Coronavirus a ‘severe but temporary challenge’ for commercial property in Asia-Pacific, says Cushman and Wakefield
- Oversupply in China’s premium office market, combined with impact of Covid-19 virus, likely to depress rents
- Hong Kong’s retail property market could be forever changed thanks to the cumulative effects of the virus and the protests movement
The gloom around the commercial property sector in Asia-Pacific is being tempered by expectations that the downturn, caused by the coronavirus, will be relatively short lived, according to a report released last week by Cushman and Wakefield.
“In general, the Covid-19 outbreak is being viewed as a severe but temporary challenge, and vendors will be reluctant to dispose of properties now unless absolutely necessary. We expect that Asia-Pacific transaction volumes will decrease sharply for the initial part of 2020 as property owners hunker down and weather the storm,” said James Shepherd, regional head of research at the property services company.
In Hong Kong, transaction volumes have fallen but price discounts are unlikely in the near term.
“We have seen little evidence in recent weeks of significant price discounting … the expectation is that Covid-19 will follow a similar trajectory as Sars in 2003 with the impact limited to the first half of 2020,” said Reed Hatcher, the company’s head of research for Hong Kong.
Average rents in Causeway Bay, one of Hong Kong’s major shopping districts, fell 14.9 per cent in the second half of 2019, prior to the Covid-19 outbreak as months of violent street protests took a toll.
Citing luxury import tax cuts in China, last year’s social unrest and bans on parallel trading, Tommy Wu, lead economist for Hong Kong at Oxford Economics, said retailing in Hong Kong may have suffered a permanent blow.
