REIT ASIAPAC MAGAZINE REITASIAPAC AUGUST 2020 ISSUE | Page 10

REIT ASIAPAC
1. MAJORITY SEES ASIA
PACIFIC RECOVERY AFTER
AT LEAST 6 MONTHS
Q
When will the REIT markets recover?
While 37.5% of fund managers see recovery in 3-6 months,
the rest say recovery will take longer.
“[Covid-19] resulted in huge fluctuations in market valuations,
but this should stabilise over time,” said one fund manager.
At the onset of travel restrictions implemented to curb the
spread of the global pandemic in March and the resulting
dislocation of the global supply chain, both real estate
investment trusts (REITs) and equities in Asia Pacific were
down by double digits. An analysis from Hong Kong-based
Admiral Investments showed that the top 100 most-traded
REITs in the region were down by 24%, while equities
slumped by 12%.
By sector, the hotel industry suffered the most during the
month, according to Global Property Research data. Hotel
REITs were down 40% during the month, followed by retail’s
32% decline.
By April, however, both Asia Pacific REITs and equity markets
had recovered; REITs were up 7%, while equities climbed
9%. During the month, gains were recorded across all REIT
sectors with the most notable recovery seen in the hotel
sector, which climbed 17%, while retail rebounded by 15%.
But the path ahead remains uncertain.
Recovery in the second-half is seen likely for some, while
others prefer to err on the side of caution. According to
Knight Frank, the markets in the Asia Pacific will likely benefit
from the recovery in China.
“The second half of the year is very much likely to be an Asian
story,” said Neil Brookes, Head of Capital Markets in the Asia
Pacific at Knight Frank. He said Beijing and Shanghai remain
the top choices for investors, adding that a “slightly unusual
quirk” of the Covid-19 situation is that China has become the
core safe-haven market in the Asia Pacific.
The capital markets executive also said that their consultancy
has already seen “increased interest from Singapore-based
investors going into China,” adding that “feedback from our
major regional clients is that acquisitions are firmly on the
agenda.”
Others are less optimistic. “For real estate to recover, we need
more policy responses and support from the labour market,”
Laura Dietzel, a senior real estate analyst at RSM Partner said
in an interview with Preqin. “A sustained, true recovery will
only be able to be able to occur when consumer confidence
is back,” she said. “We can be cautiously optimistic, but I
don’t think H2 (second-half of 2020) is going to rebalance
the market.”