The spread of COVID-19 smashed investments in Asia Pacific commercial real estate during the first quarter of 2020, down 34% year-on-year to US$29.5bn, according to JLL.
The most adversely affected markets in Asia Pacific, mainland China, Hong Kong and Singapore, saw investment activity decline by at least 60% YOY.
On the other hand, South Korea and Japan were the least impacted markets, where transaction activity was similar or slightly higher YOY.
“The decline in Asia Pacific transaction volumes in Q1 was widely expected, given the impact of the COVID-19 situation,” said says Stuart Crow, CEO, capital markets, Asia Pacific at JLL.
“Many investors have paused activity due to the uncertain economic environment and hence, deal activity has been impacted. We see this reduced activity continuing into Q2, with trading volumes likely to bounce back more strongly in the second half of the year. There are many well-capitalized investors waiting for opportunities, and we think the dislocation in the markets will create strong deal flow across most sectors.”
Across the different asset classes, retail investment was the hardest hit, down 39% YOY due to lockdowns and safe distancing measures.
Office transaction volumes fell 35% and hotel investments declined 22%, while industrial and logistics transaction volumes were up 9% YOY.
“The full impact of the COVID-19 outbreak on the investment market will hopefully start to become clearer in Q2 as investors focus on existing portfolios and bide their time for the right opportunities,” said Regina Lim, executive director, capital markets research, Asia Pacific at JLL.
“However, as business activities in Mainland China have gradually returned to normalcy in March, and some economies in the region have managed to avoid a complete lockdown, we believe a material drop off from this quarter level would be unlikely.”