Real Estate Investment Q4: A New Hope

Real Estate Investment looks up to a new dawn after a long tiring night of Coronavirus gloom starts to fade away, with potential new hopes and opportunities brought by signs of improvement in the real estate sector across various countries. Asia Pacific property investment is leading the way with signs of recovery in the commercial real estate in China underpinned by changing consumption patterns and the new era of flexible workspaces, sustainability, and technological innovation.

Bright spots are also seen especially in Seoul, Tokyo and Singapore where a surge of investment activity rises as these cities are tabbed by analysts as top three cities globally for investment. In terms of real estate's sectors, the changing shopping behaviour in the US has created great opportunities for warehouses, distribution centres and remote working spaces.

We also see efforts made by the Hong Kong’s Mortgage Corporation's action to lower their interest rate and extend the pilot fixed-rate mortgage scheme for homebuyers so as to enhance the banking stability in the long run as the city currently faces rising unemployment and a recession.

Elsewhere, European real estate financiers remain worried that economic downturn caused by the pandemic situation will catch up with the soaring property valuations that have kept on rising in developed countries, as European banks start to rein in their mortgage funding.

What caught our eyes this week?

Here are Real Estate's Winners and Losers in the New Normal

Entrepreneur – Residential housing has stayed resilient throughout 2020. Commercial Real Estate (CRE), however, is severely impacted as lockdowns forced offices and shops to close.

But there’s a silver lining to Americans changing their shopping behaviour: online sales and work-from-home (WFH) are creating lucrative opportunities for cold-storage warehouses, distribution centres and remote working spaces.

Despite these trends, the residential housing market remains robust due to low mortgage rates and a glut of supply. COVID-19’s impact on real estate is interesting because there are underlying structural transformations on how Americans study, work and buy food. Investors, developers and tenants will need to adapt to a permanently different landscape.

Commercial Real Estate Investment Market Set to Boom in China

Shine – Investment in China’s alternative sectors is set to boom over the next decade, underpinned by changing consumption patterns and new technology adoption. By 2030, the total value of investable commercial real estate in China will increase to about 80 trillion yuan (USD$ 12 trillion), the largest in Asia Pacific in a decade.

The new era of China's commercial real estate development will be characterised by sustainability, technological innovation and flexible workplaces, the emergence of new tier-one cities as well as alternative asset classes with greater integration of real estate and finance; thereby creating significant new opportunities for investors.

Hong Kong Extends Pilot Fixed-Rate Mortgages Scheme by a Year, Lowers Interest Rates to Combat Pandemic Fallout

SCMP – Hong Kong Mortgage Corporation (HKMC) extended the pilot scheme by a year, and said interest rates will also be lowered further from between 2.75% and 2.55% to a lower rate of 1.99%, as the city faces rising unemployment and a recession amid this coronavirus pandemic.

HKMC aims to provide an alternative financing option to homebuyers for mitigating their risks arising from interest rate volatility, to enhance banking stability in the long run. The application period for Fixed-rate Mortgage Pilot Scheme opens on Monday, and has been extended until October 30, 2021.

Read also: How Does Internal Rate of Return (IRR) Impact Real Estate Investors' Decision-Making Process?

APAC Property Investment Spikes 35% as Institutions Step Up

Mingtiandi – Real estate investment in Asia Pacific showed signs of recovery in the third quarter of 2020 as volume shot up 35 percent from the previous three months, supported by the return of institutional investors who had stayed on the sidelines during the first half of the year.

Seoul and Tokyo are tabbed by analysts as the top two cities globally for investment to date, with Singapore following in third place as the city stands out to be a safe haven for corporate activity. While uncertainty will remain for the foreseeable future, we believe that low transactional activity has bottomed out, the optimism for the fourth quarter and beyond continues to grow.

Read also: Guide to Investments in Singapore

Surge in European House Prices Stokes Concerns Over Market Resilience

Financial Times – The housing market acts as the canary in a coal mine, as prices tend to drop as a wider economic downturn looms. But this year, with a deep global recession caused by the coronavirus pandemic situation, property valuations have kept on rising in developed countries worldwide.

Real estate financiers worry that the fallout from the pandemic will catch up with the soaring valuations, added with a worrying sign where bank in Europe’s housing market starts to rein in their mortgage funding.

Read also: Investing in the UK Real Estate Market

Vantage Point is a curated cache of the latest trends in real estate investing repurposed from media outlets and websites around the globe. Each article is a succinct wrap-up of key news points for an easy read. Outbound links, embedded in each editorial, are attributed to original external sources. RealVantage makes no warranties or representations regarding the accuracy, completeness or veracity of the information or data contained in such external sources. Editorials under the Vantage Point vertical do not reflect the views of RealVantage, in part, or in its entirety.

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