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Global Cities

Think Asia Pacific cities 2020 outlook

Harry Tan
Head of Research, Real Estate, Asia Pacific
Think Asia Pacific Cities Q1 2020 outlook_Hero
Prior to the outbreak of Covid-19 early this year, we had revised upward our outlook for regional economic conditions in 2020. The turnaround in monetary policy direction by many global and regional central banks in mid-2019 underlined our sanguine view of prospects for the Asia Pacific economies and real estate markets, as did sturdy capital market sentiment and flows. However, the rapid spread of the coronavirus since early January 2020 is now highly likely to depress growth in Q1 2020. China will be most impacted but the severity of the hit to tourist flows and demand from China, as well as supply-chain-led production shortfalls, will weaken regional sentiment, demand and growth more broadly.

The medium-term outlook is also less certain. Unlike in 2003, when the pullback in growth from SARS lasted only a quarter before real activity rebounded strongly, a return to trend growth may not materialise as quickly. The headwinds will be much greater, noting that in purchasing power parity terms, the Chinese economy is more than four times bigger, with a more than five-fold increase in the number of middle-class households (income of between US$35,000-70,000 per annum) and is much more interconnected with the rest of the world. At 20% and 37% of global GDP respectively (from 9% and 21% in 2003), China and Asia Pacific’s weight suggests a higher risk of economic and market dislocation from the rest of the world this time. Forthcoming fiscal and monetary policy support will help to mitigate further downside growth risks across the region but only to the extent that pent-up demand in the second half will recoup some of the lost H1 output.

All said, while regional growth this year is likely to come in below initial expectations, a stronger demand picture is likely to surface in 2021 with growth running significantly above trend. The Covid-19 outbreak will stall, but not derail, the longer-term positive structural trends and the deep set of investment opportunities across Asia Pacific.

Think Asia Pacific cities 


Office sector overview 
  • Business and leasing activities to slow due to high business uncertainties.
  • Offices in Tokyo, Seoul and Australian east coast to remain attractive.
  • Flexible workspace and smart buildings to enjoy structural tailwind.

Retail sector overview 
  • Retail sector is among the hardest hit by the virus outbreak; physical space is feeling the pinch as stores shutting down/shortening hours, and landlords offering rental relief.
  • Near-term private consumption to be suppressed, but subsequent rebound is expected in H2 2020 with the release of pent-up demand.

Logistics sector overview 
  • Trade and manufacturing to take a short-term hit.
  • A surge in logistic demand in e-commerce, food and pharmaceutical sectors.
  • We recommend well-built and well-located last-mile assets in Seoul, Tokyo and Sydney.


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