Global sentiments for real estate appear less pessimistic: Savills

/ EdgeProp Singapore
April 23, 2020 5:35 PM SGT
Source: Savills Research
Source: Savills Research
SINGAPORE (EDGEPROP) - In a survey comprising 31 countries, Savills has gathered that the property outlook worldwide has improved slightly — 19% of countries reported a “severe” negative impact on the real estate market, an improvement from the 29% reported in its survey prior on March 31.
Correspondingly, 74% have described a “moderate” negative impact, as opposed to 67% as at end-March.
Sentiment in China has improved somewhat, seeing real estate activity resume as infection rates are contained. Retail and office leasing activity rose moderately in the first half of April. Utilisation rates have also increased as more offices and shops are now open with higher footfall, although these remain below normal levels as social distancing continues, it notes.
South Korea and Vietnam both reported a “neutral” market sentiment, benefitting from rapid declines in infection levels.
Surprisingly, rents have remained unchanged across 60% of sectors and countries worldwide. In the office sector, rents have remained unchanged for 71% of the countries surveyed, supported partly by extensive concessions.
Retail tenants have been the largest beneficiaries for rent relief, with 80% of countries reporting receiving some form of concession.
Deferred service charges and changes in payment structures are the next most common, with 40% of countries receiving these.
Demand for office is gathered to be stable in 42% of countries, while 55% reported moderate falls in occupier demand. This is a significant improvement from the 70% that reported moderate falls as at end-March, Savills highlights.
Although real estate transaction volumes are down, they are no longer falling as sharply as in March. In the first half of April, 44% of countries noted no change in transaction volumes. Specifically in the office sector, nearly half of the countries surveyed reported no change in transaction volumes, whereas in March 73% of countries reported moderate or severe decline in volumes.
Overall, capital values have been largely unaffected — 63% reported values to be unchanged. Logistics and healthcare continue to fare well — 87% and 95% of countries reported respectively unchanged or increased capital values.
Meanwhile, over two-thirds of countries report office and residential capital values to be unchanged, observes Savills.
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