市場展望

The pandemic has induced behavioural changes amongst consumers that are likely to stay permanent. This has hit the physical retail and F&B sectors hardest and the industry has to be quick to adapt to this new reality in order to nurture the sector back to recovery, albeit in an evolved form.

Footfall numbers will be hard-pressed to return to pre-COVID levels so long as the need to social distance is enforced. The takeaway channel is therefore vital. With incomes falling and unemployment rising, food delivery companies are seeing a decline in activity from the peaks witnessed in the months of April and May. Parents are telling their children now not to order frivolously. Footfall ebbs and flows with some days seeing much greater activity than others (same as our office – some days we have 30% of the workers back while for most of the time, it’s just 15% to 20%). It is difficult to predict the daily flow these days. Whenever helicopter money is disbursed by the government, the crowd emerges in the suburbs. But give it about 10 days and the patronage falls back to pre-payout levels.

The points highlighted above are summarised in the following heatmaps. Table 1A and 1B show the heatmap of revenues by broad tenant types in CBD and Suburban locations. These are the findings obtained after spending weeks soliciting feedback from various retail and F&B operators plus plying the grounds to weed off the weekend-weekday effects.

WHEN CULTURAL VALUE BECOMES COMMERCIAL VALUE AND TRANSFORMS INTO INVESTMENT GAINS.

• The total shophouse transaction value amounted to S$880.7 million in 2020, riding out the pandemic with only a slight 3.8% year-on-year (y-o-y) decline when compared to the S$915.9 million recorded in 2019, as sales in Q4 2020 rebounded to surpass pre-pandemic levels. Gross sales value in the quarter alone accounted for almost half of 2020 shophouse sales value at S$431.8 million.
• The shophouse sales volume was also greater in 2020 compared to the previous year, with 138 transactions lodged as compared to 123 in 2019 (Exhibit 1). The majority (88.4%) sold were freehold shophouses. Q4 2020 saw a total of 51 shophouse transactions, 19 more than in Q3 when sales started to recover.
• Aided by lower costs of borrowing and high liquidity in the market, pent-up demand from different pools of buyers such as first-time investors as well as family offices and corporates contributed to the overall recovery of the shophouse market, especially towards the last quarter of the year. Price expectations between buyers and sellers were realistically met, leading to the materialisation of sales.

Opportunities remain in a challenging market

Despite the year starting with the pandemic and the resulting economic shock, China rebounded quickly and was one of the few countries that recorded economic expansion for 2020. As we look forward to 2021, many aspects of life, work and the economy have fundamentally changed with the significant advances and greater adoption of digital technologies. Nevertheless, we also start where we left off before COVID-19, tackling bigger structural issues that persist such as debt levels, climate challenges and economic stability.

In the property market, 2021 presents challenges and opportunities. The residential sales sector is faced with tighter regulations to deleverage the sector, which will slow growth and restrain demand. However, those with capital will continue to invest as to store, preserve and grow wealth. Travel restrictions have limited secondments and returning expat numbers, but operators have been swift to tailor services and facilities to the growing local client base, which is realizing the advantages of leasing. The commercial sector is confronted with excess supply, though landlords that can create a nurturing creative environment and greater flexibility for tenants will retain market share. Online platforms continue to take a larger share of retail sales, though a thirst for unique experiences and social interaction ensures bricks and mortar locations remain a key touchpoint between brands and consumers. 

The logistics sector’s growth is throttled by regulations and strict land permits, but demand from 3PLs and ecommerce platforms remains voracious. Investment has shied away from the traditional commercial sectors for higher growth opportunities in the logistics and data centre markets, though, as they pull back and vendors feel greater pressure from financing restrictions, opportunities are beginning to emerge, and activity levels are expected to start to pick back up. 

寻路向前

尽管2020年初爆发疫情带来巨大冲击，但中国经济迅速反弹，成为全年经济同比增长的少数几个国家之一。伴随数字技术的进步和推广，我们的生活、工作和经济活动都在发生变化。此外也需积极应对债务、气候、经济稳定等长期存在的结构性挑战。

2021年的房地产市场挑战和机遇并存。住宅销售市场正面临监管加码，短期市场需求或将因此受限，但市场中长期价值前景并未改变，仍是财富保值及增值的重要去向。高端租赁市场持续演进，旅行限制影响外籍租客需求，但本地租客需求上升、日趋多样，为业主带来调整机会。写字楼市场存在局部供应放量，而能为租户创造创意环境和灵活空间的业主将占据优势。零售商纷纷发力电商平台，但顾客对独特体验和社交互动的诉求说明，实体店依然是品牌和消费者沟通的重要渠道。

物流行业的增长受到政策和土地许可的限制，但来自第三方物流公司和电子商务平台的需求有增无减。物流和数据中心的高增长潜力令一些投资者从传统物业领域转向利基资产。但随着竞争减少及部分业主面临融资压力，传统资产的机会也将再次出现，投资活跃度有望因此回升。

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.