Real estate investment volumes across Asia Pacific fell 32% in the first half of 2020, as the impact of COVID-19 hit markets harder in Q2, according to JLL.
Investment activity in the second quarter of 2020 slipped 39% year-on-year, accelerating from a 26% drop in the first quarter, as economies introduced lockdowns and travel bans.
Singapore and Hong recorded the largest falls in Q2, down 68% and 65%, respectively.
Australia fell 58%, South Korea declined 45%, and China tumbled 15%, however these declines were offset by the return of activity in the latter part of the quarter.
Strong domestic liquidity and transactions in the multi-family sector helped Japan, which only retreated 20%.
“The sharp decline in deal activity in the second quarter is reflective of the lack of willing sellers and the general uncertainty that exists around market recovery,” said Stuart Crow, CEO, capital markets, Asia Pacific at JLL.
“Liquidity remains very high, and we expect transaction activity is poised to rebound in the second half as economies further reopen and pricing expectations are adjusted in certain markets.”
In the leasing market, office leasing was subdued in the first half.
Office rentals in Hong Kong’s Central district fell the most, down 9.3%, followed by a 4.1% decline in Beijing, a 3.9% drop in Melbourne, a 3.5% fall in Sydney, and a 3.3% dip in Singapore.
Osaka and Seoul were among the few CBD office markets where rentals rose, up 1% and 2%, respectively.
“Office leasing activity was relatively muted during the second quarter across Asia Pacific’s major markets, as heightened economic uncertainty influenced decision-making and lockdowns created inspection challenges,” said Jeremy Sheldon, head of markets, Asia Pacific at JLL.
“While there were some relative bright spots in select areas, the market does remain unpredictable and all sides will be watching closely as the second half unfolds.”
Retail was most severely impacted by the lockdowns in Q2, with retail leasing falling 13.3% in Hong Kong and 8.5% in Singapore.
Industrial and logistics proved resilient in the second quarter, with rental growth of 1.2% in Shanghai and 1% in Sydney.
“There is still significant uncertainty about growth and the shape of recovery amid the COVID-19 pandemic,” said Roddy Allan, chief research officer, Asia Pacific at JLL.
“Supply and demand remain the drivers of leasing performance and, inevitably, as markets continue to experience periods of lockdown, there is a direct impact on demand.
“The impact of COVID-19 will remain, but our research indicates investors will approach the market in the second half with measured optimism, which we believe will accelerate further in early 2021.”
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