RCA Insights

Liquidity in Asia Pacific Markets May Deteriorate Further

By on June 2nd, 2020

As we move further into the Covid-19 crisis and transaction activity continues to dwindle, investors are becoming increasingly concerned about market liquidity. Given the long-term nature of commercial real estate investment one should expect a certain amount of cyclicality during the period of ownership. However, at times of extreme stress the need for liquidity becomes paramount in order to preserve cash and lock in performance.

Asia Pacific is the smallest of the three global zones in terms of transaction volume and home to some of the least transparent markets worldwide, so it is more susceptible to a rapid drop in liquidity and longer recovery periods.

With Asia Pacific feeling the negative impacts of Covid-19 before many other parts of the world, the impact on investment activity and buyer behavior has already started to feed through to the RCA Capital Liquidity Scores. All of the major metros across Asia Pacific recorded a decline in liquidity between the end of 2019 and the first quarter of 2020, even the region’s most active metros of Seoul and Tokyo. (The RCA Capital Liquidity Scores are calculated from six underlying absolute and relative measures of market activity.)

Tokyo 5 Wards has consistently been ranked as the market with the highest liquidity in Asia Pacific and even during the downturn of 2008-10 it recorded a steady level of domestic, regional and global investor activity and thus a high liquidity score. In the first quarter of 2020 it was the only market to see its score dip below its Global Financial Crisis (GFC) trough. (GFC period for this analysis spans Q2 2008 to Q4 2010.)

The other major markets are still well above their GFC lows, but the scores from that period do give some indication of just how low liquidity can drop in certain locations when investors take fright. Australian cities have shown the most volatility among the top APAC markets since the inception of the scores: for instance, Brisbane dropped to a score of just 33 during the GFC. In Q1 2020 Brisbane’s score stood at 71.

With transaction activity yet to pick up substantially, the Q2 2020 liquidity scores are likely to show a further deterioration. The lows of the GFC came after several quarters of declining activity and did not coincide in terms of timing in each metro. The current downturn is affecting metros and countries differently, so we are likely to see an uneven pattern of declining and improving liquidity scores as the situation evolves, which will provide problems and opportunities for owners and investors alike.


The RCA Capital Liquidity Scores are calculated using a combination of absolute and relative measures. The absolute measures are transaction volume and count of unique buyers. The relative measures are shares of: global cross-border investment; zone market maker investment; global market maker investment; and, institutional investment. The RCA Capital Liquidity Scores cover 155 markets across the world. To learn more about this data, contact us.

Also on RCA Insights:

Paris Ties Manhattan as World’s Most Liquid Market

Shrinking Buyer Pool May Accelerate Price Floor Discovery

Chart: Most Liquid Markets in Europe Before Lockdown

Price Recovery and Liquidity Parallels From the GFC

David Green-Morgan

Managing Director, APAC

David Green-Morgan is a highly regarded global commercial real estate expert with 20 years of industry experience. Before joining RCA in November 2017, he spent six years at brokerage firm JLL in Singapore, where he was responsible for their real estate capital markets research globally. Prior to that he spent five years at Cushman & Wakefield in Sydney as head of Asia Pacific research. David started his career at Investment Property Databank (IPD) where he was at the forefront of data analytics to benefit clients’ decision-making.