Thought Leadership

The Retirement Census is an annual data collection proces conducted amongst Australian retirement village operators. It covers retirement villages governed by state Retirement Villages Acts, rather than other forms of seniors’ living accommodation.
The 2020 Retirement Census covers FY20 (July 2019 June 2020). From March 2020, Australian businesses across all sectors have been significantly impacted by COVID 19 induced government restrictions on operations, employment, and service provision. Participation in the Retirement Census is entirely voluntary, meaning participating operators change year to year. Comparison with previous year figures should be considered with this in mind.

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This presents many opportunities for readers of The Wealth Report, whether it’s the investment potential of the global demographic trend towards longer, healthier lives – explored in detail in our Big Interview on page 10 – or the ability of forward-thinking property investors and landlords to capitalise on demand for “healthy” workspaces that boost productivity, which we discuss on page 76. In parallel with this, “giving something back” is increasingly important to the UHNWI community, and on page 86 we profile three fascinating philanthropists whose work benefits a diverse range of causes.

A central pillar of The Wealth Report, the results of our proprietary Wealth Sizing Model – unveiled on page 18 – reveal that wealth continues to be created around the world, especially in Asia’s economic hubs. This growth in private capital is having a noticeable impact on real estate markets globally.

Prime retail markets were severely disrupted by the pandemic with rental movements from -41.6% (Jakarta) to +2.6% (Guangzhou). In Jakarta, with strict social distancing measures and restrictions on mall opening hours, landlords were pressured to provide rental relief, and many of them slashed rents by half. In China, retail footfall recovered, and rents increased by 2.6% and 0.5% in Guangzhou, Shanghai, while softening by 2.8% and 1.5% in Beijing and Shenzhen. Vietnam’s retail markets were resilient with total retail sales of goods and services up 5.6% QoQ in Q4/2020. Rents in Ho Chi Minh City and Hanoi increased by 2.1% and 0.1% respectively. 

The logistics market has proven to be highly resilient and will remain a key focus in the region, with rental movements ranging from -0.4% (Shanghai) to +7.3% (Singapore). The pandemic accelerated a shift to online retail, and logistics assets were the major beneficiary. In Singapore, most warehouses are at capacity and some spillover demand has been seen in traditional factory space. In China, driven by rising domestic consumption and e-commerce, demand for modern logistics facilities is expanding rapidly. Beijing (+0.7%), Shanghai (-0.4%), Shenzhen (+2.4%) and Guangzhou (+3.0%) all entered an early upswing.

Real estate companies have ramped up their investment in technology in response to the COVID-19 pandemic, finds a survey of some of the biggest property players in Asia.

The survey by independent news source Mingtiandi, in collaboration with technology company Yardi Systems, finds 70 percent of real estate companies are scaling up their investment in property technology, or proptech.

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When COVID hit the world, the accompanying lockdowns brought the term Work(ing) From Home (WFH) from the margin to the mainstream. This sounded alarm bells around the world, from savvy investors like Warren Buff et to analysts and other market watchers, thinking that the age of the CBD office market is over. Those who believe that WFH will significantly reduce demand for office space have valid reasons but their concerns about demand have not been articulated considering the following:

When COVID hit the world, the accompanying lockdowns brought the term Work(ing) From Home (WFH) from the margin to the mainstream. This sounded alarm bells around the world, from savvy investors like Warren Buff et to analysts and other market watchers, thinking that the age of the CBD office market is over. Those who believe that WFH will significantly reduce demand for office space have valid reasons but their concerns about demand have not been articulated considering the following:

1. The discrete nature of office leasing terms
2. Time domain
3. New demand

By not accounting for these factors, any analysis of the market is likely to fall short of the mark. Today, we will analyze the Singapore CBD Grade A Office market to look at how it may permutate over time after we adjoin these three extensions to the mainstream WFH belief that there will be a sharp climbdown in demand. From a list of permutations, we will input our prior probabilities as to which of these are likely to play out in future. This approach is in sharp contrast to providing a singular outcome after just one round of reasoning.

• The COVID-19 pandemic and the ensuing lockdowns’ economic ramifications have caused significant uncertainty over the future of work and rental income from office properties.
• Nearly 60% of the UK Quarterly Property Index’s office rental income comes from leases that expire or contain a break-clause date over the next five years.
• A review of lease events showed that in 2019 47% of offices were vacant for one quarter or more after a break clause and 72% were vacant after lease expiry.1 These numbers could rise amid COVID-19, leaving more rent at risk.

• Lockdowns and social distancing have impacted many tenant businesses, resulting in an unprecedented number of requests for rental relief, stressing real estate rental-income streams.
• For equity investors, income returns have weakened, despite softening asset values. Recent income returns may understate the full potential impact as accrual of deferred rents may mask further shortfalls.
• Lower rental incomes may also stress debt covenants and increase servicing pressures on some loans. In loans that default and are foreclosed upon, falling asset values may also increase potential loss severity.

What’s the effect on investors when commercial tenants can’t pay their rent? For answers, we caught up with Bryan Reid, executive director on MSCI’s real estate solutions research team.

As record-breaking investment flows into real estate, fund managers face increasing complexity and growing investor demands for real time reporting. We talk to Yardi’s Bernie Devine about the trends.

As governments around the world start to ease restrictions on lockdowns, attention inevitably turns to the concept of “returning to work.” However, this viewpoint incorrectly frames the current state of play. Many office-based workers have continued to work through the pandemic and so the focus should actually be on who should go “back to the office?” Of course, the first focus has to be on employee wellbeing and vulnerable employees need to remain safe.  But after that, the situation becomes more blurred,

As governments around the world start to ease restrictions on lockdowns, attention inevitably turns to the concept of “returning to work.” However, this viewpoint incorrectly frames the current state of play. Many office-based workers have continued to work through the pandemic and so the focus should actually be on who should go “back to the office?” Of course, the first focus has to be on employee wellbeing and vulnerable employees need to remain safe.  But after that, the situation becomes more blurred, not least as social distancing will mean that not all employees can still be accommodated in the available space.  In conjunction with this, companies recognize that some workers can successfully operate remotely at least part of the time. As a result, companies will have to provide more choices and greater flexibility to work away from the office for the foreseeable future.
 

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