Hong Kong, Singapore lead biggest pullback in Asia-Pacific commercial real-estate deals since 2008 financial crisis

Investment fell by half in the first quarter from a year earlier, touching its lowest level since mid-2010: Real Capital Analytics

Hong Kong, Singapore and China saw the biggest declines last quarter, based on JLL data

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Transaction volumes fell 68 per cent in Singapore last quarter, according to JLL. Among the six mature property markets in the region, Hong Kong fared the worst, with a 74 per cent decline. Photo: Roy Issa

Published: 7:00am, 14 May 2020Updated: 7:24am, 14 May 2020

A slump in investment in Hong Kong and Singapore commercial property has contributed to the biggest pullback in a decade across Asia-Pacific, suggesting investors are conserving cash to ride out the coronavirus pandemic.

Investment fell by 50 per cent to US$21.3 billion last quarter from a year earlier, according to Real Capital Analytics, which tracks transactions worth at least US$10 million each. That is the least since the second quarter of 2010, it said.

The drag reflects the underlying pessimism among investors in key Asian markets, as lockdown measures crippled regional economies and threatened a global recession. Recent trends suggest investors are looking for value in South Korea or Japan, in markets relatively insulated from the expensive financial hubs when they rebound.

“Many investors have paused activity due to the uncertain economic environment and, hence, deal activity has been impacted,” said Stuart Crow, chief executive of capital markets in Asia-Pacific at JLL. “We see this reduced activity continuing into the second quarter, with trading volumes likely to bounce back more strongly in the second half of the year.”

Using a broader yardstick, JLL said investment in commercial properties in the Asia-Pacific region fell by more than a third to US$29.5 billion last quarter. A different measure used by CBRE showed a 25.4 per cent drop to near a three-year low of US$22 billion.

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