Asian commercial property markets are reaping the benefits of effective corovavirus pandemic control
- The region’s outperformance is most apparent in Taiwan and South Korea, which have not only kept infections in check but also avoided draconian shutdowns
- Asian commercial real estate markets also benefit from deep pools of local capital
Differences in countries’ handling of the Covid-19 pandemic have been apparent for some time. Just a cursory glance at the latest data from Johns Hopkins University shows the extent to which different approaches – particularly on contact tracing and social distancing – have caused sharp divergences in outcomes.
In most parts of Asia, on the other hand, the virus was crushed early on in the crisis, resulting in a faster and sustainable restart of economic activity. While the rolling seven-day average of new cases per million people in the US and the European Union has shot up to 317 and 457 respectively, it has never exceeded 27 in Asia since the start of the pandemic, according to data from Our World in Data.
In global commercial property markets, the East-West divide in pandemic control has been less discernible when it comes to data on leasing activity and transaction volumes. The unprecedented and sudden economic halt earlier this year, and the persistent uncertainty about the strength of the recovery, continue to take their toll on occupier and investment markets the world over.
However, the resilience of Asian real estate is becoming more pronounced, particularly in markets whose virus containment policies have proved the most successful. A report published by CBRE last week noted that net absorption of Grade A office space in China’s Tier 1 cities in the third quarter of this year was “consistent with” pre-pandemic levels. What is more, transaction volumes in China last quarter were down just 10 per cent on an annualised basis, data from JLL shows.