RCA Insights

Chart: APAC Risk Aversion Evident Before Virus Spread

By on March 17th, 2020

The first couple of months of 2020 have been dominated by fears of the novel coronavirus’s impact on global economies and property markets. Historically, investors tend to become more cautious in their investment choices during periods of heightened uncertainty, and this year has been no exception in the Asia Pacific region. However, a closer analysis of Real Capital Analytics data shows that investor risk aversion had already been growing over the prior months.

Asia Pacific deal volume for 2019 was only slightly down on 2018. However, investment activity for the office and retail sectors — which typically comprise two thirds of annual deal volume in the region — was concentrated on a limited number of locations. Transaction volume for retail and office properties outside of the top six markets accounted for a mere 5% of all investment, the lowest ever share and down from 9% in 2018.  (Top six are Australia, China and Hong Kong, Japan, Singapore and South Korea.)

RCA’s preliminary data shows that 2020 has been off to a slow start so far. Investment volumes have been weighed down by uncertainty over when economic activity will resume, particularly in China, Hong Kong and Singapore. Nevertheless, we expect the core markets in Asia Pacific to maintain or even increase their share of investor activity over this year.

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Ben Chow provided data analysis for this article.

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David Green-Morgan

Managing Director, Asia Pacific

DGreen-Morgan@rcanalytics.com

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.