Asia Pacific real estate may face market correction in 2021: ULI & PwC

SINGAPORE (EDGEPROP) - A report jointly published by the Urban Land Institute (ULI) and PricewaterhouseCoopers (PwC) lays out concerns that a correction may be on the cards next year for some property markets in the Asia Pacific region.

“The Asia Pacific region has been remarkably resilient to the challenges faced by coronavirus, particularly compared to Western markets, but we expect to see some market correction,” says David Faulkner, president of ULI Asia Pacific.

The report names three markets where stress seems likely to surface. In China, where a liquidity squeeze is creating bank financing challenges for smaller sized property developers. In India, where the implosion of local non-bank finance companies has created opportunities for foreign private equity funds. And Australia, where the economic impact of the Covid-19 pandemic has been most acute, and greater market transparency is likely to open up more buying prospects.

Singapore, Tokyo, and Sydney continue to rank highly as the top three markets for investment and development prospects in the Asia Pacific region. Ho Chi Minh City was the sole emerging market city with the best prospects for growth, boosted by its successful containment of the pandemic and a rapidly growing economy.

“2020 is a challenging year for all investments including real estate. Due to Covid -19 travel restrictions, there is a significant decline in cross-border investments. But with current liquidity, Singapore's stable market with good quality assets has helped the country maintain its position as the city of choice for investment prospects,” says Yeow Chee Keong, real estate and hospitality leader at PwC Singapore.

Ong Choon Fah, the ULI Singapore Chair and CEO of Edmund Tie, says that on top of corporate office assets, investors in Singapore are increasingly looking at potential deals involving logistics facilities. The ULI and PwC report highlights logistics as the asset class likely to emerge stronger post-Covid, with demand driven by cyclical and structural drivers such as e-commerce growth.

The report also highlights upbeat consumer sentiment and a reliable long-term mortgage and rent payment track record earmark the residential sector as a defensive asset class that investors in the region are also targeting. Positive signs also point to growing demand for green debt in the Asia Pacific region.