Why The Coronavirus Outbreak Could Have A Lasting Impact On Asia Pacific Real Estate - 2020 - FINAL PDF

WHY THE CORONAVIRUS
(COVID-19) OUTBREAK
COULD HAVE A LASTING
IMPACT ON ASIA PACIFIC
REAL ESTATE
C B R E R E S E A R C H | AS I A P AC I F I C S P E C I AL R E PO R T
WHY THE CORONAVIRUS (COVID-19) OUTBREAK
COULD HAVE A LASTING IMPACT
THE SHORT-TERM IMPACT ON ASIA PACIFIC REAL ESTATE
INTRODUCTION
The coronavirus (COVID-19) While the large number of unknowns about COVID-19
make it difficult to predict when it will be contained, the
outbreak has cast a shadow over consensus appears to be that the outbreak is likely to be
the Asia Pacific economy in the under control by the end of H1 2020. However, as the
impact continues to grow in terms of scope and
opening months of 2020 and poses magnitude, attention is now turning to the long-term
a downside risk to global growth. consequences for the real estate sector.
The short-term impacts are significant and continue to This Special Report by CBRE explains how the outbreak
evolve along with the development of the disease. The has impacted the Asia Pacific real estate sector thus far
suspension of manufacturing in China is causing and identifies several potentially long-term trends that
considerable disruption to supply chains. Public health could become a permanent feature of the regional
concerns and travel restrictions nationally and property landscape.
internationally have seriously impacted consumption
activity and prompted consumers to avoid crowds and In the office sector, these include the accelerated
stick to daily necessities. Regional and global tourism adoption of flexible working, the re-evaluation of
and air travel have been hit hard. Business Continuity Planning (BCP) and workplace
wellness measures. The increasing use of omnichannel
In the real estate sector, some office occupiers, strategy and pick-up points are likely to affect the retail
especially those in Greater China, have postponed sector, while the logistics sector is set to expedite the
major leasing decisions, brick-and-mortar retailers integration of automation in logistics operations. On the
across Asia Pacific are feeling the strain, and general investment front, a lower interest rate environment will
logistics operators are struggling to deliver goods to ensure prime core assets remain ideal defensive plays,
customers due to shortage of labor. Many investors have while the evolution of consumer behaviour and adoption
moved into wait-and-see mode. of new technology such as the cloud will drive sustained
demand for alternative sectors such as data centres and
cold storage.
CBRE RESEARCH | ASIA PACIFIC SPECIAL REPORT © 2020 CBRE, INC.

THE SHORT-TERM
IMPACT

ECONOMY
Economy – growth set to dip in H1 2020 With Chinese visitors accounting for at least 33% of
tourist shopping expenditure in top Asia Pacific
China accounted for 16.8% of global GDP in 2019, destinations such as Singapore, Korea, Japan and
compared to just 6.9% in 2003, when the SARS outbreak Australia, the imposition of travel restrictions and reduced
occurred1. The significant slowdown in economic activity flight capacity will cause a significant decline in inbound
on the mainland, where GDP growth forecasts for H1 demand across the region. In Hong Kong SAR, the
2020 have been downgraded to 4 – 5% y-o-y 2 following impact on retail sales could be even higher given that
the outbreak, is already spreading to other regional over 75% of the city’s tourist arrivals originate from
markets, many of which are bracing for a moderate mainland China.
short-term impact. CBRE has revised down its 2020 Asia
Pacific GDP growth forecast from 4.2% to just under 4% 3 Falling visitor arrivals will also severely impact the
in 2020. hospitality sector. In Singapore and Hong Kong SAR,
hotel revenue per available room (RevPAR) and
Consumption has been hit hard, with discretionary occupancy are already under downward pressure.
spending in Greater China falling sharply as people Elsewhere, several upscale hotels in Ho Chi Minh City
stay home and avoid crowded locations, particularly reported an occupancy rate as low as 30% in February
shopping malls. While the entertainment, F&B and 2020, despite the first two months of the year traditionally
fashion categories have been most affected by the being a busy period.
slowdown in household retail spending, retailers with
established omnichannel platforms have helped to offset
some of the impact.
Figure 1: Asia Pacific 2020 GDP Growth Forecast
8%
6%
4%
2%
0%
-2%
-4%
Mainland India Australia Korea New Zealand Singapore Japan Hong Kong Asia Pacifc
China SAR
As of Jan 2020 As of Feb 2020
Source: Oxford Economics, CBRE Research, February 2020.
1 Oxford Economics, CBRE Research, February 2020.

2 Oxford Economics, February 2020.
3 CBRE Research, February 2020.

ECONOMY (CONTI NUED)
The other major disruption has been to global supply This is having a severe knock-on effect on global
chains linked with China. Industrial manufacturing in markets, with automotive, electronics and
China will take some time to return to normal due to the pharmaceuticals companies all issuing warnings about a
slower return of workers resulting from mandatory potential halt in production. In Korea, the domestic
quarantine measures in major cities; the need to source automotive industry has had to halt production for more
personal protection equipment (PPE); and disruption to than a week, while the country’s exports and domestic
the supply of raw materials resulting from the suspension earnings are suffering as intermediate goods cannot be
of inter and intra-city transport. imported from China. Elsewhere, heavy construction
equipment maker JCB has reportedly cut production and
Data from Oxford Economics show that the global working hours at its UK factories after more than 25% of
electronics and electrical equipment sectors are its component suppliers in China were closed because of
particularly reliant on China, with over 10% of total non- the outbreak5.
Chinese sectoral output originating from the mainland4.
4 How global supply chains will feel coronavirus’ chill, Oxford Economics, February 2020.
5 Financial Times [link], February 13, 2020.

OFFICE
Office – delays to new commitments offset by for Greater China now allocated elsewhere. Occupiers
postponement of new project completions engaging in renewals are aiming to achieve flexibility in
space requirements for future headcount adjustments
Asia Pacific office occupiers were in a cautious mood at rather than rushing to secure space now.
the beginning of the year due to growing concern over
the late-cycle economy. This view has hardened since the CBRE believes that the impact on other Asia Pacific office
outbreak, with the negative impact on leasing demand markets will be minimal, as demand is domestic driven
mostly felt in Greater China, where some occupiers have (rather than by Chinese firms) or supported by low
postponed major leasing decisions amid widespread vacancy and a lack of new supply. The office sector is
disruption to business operations. However, leasing therefore likely to be the first to recover after the
activity is likely to pick up as early as Q2 2020, should outbreak. Regional net absorption will hold firm in full-
the outbreak be contained. year 2020, although expectations have been slightly
revised down to flat growth from an upper 5% boundary
Occupiers already engaged in office fit-out projects face in our earlier forecast.
delays to construction and are requesting extensions to
fit-out periods. Some may have to delay plans for new
office moves, with budgeted CapEx originally earmarked
Figure 2: Net Absorption in Major Markets Impacted by SARS in 2003
2,000
SARS Peak
Net Absorption (‘000 sq. ft. NFA)
1,500
1,000
500
(500)
Q4 2002 Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004
Beijing Shanghai Guangzhou Shenzhen Taipei Hong Kong SAR Singapore
Source: CBRE Research, February 2020.
Revisions to rental growth forecasts are mainly confined around 10% of forecasted new supply in 2020 will be
to several markets in Greater China. Rental revisions in postponed due to construction delays, alleviating some
mainland China are not expected to be significant as oversupply pressure on these markets. Rents in Hong
some landlords, especially State-owned Enterprises Kong SAR will come under greater downward pressure
(SoEs), prefer to grant longer rent-free periods and rental but the full-year decline is likely to be frontloaded in H1
holidays to existing tenants rather than acquiesce to lower 2020 and will also partly be attributable to ongoing
base rents. Non-SoE landlords are observed to be market weakness witnessed since last year.
holding rents steady for existing tenants. In addition,

RETAIL
Retail – consumption slows but omni-channel Rents are coming under strong downward pressure.
retailers display resilience Major retail landlords in mainland China and Hong Kong
SAR such as Wanda, China Resources, Seazen, Swire
COVID-19 has had the strongest impact on the retail Properties and SHKP have announced temporary rental
sector. Thousands of retail stores and malls in China cuts to alleviate pressure on tenants. Elsewhere, a
have temporarily closed, with a survey by the China landlord in Seoul has reportedly agreed to provide a
Chain Store & Franchise Association (CCFA) finding that short term rental reduction and relief scheme for its
around 40% of its members were open for business in tenants, with other landlords in Korea may follow suit. In
early February6. Although 70% of malls in tier I cities Singapore, Mapletree Commercial Trust has offered
have now re-opened, the resumption of business in tier II rental rebates for selected tenants at VivoCity, while Jewel
cities will be slower. The widespread closures are set to Changi Airport has provided rental rebates to its F&B
curtail full-year retail sales growth from 8% in 2019 to occupiers. CBRE Research expects this trend to continue
about 6%7, with the first two months of the year usually until the situation improves. Apart from rental rebates,
accounting for around 16% of annual retail sales8 due to landlords may also consider mutually beneficial schemes
the Chinese New Year holidays. such as purchasing goods or cash coupons from tenants
for later promotional use.
Numerous markets in Asia Pacific9 have imposed travel
restrictions on visitors from mainland China, with some
also prohibiting arrivals from Taiwan, Hong Kong SAR,
Macau SAR and Korea. The fall in mainland Chinese
visitors has impacted retailers and shopping centres in
key regional markets catering to these visitors.
Figure 3: Mainland Chinese Visitors as a % of Total Tourist Arrivals and Spending
Contribution by Mainland Chinese tourists

(2018/ 2019)
100%
% of Total Tourist Arrivals
% of Total Tourist Shopping/Spending
80%
60%
40%
20%
0%
Hong Kong SAR Korea Vietnam Japan Thailand Taiwan Singapore Australia Malaysia
Source: CEIC, Hong Kong SAR - Tourism Board, Japan – Tourism Agency, Taiwan - Tourism Bureau, Ministry of Transportation and Communications, Korea - Korea Tourism
Organization, Australia - Australian Bureau of Statistics, Tourism Research Australia, Singapore - Singapore Tourism Board, Thailand - Ministry of Tourism and Sport, Vietnam -
Vietnam National Administration of Tourism, Malaysia - Tourism Malaysia, CBRE Research, February 2020.
6 China Chain Store & Franchise Association, February 2020.

7 Oxford Economics, February 2020.
8 National Bureau of Statistics of China, CBRE Research, February 2020.
9 Markets which have implemented travel restrictions on people who have visited mainland China include Hong Kong SAR, Macau SAR, Japan, Korea,
Singapore, Australia, New Zealand, India, Indonesia and Vietnam, as of February 27 2020.
Taiwan and the Philippines have restricted people who have visited mainland China, Hong Kong SAR and Macau SAR, as of February 27 2020.
Mainland China, Hong Kong SAR, Taiwan, Singapore, Japan, India, Vietnam and Thailand have restricted people who have visited Korea as of February
27 2020.
7

RETAIL (CONTINUED)
Rents in Greater China and Singapore – which are While many traditional brick-and-mortar retailers are
already suffering from weaker fundamentals – are struggling to ride out this period and are seeking
coming under pressure. Prime streets catering to the temporary rental reductions, those with omni-channel
tourist trade will be hit the hardest, with CBRE revising platforms, especially in the grocery and fresh food related
down its 2020 rental growth forecast for these markets by categories, have reported a surge in sales. JD.com
20 to 500 bps. Around 20% of new supply due for registered a 400-500% y-o-y increase in fresh food sales
completion in China this year will be postponed, with during Chinese New Year10. The growth of online
additional delays expected should developers continue to shopping and on-demand food delivery therefore
find it challenging to secure tenants over the remainder appears to be cushioning the overall negative impact on
of the year. private consumption.
10 Food Navigator-Asia.com [link], February 12 2020

INDUSTRIAL & LOGISTICS
Industrial & logistics – industrial production

temporarily operating well below capacity Business to Consumer (B2C) logistics in markets
impacted by the outbreak has also been affected, albeit
Industrial manufacturing activity in China has been to a lesser extent. A surge in online shopping in most
disrupted due to the extension of the Chinese New Year Asia Pacific markets, especially for groceries and food,
break, interruption of inter-city transport systems and the has led to a surge in demand for last- mile logistics.
slower return of workers resulting from mandatory However, many providers across the region have
quarantine measures in major cities. Factories are struggled to cope with this spike in demand, a situation
required to meet new public health protection standards exacerbated by a shortage of labour. Deliveries have
before resuming work, while the production of medical therefore been affected. A gradual increase in demand
supplies and necessities has been prioritised. Industrial has also been observed in comparatively under-served e-
production is therefore not expected to return to full commerce markets such as Hong Kong SAR, where
capacity until mid-March at the earliest. providers have struggled to cope with the surge in online
orders and on-demand food delivery.
The disruption will have a knock-on effect on
neighbouring countries, with 40% of intermediate The outbreak is set to accelerate the upgrading of the
goods in Asian supply chains originating from China11. supply chain to support omnichannel retail, which will
For example, Hyundai has suspended production lines support further growth in logistics space demand.
in Korea due to the lack of parts from China12. Capital CBRE retains its forecast of mild rental growth this year,
Economics has stated that Vietnam, Malaysia and despite slower overall leasing activity resulting from
Cambodia are the most vulnerable markets as over 6% the disruption.
of the gross value-added of their economies come
from China.
Figure 4: Disruption to Global Supply Chains
Imported manufacturing inputs from mainland China as % of total imported manufacturing inputs
50%
40%
30%
20%
10%
0%
Korea
Indonesia
Cambodia
Hong Kong SAR

Vietnam
Malaysia
Thailand
Philippines
India
Singapore
Taiwan
Japan
Australia
New Zealand
Source: Capital Economics, February 2020.
11 Bloomberg [link], February 5, 2020.

12 Bangkok Post [link], February 7, 2020.
9

INVESTMENT
Investment – investor demand weakens Purchasing is likely to improve once the outbreak has
temporarily been contained, supported by pent-up investment
demand. CBRE’s 2020 Investor Intentions Survey found
There will be a short-term slowdown in purchasing activity that investors retain a solid appetite for real estate, with
across the region, with many investors postponing cross-border investors expected to shift their focus to
investment decisions and moving into wait-and-see Australia and Japan given the low cost of financing,
mode. Mainland China and Hong Kong SAR will while turning more cautious towards Greater China in
experience a sharp decline in deal flow in Q1 2020 due the short term.
to reduced business activity. Australia and Singapore will
also be relatively quiet as landlords opt to postpone sales Assets providing steady income streams will be the focus,
due to potential cross-border investors being unable to while interest in logistics assets will strengthen alongside
perform site visits. The impact on Japan and Korea will solid e-commerce industry growth. Demand for retail and
be relatively mild thanks to continued solid investment hotel assets will suffer due to falling rental income and a
demand from domestic investors. slowdown in regional tourism arrivals, respectively. This
will exert downward pressure on capital values.
Despite the current circumstances, there is still ample Opportunistic investment in China debt will continue
capital in the region seeking medium to long-term real apace, with highly leveraged Chinese developers set to
estate investment opportunities. Asia Pacific-focused come under even greater pressure due to the halt in
private equity real estate funds raised USD 38 billion in business activity and slowdown in residential sales.
2018-2019, an amount well in excess of the USD 5
billion raised in 2002-2003, indicating a significantly
larger investment pool. Relief measures such as
supportive monetary policy and anticipated interest rate
cuts across the region are lending support to pricing.
Figure 5: Investment Activity in Mainland China and Hong Kong SAR Improved After the SARS
Outbreak was Contained
Commercial Real Estate Transaction Volume (2002-2004)

14,000
12,000
10,000
USD million
8,000
6,000
4,000
2,000
0
H2 2004
H1 2003
H1 2002
H2 2002
H1 2003
H2 2003
H1 2004
H1 2002
H2 2002
H1 2003
H2 2003
H1 2004
H2 2004
H1 2002
H2 2002
H1 2003
H2 2003
H1 2004
H2 2004
H1 2002
H2 2002
H1 2003
H2 2003
H1 2004
H2 2004
H1 2002
H2 2002
H1 2003
H2 2003
H1 2004
H2 2004
H1 2002
H2 2002
H2 2003
H1 2004
H2 2004
Mainland China Hong Kong SAR Singapore Japan Australia Korea
SARS OUTBREAK
Source: RCA, National Bureau of statistics of China, The Land Registry, Hong Kong SAR, CBRE Research, February 2020.
10

THE LONG-TERM
IMPACT

THE LONG-TERM IMPACT ON ASIA PACIFIC REAL ESTATE
OFFICE
Greater Adoption of Flexible Working Reviews of Business Continuity Planning
CBRE believes the outbreak will create further The outbreak will force companies to reassess Business
opportunities for office occupiers to test the feasibility of Continuity Planning (BCP), particularly the need to
flexible working or agile working in many markets. In maintain back up locations for critical business functions
recent weeks, the government and private sector in and essential employees. Some companies may consider
Singapore, Hong Kong SAR, Macau SAR, mainland the formation of alternate teams of employees (e.g. Team
China, Japan and Korea have ordered or encouraged A & Team B) to be deployed on different schedules and
employees to work from home in order to limit social at different locations during future outbreaks. Occupiers
contact to slow the spread of COVID-19. will also need to ensure adequate supply of protective
equipment such as disposable gloves and masks. On the
Some companies – particularly those whose staff require landlord side, improvements to building hardware will
only a computer and internet connection to perform their need to be made, such as the installation of medical
duties – have found this experiment to be relatively grade air purifiers.
successful. While concerns remain over productivity and
collaboration among employees working from home, Greater Importance of Property and Facility
CBRE believes this large scale trial may encourage Management
companies to be more willing to accelerate the adoption
of flexible and home working polices in future. Property management will become more prominent. At
the individual tenant level, greater sensitivity towards
hygiene will require more frequent and rigorous
Adjustment of Space Utilisation Metrics sanitisation of the office environment, particularly of
shared areas such as canteens and bathrooms along with
Space utilisation in agile workplaces will be re-evaluated hardware such as phones and keyboards. Hygiene
due to the need to maintain comfortable density (as concerns will require office managers to ensure high
opposed to high density) to limit the transmission of standards of cleanliness are maintained while
diseases. At the same time, the workforce will become communicating this to employees.
more mobile along with the greater adoption of flexible
working after the outbreak. Occupiers will need to Asset managers – particularly of properties that include
balance space efficiency with employee health and shared amenities such as cafes, retail and agile space –
safety considerations, which may lead to slower growth will need to augment existing hygiene policies to reassure
in space requirements. tenants and employees. Features such as temperature
checks at entry doors or thermal imaging systems –
introduced by many buildings since the outbreak – may
Stronger Demand for Buildings with Sustainability become standard procedure during flu season. Regular
and Wellness Features cleaning and disinfection in public areas, better control of
people flows and the provision of isolation zones will
Occupiers will place a stronger emphasis on building become more important. Office landlords may also
specifications as they strengthen their commitment to consider providing medical updates and communications
employee health and wellness. Properties with via tenant engagement platforms and social media – an
sustainability and wellness features, particularly those approach successfully deployed by some of the retail
related to indoor air quality, ventilation systems, water landlords in recent weeks - to keep building occupants
drainage systems and other indoor environmental informed of the latest developments during future
features to improve employee comfort, will attract outbreaks. The complexity of facilities management in an
stronger demand in the long term. This could potentially office building is likely to eventually resemble that in a
hasten the development of more LEED and WELL-certified small shopping mall.
buildings. As of February 2020, there were about 700
certified and registered WELL commercial projects
providing a total of 219 million sq. ft. of space in Asia
Pacific, of which over 40% are in China.
12

RETAIL
Growing Popularity of Online Groceries Social Commerce Set to Gain Momentum
With brick-and-mortar stores in Greater China and The shift to e-commerce will place even greater pressure
Singapore having been forced to curtail their business on retailers and landlords to offer unique and engaging
hours or close completely, shoppers have gone online for shopping experiences – either via interactive formats or
daily necessities. This had led to a boost in online grocery omnichannel strategies - to attract shoppers and sustain
and fresh food sales – a trend that is set to hasten the sales growth in the long term. Live-streaming – an
growth of this format and support the expansion of increasingly popular format combining entertainment and
omnichannel supermarkets such as Freshippo and e-commerce – can help retailers foster a “see now, buy
7Fresh. While a continuation of this trend will provide now” culture enabling them to quickly inform consumers
solid support to e-commerce growth, it will create about their products and create a sense of urgency to
additional headwinds for traditional brick-and-mortar purchase. Intime Department Store in China has
outlets that do not have an omnichannel presence. partnered with hundreds of Key Opinion Leaders (KOL) to
host livestreaming sales events during the outbreak14.
Brick-and-Mortar Stores to Support Last Leg Ultimately retailers will need to develop their ability to sell
Delivery their products and provide their services without a
physical store. As well as online grocers and fresh food,
Relatively under-served e-commerce markets such as other industries such as medical doctors and educational
Hong Kong SAR have also seen a jump in online sales, centres have been forced to operate online during the
which may signify the beginning of a long-term outbreak, to varying degrees of success.
fundamental shift to an online economy. E-commerce
platform HKTVmall reported a 64.7% y-o-y surge in
average daily orders in January, while average daily Property Management to Be A Key Focus
gross merchandise value (GMV) on order intake for the
same month rose 49.6% y-o-y to HKD 10.9 million13. CBRE expects the outbreak to strengthen the importance
HKTVmall is also reportedly working with its merchant of property management in shopping malls and retail
partners to set up pick-up points in their stores – a trend stores in the coming years. Hygiene and other measures
that could simplify the last leg of the supply chain should to ensure facilities are safe and clean for employees and
it gain traction in the long-term. customers will be top of mind. Permanent measures may
include providing hand sanitiser at entrances and more
regular cleaning of goods or locations frequently touched
or used by shoppers.
13 Hong Kong Television Network Limited [link], February 10, 2020.

14 Xinhuanet [link], February 12, 2020.
13

Relocation and Diversification of Production Cold Storage Demand to Surge

Bases to Accelerate
Niche industrial and logistics assets will also benefit in the
Rising labour costs in China and the U.S.-China trade long-term, with growing consumption and omnichannel
conflict have already prompted many global distribution of groceries and fresh food set to accelerate
manufacturers to diversify supply chains to other markets occupier demand for cold storage facilities in the
in Asia such as Vietnam, Thailand, Indonesia, India, coming years.
Bangladesh and the Philippines. CBRE believes the
outbreak and the significant disruption it has caused to Automation to Transform Warehouses and
the supply chain will prompt more manufacturers to Distribution Centres
consider this long-term shift as companies look to reduce
reliance upon a single market and avoid The adoption of new technologies in the logistics space
overconcentrating production in one location. However, is likely to receive added impetus. Delivery companies
the complete exodus of manufacturing capacity from have sought to work around quarantine regulations by
China is unlikely given the sophistication of the industry, using Automated Guided Vehicles (AGVs) to provide
the maturity of the supply chain and the huge domestic contactless delivery. JD.com has reportedly delivered
consumption market. goods using drones in Hebei province during
the outbreak16.
E-commerce Demand to Drive Additional
Warehouse Requirements While return on investment remains a major
consideration, more logistics providers may consider
CBRE had already identified e-commerce as the main automating some of their operations to reduce reliance
tailwind propelling the logistics sector in 202015. on human employees and protect against disruption
However, with the outbreak prompting a jump in online caused by future outbreaks. This will transform the way
sales and expediting the structural shift towards operators configure and build their warehouses and
omnichannel retailing, additional warehousing space in distribution centres. For those logistics facilities that do
and around major metropolitan areas will be needed to continue to host large numbers of human employees,
meet the surge in last-mile delivery. hygiene and sanitation will need to be improved.
15 CBRE Asia Pacific Real Estate Market Outlook 2020

16 Nikkei Asian Review [link], February 12, 2020.
14

INVESTMENT
Core Assets to Remain Defensive Plays Older Logistics Facilities Offer Redevelopment
Opportunities
Interest rates are expected to stay lower for longer as
central banks reintroduce accommodative monetary The increasing use of automation in logistics facilities will
policy – a trend that will support real estate pricing. make it more difficult for older properties to secure
Although yields for prime core assets remain low, well- tenants and accelerate their drift towards obsolescence.
located high quality assets will be able to withstand short- This could lead to redevelopment opportunities for
term market weakness. The lower interest rate older assets.
environment will ensure the yield spread remains
attractive. Prime core assets are set to remain ideal
defensive plays. Retail is here to stay
While retail is set to experience severe short-term

Cold Storage and Data Centres Enter the headwinds, CBRE believes the sector remains an
Mainstream attractive long-term investment opportunity. The ongoing
transformation of shopping centres into experience
Cold storage is seeing robust demand on the back of the centres will require strong operational expertise. This will
surge in online grocery and fresh food sales. A recent create more opportunities for investors possessing solid
report published by CBRE found that while there exist retail experience as competition for retail asset will be
several barriers to investment in the sector, build-to-suit less intense.
or forming partnerships with cold storage developers and
operators are viable entry routes for investors17. Cold
storage-focused real estate funds may also emerge Integration of Sustainability into Investment
in future. Strategy
Data centres – already the subject of strong investor With more occupiers placing greater importance on
interest18 amid the growing importance of Big Data, employee health and wellness, properties with LEED and
Industry 4.0, Internet of Things (IoT) and the mainstream WELL certification will attract stronger demand. Investors
adoption of cloud-based services – are likely to take on a will increasingly focus on high quality properties with
more prominent role, should companies decide to allow these attributes or incorporate sustainability and wellness
employees to work from home more regularly. This would criteria in their value-added strategy to ensure their
drive cloud storage demand and data usage, boosting properties align with this long-term trend.
data centre fundamentals.
17 Asia Pacific Cold Storage: An Investor’s Guide, CBRE Research, July 2019
18 CBRE’s 2020 Investor Intentions Survey found that data centres were the most popular alternative sector. 30% of respondents stated they are actively
pursuing investment opportunities in this sector compared to19% in 2019.
15

THE LONG-TERM IMPACT
Figure 6: Common Long-Term Impacts Across Different Sectors
Industrial &
Long-Term Impacts Office Retail Logistics Investment
Greater importance of
property management
Dispersion of locations for

work and production due to
risk diversification
Further growth of online

retail and last-mile logistics
Stronger demand for cold

storage amid online grocery
boom
Preference for buildings with

wellness and sustainability
features
Low impact Medium impact High impact
16

APPENDIX 1 ON ASIA PACIFIC REAL ESTATE
ECONOMY
SUMMARY OF SHORT-TERM IMPACTS ON KEY MARKETS
MARKET SHORT-TERM ECONOMIC IMPACTS
Mainland • Growth will slow in H1 2020 but rebound in H2 2020. CBRE’s full-year GDP forecast has been
China revised down from 6.1% to 5.6%.
• The People’s Bank of China (PBoC) injected RMB 1.2 trillion worth of liquidity into the market via
reverse repo operations on February 3 and lowered the 1-year Loan Prime Rate (LPR) by 10 bps
and 5-year LPR by 5 bps on February 20. The China Securities Regulatory Commission (CSRC)
issued a circular forbidding short selling in the A share stock market.
• Additional measures in the pipeline include tax reductions and exemptions for impacted
industries; further interest rate cuts; and specific policy support for Wuhan and Hubei.
Hong Kong • GDP growth is expected to stay negative in H1 2020 due mainly to the residual impact from
SAR 2019 sociopolitical unrest and the coronavirus outbreak.
• Retail, food and beverage, trade and tourism are under the greatest pressure. Should the
outbreak be prolonged, the overall unemployment rate will climb noticeably in Q2 2020,
particularly in these industries.
• Some IPOs scheduled by Mainland Chinese firms in H1 2020 may be postponed to later in
the year.
Taiwan • The overall impact on the economy is expected to be short-lived.

• In addition to a possible decline in commodity exports, exports of services are expected to drop
due mainly to the slump in tourism.
• Taiwan’s Directorate General of Budget, Accounting and Statistics recently revised its GDP
forecast for 2020 down by 0.35 percentage points to 2.37% y-o-y.
Singapore • Although Singapore's manufacturing sector exhibited some early signs of recovery in Q4 2019,
this is likely to be curtailed, especially with mainland China being one of the country’s largest
global trade partner (13.4% of total trade). However, Singapore is well diversified with many
trade partners and therefore the impact will be cushioned.
• The Ministry of Trade & Industry has revised its 2020 GDP growth forecast to between -0.5%
to 1.5%.
Japan • The February consensus forecast for Q1 2020 GDP is 0.3% y-o-y (annualised basis), which is
21bps below January’s consensus.
• Some economists are forecasting negative growth for Q1 2020, which would mean two
consecutive quarters of negative growth following Q4 2019, which was down 6.3% q-o-q. The
decline in Q4 2019 was mainly due to recoil from front-loaded demand in Q3 2019 before the
consumption tax hike, as well as weather-related factors including typhoons and a warm winter.
• The decline in inbound demand from Chinese tourists has already resulted in a double-digit
sales decline in Japanese department stores during the Lunar New Year holiday. Pressure on the
retail sector is expected to increase as domestic consumption sentiment will further dampened by
the rising number of infected cases in addition to the most recent consumption tax hike in
October 2019.
• Delays to factory production in mainland China have negatively affected Japanese
manufacturers’ supply chains.
17

ECONOMY (CONTI NUED)
MARKET SHORT-TERM ECONOMIC IMPACTS
Korea • The economic impact of the coronavirus outbreak has been felt far quicker than that during MERS
five years ago.
• Korea's growth rate will drop due to sluggish exports overlapping with the shrinking domestic
demand caused by fewer tourists. The Bank of Korea (BoK) recently announced it would lower its
2020 GDP growth forecast by 20bps to 2.1% due to signs that COVID-19 is weighing on growth
in H1 2020.
• The electronics and semiconductor sectors have been hit hard as mainland China is the largest
importer of Korean semiconductors.
India • While the initial impact on the Indian economy was limited, however the recent rise in COVID-19
cases particularly in the backdrop of high internal migration and dense population could pose a
challenge to growth. This could dampen household spending particularly on retail, eating out,
recreation and leisure – which together account for 6% of the country’s GDP19. However, CBRE
expects the Indian economy to record growth of 5.6% in 2020 and a notch higher next year.
• A slowdown in mainland China and a serious disruption to supply chain linkages could impact
sectors such as electronics, engineering goods, pharmaceuticals and chemicals. Mainland China
is India’s largest trading partner and an impact on imports could lift costs if traders look for
alternate sources. However, there could also be a long-term opportunity, if the country focusses
on its supply-chain infrastructure and business environment and positions itself as a viable
alternate in the long run.
Australia • The outbreak is set to impact the Australian economy due to mainland China being Australia’s
biggest export market as well as a key source of tourism arrivals.
• Chinese constitute 30% of overseas students in the country, which will be detrimental to the
income of universities and providers of student accommodation.
• Direct inbound flights from mainland China have been banned until March 29 and restrictions
exist on international travelers who have recently visited mainland China. Coupled with recent
bushfires, the retail and hospitality sector will experience a challenging year in 2020.
• The government has introduced a AUD 76 million recovery package to assist the tourism industry.
New Zealand • After what was expected to be improving GDP growth in 2020, New Zealand’s economy will be
adversely impacted, mainly through the export and supply chain channels.
• At a sectoral level, while mainland China only accounts for 11% of tourists, in certain
accommodation and F&B markets its influence is significant and the banning of flights from
mainland China is having a sizable impact. The impact is severe in the foreign education sector.
Vietnam • Exports may decrease by as much as 20% in Q1 2020, equivalent to a 44bps decrease in
quarterly GDP, according to The Ministry of Planning and Investment (MPI). The MPI says GDP
may decrease to 6.27% in 2020.
• Many local manufacturers have temporarily ceased production since January as spare parts and
raw materials for cellphones, computers, appliances, vehicles, apparel and footwear are heavily
dependent on imports from mainland China.
• Vietnam is also overly-dependent on mainland China as an export destination for major
agricultural products such as rice, fruit and rubber.
Thailand • With exports and tourism being Thailand’s top contributor to GDP, the outbreak will have a
significant impact on growth and sentiment.
• Chinese tourists accounted for almost a third of Thailand’s tourist arrivals in 2019. This heavy
reliance on one market has shown its downside as many resort destinations have seen a
significant drop in tourist numbers.
• GDP growth in 2020 has been revised down by many financial institutes to under 2% from the
previous forecast of 2.5%-3.5% earlier this year.
18
19 Capital Economics, March 2020.

OFFICE
LATEST 2020 GRADE A

MARKET IMPACT RENTAL FORECAST CBRE VIEW
(AS OF FEBRUARY 2020)
Mainland Medium Beijing: -1.3% • The outbreak has significantly curtailed business
China operations. Leasing activity is expected to slow in Q1
Shanghai: -4.0% 2020, with many occupiers – especially those in
severely impacted industries such as catering, retail
Guangzhou: 0% and transportation – likely to delay decisions involving
large scale CapEx.
Shenzhen: -4.5% • The degree of impact on individual cities will vary
based on the severity of infections.
• Provided the virus can be largely contained within
Hubei province, its impact on the national office
leasing market – except for Wuhan – will be short-
lived. Leasing activity is likely to recover as early as late
Q2 2020, supported by the accelerated opening up of
the financial sector to foreign participation.
Hong Kong Medium -10.0% • New demand from Mainland Chinese firms will
SAR contract further until the outbreak is curtailed. Vacancy,
which is as low as 3.4% in the Central submarket,
coupled with underlying shadow space will take longer
to backfill. However, limited new supply in 2020 will
provide some comfort to landlords.
• The rental decline will likely accelerate in H1 2020,
resulting in a frontloaded full-year decline of at least
10%. Decentralised areas will be more resilient.
Taiwan Low 2.3% • CBRE retains its forecast for rental growth and net
absorption this year on the back of stable leasing
demand for quality offices. In addition, the absence of
new supply will ensure vacancy remains at historical
lows during 2020.
• Selected multinationals may delay leasing decisions in
the short term.
Singapore Low 0% • There were significant declines in Grade A (Core CBD)
rents during the SARS and H1N1 outbreaks. These
however can be attributed to poor financial timing as
they occurred after the dotcom bubble (SARS) and
GFC (H1N1).
• The market is expected to remain resilient, with the
outbreak having only a limited impact. Low vacancy
will keep office rents stable in 2020.
• The impact is likely to kick in after the effects of the
outbreak weigh on the output levels of the
manufacturing and services sectors, which could
possibly impact short-term growth.
19

OFFICE (CONTI NUED)
LATEST 2020 GRADE A

Japan Low Tokyo: -0.1% • The impact will be limited as major office markets
remain upbeat. There continues to be strong
demand among tenants to move to larger and new
premises or improve their office environment.
Korea Low Seoul CBD: 0.6% • Deals in progress are proceeding as planned at the
moment.
• Office leasing demand is expected to weaken as the
situation escalates. The suspension of site visits will
lengthen the decision process. Some occupiers
previously considering relocation will likely consider
postponing their plans or extending their leases in
their existing building.
• Cost is now a top priority and more occupiers are
considering cheaper buildings first.
India Low Gurgaon (Core): 1.0% • Office leasing demand has been unaffected so far
due to a sustained appetite amongst US and EU
Mumbai BKC: 1.7% based corporates for India as an outsourcing
destination. While India’s commercial real estate
Bangalore ORR: 4.5% market has very limited exposure to mainland China,
it could get impacted if the US and Indian
economies suffer a growth slowdown on account of
the COVID-19 spread (combined share of US and
Indian corporates in overall office leasing in 2019
stood at roughly 80%). This could result into delayed
decision-making, curtailed capital expenditures,
thereby slowing down portfolio decisions. However,
health and wellness of employees could take centre
stage for majority of the corporates; with greater
focus on workplace hygiene, remote working policies
and increased adoption of flexible space options.
Australia Low Sydney: 1.7% • Any impact on the office sector will be minimal.
While some decisions might be put on the
Melbourne: 2.3% backburner, tenants won’t think too much about the
impacts of a virus - which should be temporary -
when making an occupancy decision that will last for
5-10 years.
New Low Auckland: -0.3% • A direct impact on demand could occur in the
Zealand education sector which is a significant player in the
market for Secondary CBD office space.
• Anecdotal reports are emerging of supply chain
impacts on the office market resulting from delays in
the production and shipping of goods from China
for fit-outs.
20

OFFICE (CONTI NUED)
LATEST 2020 GRADE A

Vietnam Low Hanoi: 1.0% • There will be a limited impact as leasing demand
from Chinese occupiers is still very modest.
HCMC: 1.4% • A spillover effect may emerge as office occupiers
adopt a cautious approach towards expansion,
relocation and expenses should their business be
affected by the outbreak.
Thailand Low Bangkok: 3% • The impact from the outbreak will be minimal.
Demand is more dependent on the Thai economy,
which has caused many tenants to delay expansions
or relocations.
21

RETAIL
LATEST 2020 RETAIL

Mainland High Beijing: 0.1% • Large-scale closures of shops and shopping malls
China will pull down retail sales growth to around 6.0%.
Shanghai: 0% • Around 20% of new projects due for completion
this year have been delayed, with further
Guangzhou: 0.2% postponements possible.
Shenzhen: -0.2%
Hong Kong High -20.0% • Street shop vacancy is set to climb further but
SAR shopping mall occupancy will be less affected.
• The rental decline will likely be frontloaded to H1
2020 and will be less apparent in the second half
of the year due to the lower base of comparison.
While shopping mall performance should be
relatively resilient, CBRE has revised down its
2020 core submarket street shop rental forecast
to a 20% decline.
Taiwan Medium 0% • Restaurants are expected to be hard hit in the short
term as more consumers avoid public places and
dining out.
• Several shopping malls reported a drop of 30%+ in
footfall in the second week of February. However,
selected retailers with omnichannel capabilities, such
as beauty brands and grocery retailers, have
reportedly posted double-digit y-o-y growth in sales
revenue since the outbreak.
Singapore High -2.0% • Prime retail rental forecasts have been downgraded
to -2.0% from the previous -1.0% in 2020. The
tourism-reliant Fringe and Orchard submarkets are
likely to be the most affected, while the performance
of the suburban market is expected to remain
resilient supported by solid domestic spending.
• The Budget included measures to alleviate the strain
on retail and F&B by providing a 15% rebate on
property tax.
• Retailers that trade goods made in mainland China
could come under pressure as their inventories will
steadily diminish due to supply chain disruption.
Japan Medium Tokyo(Ginza): -0.4% • While CBRE has been forecasting a moderate
drop in Tokyo high-street rents for 2020, the risk is
to further downside given the likely drop in
inbound tourists and exacerbated weakness in
domestic consumption.
22

RETAIL (CONTI NUED)
LATEST 2020 RETAIL

Korea Medium Seoul: N/A • Retail has suffered the strongest impact. Sales will be
hit in the short-term and a few openings have been
delayed or even cancelled, including Louis Vuitton’s
new pop-up store.
• Major large retailers are likely to suffer in Q1 2020,
with many hypermarts temporarily closed after visits
by COVID-19 sufferers.
• One landlord recently agreed to a short-term rental
reduction and relief scheme for a tenant upon
request. Further cases are likely to be witnessed in
the coming weeks.
India Low N/A • There was no material impact in the past few weeks,
and both physical and online retail continued to
witness growth as more global brands enter and
expand. However, the recent rise in COVID-19
cases could impact retail consumption as people
avoid crowded areas, especially F&B, entertainment
centres, shopping malls, amongst others.
Completion timelines of retail mall projects are
expected to be delayed as sourcing for fit outs is
done mostly from mainland China, resulting in lag in
projects in finishing stages and stores at fit-out
stages.
Australia Low Sydney: 0.9% • The outbreak will adversely impact revenue in the
hotel and retail sectors, diminishing returns in 2020.
Melbourne: 0.4% • Luxury brands and F&B will be significantly impacted,
especially up-scale Asian. Some of these tenants
will likely ask for rental abatements (reduced rents
over a certain period) which will reduce landlords’
bottom lines.
New Low Auckland: -2.1% • The outbreak will affect the hotel and retail industries
Zealand and weigh on performance this year. Luxury retail
and F&B will be hardest hit.
23

RETAIL (CONTI NUED)
LATEST 2020 RETAIL

Vietnam Medium Hanoi: -1 to -2% • Sales will be hit in the short term, with F&B and
entertainment most vulnerable.
HCMC: -1 to -2% • Retailers are generally in wait-and-see mode, which
has led to a significant fall in site visit and enquiries.
This will increase challenges around pre-leasing
for new malls.
• Some retailers are asking landlords to cut rents by
up to 50% or even waive rents for the duration of
the outbreak.
Thailand Medium Bangkok: 0 -1% • While overall rents might not drop, the rental model
could change to a gross profit format especially
in an environment where shopping mall footfall
is declining.
• Same-store-sales among major retailers in Bangkok
were falling even before the outbreak due to the
growth of food delivery services and worsening
pollution.
• The Consumer Confidence Index in January 2020
fell to its lowest point in 70 months but this was
largely due to the economic slowdown.
24


LATEST 2020
LOGISTICS
MARKET IMPACT CBRE VIEW
RENTAL FORECAST
Mainland High Beijing: 3.5% • Given Wuhan’s status as a national strategic
China transportation and manufacturing hub, there may be
Shanghai: 3.0% disruption to supply chains – a situation that could
worsen if the virus is not prevented from spreading to
Guangzhou: 3.0% other major urban hubs.
• The impact on logistics leasing demand in logistics
Shenzhen: 3.0% sector has been relatively limited.
Hong Kong Low -5.0% • Third-Party Logistics (3PL) firms that focus on general
SAR trade and retailers are suffering the most. Some
retailers may have downsizing requirements.
• New and expansionary demand is expected to be
limited. On a more positive note, medical product
suppliers and e-commerce portals may require
temporary space should the outbreak last for an
extended period.
• Despite the uncertainty, low vacancy and limited new
supply will prevent rents from freefalling. A low single
digit decline is expected to result from more
surrender cases and downsizing requirements.
Taiwan Medium N/A • Disruption to supply chains will affect mainland
China-based Taiwanese manufacturers with
integrated supply chains across the region. This
may also prompt some Taiwanese manufacturers
to accelerate reshoring to Taiwan and/or
other countries.
• Demand for logistics facilities will likely increase as
e-commerce prospers.
Singapore Medium 0.0% • Exports, especially electronics, are experiencing
downward pressure. However, the pharmaceuticals
sector could benefit and support GDP.
• Weaker Chinese demand for imports and some
factory shutdowns will be detrimental to Singapore
given its position in the regional supply chain as an
exporter of intermediate goods to China.
• Factory rents are likely to see a further erosion within
a range of 3.0% to 4.5% y-o-y while warehouse
rents are expected to remain flat due to the limited
supply pipeline.
25

INDUSTRIAL & LOGISTICS (CONTI NUED)
LATEST 2020 LOGISTICS

Japan Medium Greater Tokyo: 0.7% • The main impact is the disruption to the supply chain.
• There is likely to be greater online consumption, and
higher interest for logistics, where there may be further
cap rate compression.
Korea Medium Greater Seoul: 0% • Korea has been impacted by supply chain disruption.
However, online commerce has benefitted, which could
drive additional demand for logistics and warehousing
facilities.
• A major fresh food delivery companies’ sales have
doubled y-o-y.
India Low N/A • The sector did not face any major impact in the past
few weeks, witnessing robust growth due to supply side
incentives from the government and strong demand
from local and global 3PLs and e-commerce firms.
However, a disruption of supply chain linkages and
blocking of imports from mainland China might impact
sectors such as electronics, retail, consumer durables
and e-commerce, all of which are drivers of logistics
space take-up in the country. Additionally, the
completion timelines of several warehouse projects
could be delayed especially as steel supplies remain
affected, as do those of several other fit-out goods
(such as racking systems, HVAC systems etc.).
Australia Low Sydney: 2.5% • Any impact will be at the margins and is unlikely to
Melbourne: 2.0% impact occupier decisions.
New Low Auckland: 2.6% • There is some impact emerging mainly in the food
Zealand manufacturing sector and in the supply chain around it.
• With exports to mainland China being negatively
impacted by the outbreak there is increasing demand
for cold storage, with New Zealand’s cold storage
network reportedly at capacity. Flow on impacts
around production cut backs are starting to appear.
Vietnam High N/A • Supply chain disruption is happening as imported
manufacturing inputs from mainland China account for
35% of total imported manufacturing inputs in Vietnam.
• The outbreak has further contributed to weakening
interest in local industrial sector from occupiers in
Greater China. Enquiries had already dropped
significantly after the U.S. and China signed the Phase-
One trade agreement and Vietnam tightened
regulations to prevent tax evasion.
Thailand Low 0% • Supply chains for many manufacturing plants has been
impacted as raw materials needed for the production
are from mainland China.
26

INVESTMENT
MARKET IMPACT CBRE VIEW
Mainland High • Real estate investment is expected to slow significantly in the short term as business
China activity declines and non-essential meetings and travel are cancelled.
• Highly-leveraged developers and landlords could come under significant pressure.
Real estate debt will remain an attractive investment option.
• Investors will strengthen their focus on gateway cities and assets providing steady
income streams.
Hong Kong High • Transaction volume will likely see a noticeable drop in Q1 2020. Should the
SAR outbreak last in Q2, investment demand will remain limited for another few months.
• Investment demand will weaken temporarily but the limited future supply across most
property sectors remains unchanged.
• Property prices are not expected to experience a sharp decline on the back of lower
financial costs but yield will need to move out to offset climbing economic risks.
Taiwan Low • Reshoring by Taiwanese manufacturers will create investment demand for industrial
properties and industrial sites.
• Local investors are showing new interest in logistics facilities in view of robust e-
commerce growth.
Singapore Medium • Investment is expected to moderate due to the outbreak and the limited stock for sale.
• Singaporean investors will remain active in overseas markets.
Japan Low • There may be an increase in enquiries from cross-border investors given the reduced
business activity in mainland China and Hong Kong SAR.
• An increase in the number of COVID-19 cases is unlikely to impact domestic
investors’ appetite, nor would it negatively affect their mid-to long term appetite for
overseas investment.
Korea Low • The outbreak has yet to affect inbound and outbound investment flows. Investors
continue to seek assets and negotiate deals. In some cases, the transaction process
may be lengthened due to travel restrictions in some countries.
• Hypermarkets and entertainment-related retail properties may suffer from a short-term
reduction in rental income, leading to a decrease in investment sentiment. The
disposal of hypermarkets by public REITs may be impacted.
India Low • Demand remains stable and foreign investors continue to search for opportunities.
Several Asian investors and developers have been seeking commercial and residential
development opportunities for the past couple of years.
Australia Medium • There may be an impact on real estate transactions until COVID-19 is contained,
with some investors preferring to defer sales until travel restrictions are lifted and
confidence returns to normal.
New Zealand Medium • The lower propensity for travel by Asian investor appears to be an emerging
constraint in marketing to this investor group. Property sectors where this investor
typology is a major source of demand may see some impact as a result.
Vietnam Medium • There have been fewer enquiries from cross-border investors in the first two months of
2020, especially those from mainland China, Japan and Korea, due to travel
restrictions.
Thailand Low • The impact will be minimal because Thailand is mostly driven by domestic capital.
However, travel restrictions could cause some delays to activity by overseas investors.
27

CONTACTS
ABOUT THIS REPORT GLOBAL RESEARCH LEADERSHIP
Henry Chin, Ph.D. Cynthia Chan Richard Barkham, Ph.D., MRICS

Head of Research, Office Specialist, Global Chief Economist &
APAC/EMEA Asia Pacific Head of Americas Research
henry.chin@cbre.com.hk cynthia.chan@cbre.com.hk richard.barkham@cbre.com
Ada Choi, CFA Liz Hung Neil Blake, Ph.D.

Head of Occupier Research, Retail & Logistics Specialist, Global Head of Forecasting and Analytics
Asia Pacific Asia Pacific EMEA Chief Economist
Head of Research, liz.hung@cbre.com.hk neil.blake@cbre.com
Greater China
ada.choi@cbre.com.hk Leo Chung, CFA Henry Chin, Ph.D.
Capital Markets Specialist, Head of Research, APAC/EMEA
Jonathan Hills Asia Pacific henry.chin@cbre.com.hk
Senior Director, leo.chung@cbre.com.hk
Asia Pacific Spencer Levy
jonathan.hills@cbre.com.hk Chairman Americas Research & Senior
Economic Advisor
spencer.levy@cbre.com
FOLLOW CBRE
CBRE RESEARCH
This report was prepared by the CBRE Asia Pacific Research Team, which forms part of CBRE Research – a network of preeminent researchers who collaborate to provide
real estate market research and econometric forecasting to real estate investors and occupiers around the globe.
All materials presented in this report, unless specifically indicated otherwise, is under copyright and proprietary to CBRE. Information contained herein, including projections,
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WHY THE CORONAVIRUS

CBRE RESEARCH | ASIA PACIFIC SPECIAL REPORT © 2020 CBRE, INC.

CBRE RESEARCH | ASIA PACIFIC SPECIAL REPORT © 2020 CBRE, INC.

Figure 1: Asia Pacific 2020 GDP Growth Forecast

Source: Oxford Economics, CBRE Research, February 2020.

1 Oxford Economics, CBRE Research, February 2020.

CBRE RESEARCH | ASIA PACIFIC SPECIAL REPORT © 2020 CBRE, INC.

ECONOMY (CONTI NUED)

CBRE RESEARCH | ASIA PACIFIC SPECIAL REPORT © 2020 CBRE, INC.

Figure 2: Net Absorption in Major Markets Impacted by SARS in 2003

Beijing Shanghai Guangzhou Shenzhen Taipei Hong Kong SAR Singapore

Source: CBRE Research, February 2020.

CBRE RESEARCH | ASIA PACIFIC SPECIAL REPORT © 2020 CBRE, INC.

Figure 3: Mainland Chinese Visitors as a % of Total Tourist Arrivals and Spending

Contribution by Mainland Chinese tourists

6 China Chain Store & Franchise Association, February 2020.

CBRE RESEARCH | ASIA PACIFIC SPECIAL REPORT © 2020 CBRE, INC.

10 Food Navigator-Asia.com [link], February 12 2020

CBRE RESEARCH | ASIA PACIFIC SPECIAL REPORT © 2020 CBRE, INC.

INDUSTRIAL & LOGISTICS

Industrial & logistics – industrial production

Figure 4: Disruption to Global Supply Chains

Hong Kong SAR

Source: Capital Economics, February 2020.

11 Bloomberg [link], February 5, 2020.

CBRE RESEARCH | ASIA PACIFIC SPECIAL REPORT © 2020 CBRE, INC.

Commercial Real Estate Transaction Volume (2002-2004)

Mainland China Hong Kong SAR Singapore Japan Australia Korea

CBRE RESEARCH | ASIA PACIFIC SPECIAL REPORT © 2020 CBRE, INC.

CBRE RESEARCH | ASIA PACIFIC SPECIAL REPORT © 2020 CBRE, INC.

Greater Adoption of Flexible Working Reviews of Business Continuity Planning

CBRE RESEARCH | ASIA PACIFIC SPECIAL REPORT © 2020 CBRE, INC.

Growing Popularity of Online Groceries Social Commerce Set to Gain Momentum

13 Hong Kong Television Network Limited [link], February 10, 2020.

CBRE RESEARCH | ASIA PACIFIC SPECIAL REPORT © 2020 CBRE, INC.

INDUSTRIAL & LOGISTICS

Relocation and Diversification of Production Cold Storage Demand to Surge

15 CBRE Asia Pacific Real Estate Market Outlook 2020

CBRE RESEARCH | ASIA PACIFIC SPECIAL REPORT © 2020 CBRE, INC.

While retail is set to experience severe short-term

CBRE RESEARCH | ASIA PACIFIC SPECIAL REPORT © 2020 CBRE, INC.

THE LONG-TERM IMPACT

Figure 6: Common Long-Term Impacts Across Different Sectors

Dispersion of locations for

Further growth of online

Stronger demand for cold

Preference for buildings with

Low impact Medium impact High impact

CBRE RESEARCH | ASIA PACIFIC SPECIAL REPORT © 2020 CBRE, INC.

MARKET SHORT-TERM ECONOMIC IMPACTS

Taiwan • The overall impact on the economy is expected to be short-lived.

CBRE RESEARCH | ASIA PACIFIC SPECIAL REPORT © 2020 CBRE, INC.

ECONOMY (CONTI NUED)

SUMMARY OF SHORT-TERM IMPACTS ON KEY MARKETS

MARKET SHORT-TERM ECONOMIC IMPACTS

CBRE RESEARCH | ASIA PACIFIC SPECIAL REPORT © 2020 CBRE, INC.

LATEST 2020 GRADE A

CBRE RESEARCH | ASIA PACIFIC SPECIAL REPORT © 2020 CBRE, INC.

OFFICE (CONTI NUED)

SUMMARY OF SHORT-TERM IMPACTS ON KEY MARKETS

LATEST 2020 GRADE A

CBRE RESEARCH | ASIA PACIFIC SPECIAL REPORT © 2020 CBRE, INC.

OFFICE (CONTI NUED)