November 24, 2020
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HONG KONG (24 November 2020) – While the success of Asia Pacific governments in containing the spread of COVID-19 has helped limit its impact on local real estate markets, there are growing concerns that a correction may be on the cards next year, according to the 2021 Emerging Trends in Real Estate® Asia Pacific report. The 15th edition of the regional real estate forecast report is jointly published by the Urban Land Institute (ULI) – the world’s oldest and largest network of cross-disciplinary real estate and land use experts – and PwC.
The report names three markets where stress seems likely to surface. Firstly China, where a liquidity squeeze is creating bank financing challenges for smaller developers. Secondly India, where the implosion of local non-bank finance companies has created opportunities for foreign private equity funds. And lastly Australia, where the economic impact has been most acute and greater market transparency is likely to open up more buying prospects.
Singapore, Tokyo and Sydney continue to rank as the top three markets for investment and development prospects in the region. These markets are each promising a sense of safe harbour in an increasingly hostile global environment, both in terms geopolitical and economical risks. Seoul rose steeply in this year’s investment prospects rankings as South Korea enjoys the benefit of a deep domestic economy that allows assets to be brought or built with a view to serving domestic demand rather than outwardly facing geopolitical risk. Ho Chi Minh City, once again is seen as the sole emerging market city with the best prospects for growth, boosted by its successful containment of the pandemic and a rapidly growing economy spurred by the escalating China/ US trade tensions.
David Faulkner, President of ULI Asia Pacific, said: “The Asia Pacific region has been remarkably resilient to the challenges faced by coronavirus, particularly compared to Western markets, but we expect to see some market correction. Despite the common rhetoric that the pandemic has ignited many changes to our society, what we have seen so far in the real estate sector is an acceleration of trends already underway before the arrival of COVID-19. ESG themes are one example of this, as is a movement by developers towards designing general-purpose structures that can be adapted to serve multi-purposes over their lifetimes.”
“2020 has certainly been a challenging year for Asia Pacific real estate, witnessing a steep decline in transaction volumes.” said KK So, Asia Pacific Real Estate Tax Leader, PwC. “However, investors in the region remain nimble and are already grasping opportunities emerging from the crisis. While remaining focussed on mainstream asset classes, they are also looking at other sources of reliable income streams in a down-trending market.”
The report highlights that logistics will probably be the asset class that emerges from the pandemic strongest as it continues to witness sustained demand, driven by a number of cyclical and structural drivers, in particular the robust growth in e-commerce. Meanwhile, residential sectors in the Asia Pacific region have remained surprisingly resilient to the impact of COVID-19, despite threats of economic downturns. In an environment of uncertainty, this upbeat consumer sentiment, together with an equally reliable long-term mortgage and rent payment track record, earmark the residential sector as a defensive asset class that investors in the region are now targeting.
Other trends of note cited in the report include:
The Emerging Trends Asia Pacific report is based on a survey of 391 real estate professionals, as well as 134 interviews, including investors, developers, property company representatives, lenders, brokers and consultants.
The report, which is being discussed at a series of events across the region over the next several weeks, was released as part of a live webinar on Tuesday 24 November 2020, and a recording is available to attendees and ULI members by contacting [email protected].
The full report is available on Knowledge Finder or at asia.uli.org/emerging-trends.
About the Urban Land Institute
The Urban Land Institute is a non-profit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land in creating and sustaining thriving communities worldwide. Established in 1936, the Institute has over 45,000 members worldwide representing all aspects of land use and development disciplines. For more information, please visit uli.org or follow us on Twitter, Facebook, LinkedIn, and Instagram. ULI has more than 2,500 members in the Asia Pacific region. For more information on ULI Asia Pacific, visit asia.uli.org or follow us on Twitter, Facebook, LinkedIn and Instagram.
About PwC
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 155 countries with over 284,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. © 2017–2020 PwC. All rights reserved
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