hit by COVID-19, we expect 
cash-strapped asset owners may be more flexible on price expectations, giving 
long-term investors the chance to hunt for bargains now. We highlight logistics 
warehouses, since COVID-19 is further boosting online shopping and thus demand 
for logistics space, as well as data centres, for which mainland China's 
national work-from-home experiment has boosted already surging demand.

A Colliers survey of over 700 landlords, investors and occupiers in mainland 
China indicates that overall, landlords are more positive about expectations 
for 2020 in the wake of COVID-19, as only 29% of landlords expect rents to 
decline, whereas 45% of tenants are already seeing a decline in business 
activity. However, certain tenant sectors such as online shopping, online 
education, online gaming, pharmaceuticals and healthcare are little affected, 
or may even be achieving sales increases. While a mismatch of expectations 
exists, occupiers can use this difficult period to forge deeper relationships 
with landlords, while the more secure occupiers can initiate long-term 

Hong Kong's significant recovery potential

With sentiment in Hong Kong's property market expected to recover as early as 
Q2 2020, investors have a chance to benefit from price corrections and acquire 
discounted assets. Targets for a rebound in Hong Kong include strata-titled 
office space, en-bloc offices in fringe areas, and hotels, whose prices have 
fallen about 30% from their peak. Industrial assets for conversion remain 

Hong Kong is going through a steep downturn. However, falling rents and the 
prospect of a sharp recovery in sentiment in H2 suggest that now is a good time 
for growth sectors to expand at lower rental costs. We reaffirm our forecast 
that average office rents will fall by 8% in 2020 (13% in Central), with the 
decline concentrated in the first half. Although in many Asian cities Colliers 
recommends decentralisation, in Hong Kong we are now tactically advising large 
tenants to reconsider Central, where vacancy rates have risen and rents are 

Stimulus-driven revival in Singapore

Singapore's strong policy response to COVID-19 has instilled confidence in 
travellers and investors alike, reinforcing its safe haven status despite the 
near-term impact of the outbreak on the hospitality and retail sectors. A 
significant rebound in H2 is possible. Investors should target hotels, prime 
CBD offices and city fringe business space for long-term growth.

Singapore has seen modest impact from COVID-19, although occupiers have 
introduced work-from-home and split operation arrangements. We expect occupiers 
to take a long-term view of their accommodation and focus on accelerated 
technology adoption, wellness certified buildings as well as "flex-and-core" 
strategy or split office locations. In the meantime, cost-conscious occupiers 
can find quality office space at good rents in the city fringes.

Liquidity, fixed rents support Japan market

In Japan, COVID-19 has reduced risk appetite and may lead to a temporary fall 
in new investment. However, Tokyo offices still offer good value with high 
yields compared to zero-yielding bonds, while low stock of modern logistics 
warehouses should outweigh high near-term supply, ensuring firm rents. Severe 
price declines should be limited to smaller, regional hotels, which were facing 
oversupply even before the hit to tourist travel from COVID-19.

Tokyo's landlords continue to benefit from limited supply and low vacancy 
rates, while in Osaka, leasing activity ought to slow until supply reappears in 
2022. Considering slowing rental activity, we recommend occupiers renew leases 
as soon as possible and explore flex-and-core strategies to reduce dependence 
on commuting in line with government guidance.

Australia offers rare medium-term growth prospects

In Australia, the large regional investment market least affected by COVID-19, 
rental income growth is still contributing to capital value growth in office 
and industrial property, and the overall market presents an increasingly rare 
medium-term income growth opportunity. Australia, above all Melbourne, is a 
global centre of biomedical research, and we advise investors to look for 
opportunities in biomedical precincts. 

Australia is still seen as a clean, health-conscious country with a 
world-leading healthcare system. COVID-19 has had minimal impact on the 
occupier market so far. Given the global uncertainty, some occupiers in 
affected sectors may pause longer-term occupancy decisions until they have more 
confidence. As a result, Colliers has noted a modest increase in flexible 
workspace requirements as a temporary solution.

– End –

About Colliers International
Colliers International (NASDAQ, TSX: CIGI) is a leading real estate 
professional services and investment management company. With operations in 68 
countries, our more than 15,000 enterprising professionals work collaboratively 
to provide expert advice to maximize the value of property for real estate 
occupiers, owners and investors. For more than 25 years, our experienced 
leadership, owning approximately 40% of our equity, has delivered compound 
annual investment returns of almost 20% for shareholders. In 2019, corporate 
revenues were more than $3.0 billion ($3.5 billion including affiliates), with 
$33 billion of assets under management in our investment management segment. To 
learn more about how we accelerate success, visit our website 
( or follow us.

Source: Colliers International