Asia Pacific property in the Year of the Ox: how Covid-19’s impact will be felt across luxury real estate and retail markets in China, India and beyond

Feb 9 , 2021

A view of Shenzhen, Guangdong, China in 2019. Photo: Reuters

According to JLL’s 2021 Asia Pacific Real Estate Outlook report, investors will be influenced by the need for e-commerce and working from home

New retail concepts, such as Burberry’s ‘social retail’ store in Shenzhen created in partnership with Tencent, are likely to prove a new trend

Investors wondering what the coming year will hold in terms of property assets can expect “more than a rebound” – rather, a reboot, according to analysis by JLL.

Resident buildings and offices in Shenzhen, Guangdong, China in September 2019. Photo: Reuters

In its 2021 Asia Pacific Real Estate Outlook, the global property advisory predicts the Year of the Ox will mark a shift where “change becomes the new standard” in regional markets. Although even the hardworking ox may not be able to shake off all the challenges of a pandemic-riddled economy, JLL believes this could quickly be revealed as the year where Asia Pacific enters a new cycle of real estate growth, innovation and investment.

Says Roddy Allan, chief research officer, Asia Pacific at JLL: “From 2021, the impact of Covid will loom large but will not define Asia Pacific’s new real estate cycle.”

First, the good news: economic recovery is likely in many markets, Allan and his team predict. New dynamics influencing how people work, live and play will become more obvious, and pre-pandemic real estate trends will continue to accelerate. “When aligned, all these factors will shift how investors view assets and how occupiers and consumers use real estate across Asia Pacific,” they say.

From 2021, the impact of Covid will loom large but will not define Asia Pacific’s new real estate cycle

Roddy Allan, JLL

In identifying investment opportunities, JLL feels that a reimagining of outmoded assets and outdated spaces across all sectors – “fixer-upper” properties with scope for improvement – may become one of the defining themes from this year onwards.

“We estimate that upwards of 40 per cent of today’s office assets need some form of enhancement to stay relevant,” says Allan. “As a result, investors’ appetite for value-add investments may increase in tandem with opportunities to reconfigure real estate to meet changing needs arising from e-commerce, health and safety and remote working.”

In the retail sector, demand for “experiences” will continue to mature.

A sunset view of Hong Kong Island. Photo: Martin Chan

Explains Allan: “Covid-19 has served as the ultimate accelerant to corporate transformation, speeding up many trends evident before the pandemic and pushing organisations toward change. Business leaders are starting to realise that their businesses may never operate in exactly the same way as before.”

In addressing this evolution, commercial real estate leaders, led by the retail sector, may look to responsible investments and radical transformation “to create a better world of work through real estate.”

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