Regional performance has been tepid due to the absence of big players, but some markets are showing signs of improvement.
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Hong Kong’s investment momentum turned sluggish in 2020, with the total Hong Kong’s investment momentum turned sluggish in 2020, with the total transaction volume dropping 47%YOY to HKD 60.1 billion (USD 7.7 billion), a record low over the last decade.
Most investors have been taking a wait-and-see approach throughout 2020, given the market was still shadowed by different layers of uncertainty. Meanwhile, the global outbreak of the COVID-19 pandemic and the subsequent travel restrictions also likely deterred some site visits and investment decisions, especially for those investors with decision-makers abroad, making local and mainland capital the key buyers.
Whilst the property market in Hong Kong has been undergoing a correction across most commercial sectors, the gradual increase in yields in the last two years prompted investors to look for distressed assets or properties with bigger discounts, despite their limited availability. The bid-ask dislocation remained the key hurdle for investment transactions over the last 12months.
Download the Report Read MoreConducive global developments placed financial markets on a risk-on mode in the final month of 2020. The prospect of widely available coronavirus vaccines, the US bipartisan agreement on fiscal stimulus, and the EU-UK post-Brexit trade agreement’s conclusion provided the necessary fillip to sentiment, sustaining momentum for real estate stocks to conclude on a positive note.
However, for the whole of 2020, real estate stocks continued to lag the wider equity markets, which have been supported by tech and pharma counters. Property cycles will eventually chart the sector’s own way out of the crisis, which although historically it lags an economic recovery, will be longer-lived, sustained by the region’s enduring structural fundamentals.
China Real Estate Market 2021 - Finding The Way Forward
2020 has been a challenging year for all. With China now seemingly on its way to a full recovery, Savills has published its China market overview and outlook “Finding a way Forward, 2021”, which analyses key drivers and trends of five asset classes and the property management sector.
Investment: National transaction volumes decreased YoY, while niche assets increased their share of investments to all-time highs.
Office: Occupiers look to optimise their office portfolios through flexible space arrangements while also securing cost savings.
Retail: Landlords increase the share of leisure tenants in malls to attract consumers back to the high-street.
Residential: Upgrade and end-user demand supports the stable market foundations, while the multi-family sector sees new regulations to protect tenant rights.
Logistics: New infrastructure initiatives will level up warehouse standards and scale. Transparency and asset liquidity is also expected to improve with the launch of REITs.
Property management: New IPOs saw a record high in 2020, while PropTech opens the way for additional value-added services.
Regional performance has been tepid due to the absence of big players, but some markets are showing signs of improvement.
