市場展望

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. 

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. 

投資： National transaction volumes decreased YoY, while niche assets increased their share of investments to all-time highs. 

辦公室： Occupiers look to optimise their office portfolios through flexible space arrangements while also securing cost savings. 

零售： 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.

With the acceleration of digitalisation as well as changing consumer behaviour, it is imperative for retail tenants and landlords alike to adapt to the rapidly-evolving multiplatform retail scene to remain relevant, retaining the physical shopper catchment in shopping malls through an online presence. Malls should no longer purely be just a point of sale, but also extend towards being a focal point that incorporates meaningful and memorable experiences that are able to resonate with the varying consumer needs. This would make for an in-store shopping environment that is more enjoyable and appealing than just traditional brick-and-mortar shopping or mere e-commerce, as part of their placemaking strategy.

With Singapore in Phase Three of Re-Opening, increased footfall to retail spaces is expected with the relaxation of measures for gatherings and a majority of the workforce back to the workplace.

The recent slowdown in rental declines of prime retail spaces point to a potential bottoming out of rents by early 2021, and any rental reduction during the year is projected to be about 5%, barring lockdowns as a result of recurring community infections. Rentals of prime retail spaces located in Orchard might require a bit more time to recover and are expected to only return to pre-COVID-19 levels once mass vaccinations prove successful enough for the nation as well other key cities to relax travel restrictions.

Most property markets in the Asia Pacific region ended a challenging year on the path to recovery, thanks to strong performances by the office, industrial and logistics segments. In China, a combination of government policies and the ongoing e-commerce boom powered demand for business parks and warehouses. Hong Kong saw a jump in transactions after the government reduced stamp duty on the sale of commercial properties, while Singapore saw a surge in investment sales amid improving sentiment. The market outlook improved in Australia as the country bounced back quickly from a recession, while New Zealand continued to reap the benefits of its successful management of COVID-19. Vietnam, which also has managed to control the spread of COVID-19 and perform better than other Southeast Asian economies in 2020, is attracting the attention of a growing number of local and foreign investors, especially in the industrial and logistics sectors. Japan is another market where logistics assets are highly sought after, reflecting growing demand from the e-commerce sector. In Indonesia, the hard-hit hospitality sector saw a surge in interest from investors looking to acquire discounted hotel assets, while fast-growing Myanmar continued to draw interest in the logistics and affordable housing segments. The residential segment is also seen trending up in the Philippines, where remittances from overseas workers is driving demand. Overall, investors are expected to act quickly to make the most of a conducive environment as markets across the region emerge from lockdowns and economies regain momentum.

Largely muted cap rates across Asia Pacific.

Uncertainty surrounding COVID-19 continued to put potential transaction activity on standby mode in Q42020. We saw largely muted cap rate fluctuations across the region.

Key Highlights in Q4 2020:

• 在 印度, notable exceptions included dips in industrial cap rates as the region-wide proliferation of e-commerce for both F&B and retailing generates sustained demand for warehousing and logistics facilities.
  
• 孟買’s retail cap rates edged upward as drops in rental and vacancies exert downward pressure on asset values.
  
• Elsewhere in 馬尼拉, we witnessed a drop in rental values which are yet to be reflected on asset values.
  
• 在 澳洲’soffice sector, we expect modern assets with long term leases to continue showing resilience in value as investors focus more on low-risk buying opportunities.
  
• While the underlying appetite for office assets in Australia remains healthy, transaction volumes is temporarily being affected by international travel restrictions which has impeded upon site visits. Further, limitations brought about by the foreign investment approval process has posed uncertainties on inbound capital flows. However, recent inroads to policies have been made which appear optimistic.

Overall, we believe that varying expectations on economic outlook has translated into mismatch between buyers’ and sellers’ price expectations.

The gradual restoration of activity will drive capital back to office, retail and industrial sectors, in turn affecting their cap rates later in 2021.

The retail sales index (RSI) (excluding motor vehicles in chained volume terms) fell by a slight 2.4% year-on-year (y-o-y) to 98.0 in November 2020. Retail sales performance improved in the month, led by prominent large-scale sales events such as 11.11 and Black Friday on digital platforms. Prior to these events, many brick-and-mortar stores also started going virtual with establishments such as Isetan and Metro selling their products on platforms like Lazada, and BHG setting up their own shopping site. This resulted in increased online sales in November, which accounted for about 16.7% (excluding motor vehicles), or some S$516.4 million of the total retail sales amounting to S$3.1 billion. Of these, majority of the retail trade mainly comprised transactions of Computer and Telecommunications Equipment, Furniture and Household Equipment, and Supermarkets and Hypermarkets.

From Q4 2020 to 2024, some 53.8 million sq ft gross floor area (GFA) of industrial space is slated to be completed. Of these, about 43.2% of the upcoming supply is expected to be completed in 2021, with a significant proportion being multiple-user and single-user factory spaces. Coupled with the phased withdrawal of government fiscal support for businesses, multipleuser factory prices and rents are likely to come under pressure, falling by not more than 5% in 2021 while single-user factories could fare slightly better.

• The COVID-19 pandemic has significantly accelerated a number of secular shifts that were already starting to have fundamental impacts on the role real estate plays in the economy as well as in investment portfolios.
• Such disruption increases the need for evolving data and analytics to understand the rapidly changing drivers of performance and risk consistently across all types of real estate investments.
• Despite a long list of difficult questions facing the asset class, climate change and its impact on risk and return are more important than ever for real estate investors.

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HEALTHY TRANSACTION VOLUME AND MODERATE PRICE INCREASE IN A PANDEMIC YEAR

• Prices of non-landed private residential properties (excluding Executive Condominiums (ECs)) in Q4 2020** saw the greatest quarter-on-quarter (q-o-q) increase of 3.2% for 2020, bringing the full-year increase to 2.7% despite the economic turbulence.
• In 2020*, non-landed private residential sales volume (excluding ECs) totalled 17,830 units, 4.7% more than in 2019 and a surprisingly good showing in a year of crisis. Strong support from needs-based buyers and eligible HDB upgraders combined to form healthy demand, bolstering sentiment despite economic uncertainty and restrictions on the re-issuance of OTPs.
• There were 9,497 transactions in the primary market accounting for some 53.3% of total sales in 2020*, as developers pushed out new launches amid encouraging sales after Singapore exited the circuit breaker. While the secondary market was slower to regain momentum and trailed with 8,333 sales, sales caught up to some extent with some 2,904 units transacted in Q4* and 2,922 in Q3, more than three times the 760 units in Q2 2020 (Exhibit 1). The practicality of resale units due to its price discount, when compared to new sale units, and the greater choices available will continue to encourage sales.

While office rents continued to drop in the downbeat market, tenants seized the opportunity for better relocation options, resulting in high activity in the leasing market during the month. However, landlords further softened their approach and adopted a more realistic stance in negotiating leasing terms to secure tenants, so the majority of tenants tended to renew their leases. As a result, new take-up of Grade-A office space was at an exceptional low level during the month, particularly in the CBD area.

Amid the challenging economic environment,

While office rents continued to drop in the downbeat market, tenants seized the opportunity for better relocation options, resulting in high activity in the leasing market during the month. However, landlords further softened their approach and adopted a more realistic stance in negotiating leasing terms to secure tenants, so the majority of tenants tended to renew their leases. As a result, new take-up of Grade-A office space was at an exceptional low level during the month, particularly in the CBD area.

Amid the challenging economic environment, cost-competitiveness remains a pressing consideration for tenants. Going into 2021, we therefore expect to see a continuing decentralisation trend. We also foresee rising demand for co-working space, as more companies, especially small and medium-sized enterprises (SMEs), which have been heavily impacted by the coronavirus-induced recession to actively explore flexible leasing options.