HONG KONG SAR –\u00a0Media
Source: iStock<\/i><\/p>\n \u00a0<\/p>\n The study The
\u00a0<\/p>\n According to the study, rents of
\u00a0<\/p>\n Flight to Quality<\/b><\/p>\n According to the study results and
\u00a0<\/p>\n At the start of the pandemic, the
\u00a0<\/p>\n In response, investors redistributed
\u00a0<\/p>\n “What we are seeing could be a
\u00a0<\/p>\n She adds that supply within the
Government Intervention<\/b><\/p>\n To deal with the unprecedented
\u00a0<\/p>\n The researchers investigated the
\u00a0<\/p>\n They found that government fiscal
\u00a0<\/p>\n “It would seem that it is the
\u00a0<\/p>\n Hunting for Bargains<\/b><\/p>\n The researchers believe that their
\u00a0<\/p>\n Dr. Liusman notes that while periods
\u00a0<\/p>\n Commenting on future research
\u00a0<\/p>\n Reference:<\/b><\/p>\n Allan R, Liusman E, Lu T, Tsang D. The COVID-19
\u00a0<\/p>\n This article was first published in the China
\nOutReach<\/a>\u00a0– 2 December
\n2021 –\u00a0Empty office buildings, hotel rooms
\nand shopping malls \u2013 these are the facts of life in the post-pandemic new
\nnormal. They are also the results of social distancing measures as well as
\ngovernment-imposed lockdowns implemented around the world to lessen the spread
\nof COVID-19, the effects of which have rippled across real estate markets in
\nAsia. It is with this in mind that a recent study found that property prices in
\nthe overall market for much of the Asian Pacific region remained stable.
\nHowever, within the different segments of the real estate, the market witnessed
\na refocusing from some investors towards strategies involving deployment of
\ncapital towards sectors of industry that actually benefited from COVID-19.<\/p>\n![](\"https:\/\/images.media-outreach.com\/Thumb\/500x0\/201672\/CUHK-2Dec.jpg#image-201672\")
<\/p>\n
\nCOVID-19 Pandemic and Commercial Property Rent Dynamics<\/a> was co-written by Dr. Ervi Liusman<\/a> and Prof. Desmond Tsang<\/a>,
\nLecturer and Associate Professor, respectively, in the School of Hotel and
\nTourism Management at The Chinese University of Hong Kong (CUHK) Business
\nSchool. Based on data from global real estate consultancy JLL<\/a>, the study examined rental figures and property prices of
\n38 cities in 12 countries and jurisdictions in the Asia-Pacific region,
\nincluding Hong Kong, Singapore, Tokyo and Kuala Lumpur. The property sectors
\nincluded office, retail, industrial and residential. They then analysed the
\ntrends in rents and property prices in the regions.<\/p>\n
\nproperties across these sectors fell approximately 15 percent on average across
\nthe Asia-Pacific region in the first six months of 2020, coinciding with the
\nbeginning of the pandemic. Office rentals recorded moderate declines of
\napproximately 14 percent. However, the most significant and continued declines
\nin rent was found in retail properties, such as shopping malls, which fell over
\n30 percent in the period. The study found a negative relationship between the
\nnumber of COVID-19 confirmed cases and deaths and market rent in the region.
\nInterestingly, property prices in the overall market did not fall despite the
\ndrastic drop in rents.<\/p>\n
\nanecdotal evidence, overall property prices in the Asia Pacific remained strong
\ndespite the surge in COVID-19 cases with less focus on retail investment and
\nmore and of a focus into the residential and industrial properties sectors.<\/p>\n
\nresearchers say the social distancing measures and lockdowns implemented in
\nresponse to the pandemic forced people to stay at home and consequently led to
\na boom in e-commerce at the expense of demand in physical retail stores. Many
\nstores also had to close down and without stable rental income, and landlords
\nor investors became more likely to sell retail properties in their portfolios.
\nThis simultaneous movement in both sides of supply and demand meant retail real
\nestate prices saw a significant drop.<\/p>\n
\ntheir capital allocation strategies within the overall property market, taking
\nmore defensive strategies amid the pandemic, according to the researchers. That
\nis, they reallocated funds to sectors that can better withstand the
\nuncertainties brought by the pandemic, such as by investing in data centres,
\nfactories and warehouses. Given the prolonged COVID-19 pandemic, it was natural
\nfor many investors to have concerns about the eventual prospect of the retail
\nproperty market, which is why they chose to put their money in other property
\nsectors.<\/p>\n
\n‘flight to quality’ phenomenon, where investors are abandoning risky assets
\nsuch as retail properties and choosing to invest in safer options, like data
\ncentres or warehouses,” says Dr. Liusman. “Demand for real estate is
\na derived demand, which means it’s based on demand for something else, and
\npeople still need space for production and consumption. With consumers shifting
\ntheir purchases to e-commerce, online companies will need space to run their
\nbusinesses as well as for logistics, hence the rosier prospects for industrial
\nas well as other types of non-retail property.”<\/p>\n
\nindustrial property sector has remained tight with robust demand. E-commerce
\nplatforms, technology and telecommunication companies, food and drinks
\noperators and pharmaceutical companies \u2013 all of which require industrial
\nwarehousing and factory space to run their operations \u2013 were likely to have
\nbeen the driving force for the strong demand witnessed in this sector.<\/p>\n
\ncrisis brought by the COVID-19 pandemic, governments worldwide have implemented
\ndifferent support programmes to restore their economies, as shown in a report
\npublished by the International Monetary Fund<\/a>.<\/p>\n
\nfiscal stimuli packages carried out by governments in the Asia-Pacific
\ncountries. For instance, China announced an estimated 4.9 trillion Chinese yuan
\nin fiscal measures, including tax relief and reduced social security
\ncontributions. The researchers examined how different stimuli affected
\ndifferent markets in the Asia Pacific region.<\/p>\n
\nstimuli had a positive effect on reducing declines in property rents. However,
\nthey also discovered that this positive effect had already worn off by the time
\nthe announced measures got around to being implemented. They explained that
\ngovernment fiscal stimulus packages seem to be effective in mitigating the
\nnegative impact of the pandemic but this seemed to work at least as much
\nthrough helping to restore confidence in the property market as the financial
\naspect of the measures themselves.<\/p>\n
\nannouncements of those grand schemes of fiscal stimuli that weakened the fall
\nin rents. What this means is that the governments’ initial response may be what
\nmatters more in restoring investor confidence than what the governments
\nactually do to help the economies,” Prof. Tsang says.<\/p>\n
\nresearch findings can provide valuable implications on how the pandemic has
\naffected the global property environment. “Due to the diverse nature of
\nreal estate, the impact of the COVID-19 pandemic varied significantly across
\ndifferent regions and sectors. While some property sectors like retail and
\nhotels may have been negatively impacted by the pandemic, other sectors were
\nrelatively stable,” Dr. Liusman says. “As an investor, it is important
\nto examine the market demand for a particular sector when selecting the
\ninvestment portfolio.”<\/p>\n
\nof economic crises generally presented good opportunities for investors to
\nbargain-hunt, during the current pandemic property owners in the overall market
\nshied away from slashing prices to offload their assets. She explains that one
\nreason may be due to the government fiscal stimulus packages helping to restore
\ninvestor confidence. Another possibility is perhaps because those building
\nowners had deep pockets and did not feel an urgency to sell their properties.<\/p>\n
\ndirections, the researchers said further research could be focused on how the
\nproperty market has reacted to the recovery from the pandemic. Additional
\nresearch may also consider looking into any potential relapse in the property
\nmarket due to the discovery of variants of the COVID-19 virus.<\/p>\n
\nPandemic and Commercial Property Rent Dynamics. Journal of Risk and Financial Management<\/i>. 2021; 14(8):360. https:\/\/doi.org\/10.3390\/jrfm14080360<\/a><\/p>\n
\nBusiness Knowledge (CBK) website by CUHK Business School: https:\/\/bit.ly\/3oU8fiG<\/a>.<\/p>\n