Knowledge Hub

In this challenging time as COVID-19 impacts workplace operations globally, we break down how occupiers can engage with flexible workspace operators, as both a near-term business continuity solution and longer-term way of working for enterprises. We also set out steps for flexible workspace operators on how to maintain operations and protect the health and wellbeing of members at this time.

We expect a global economic recession to eventuate. The key question is how quickly the economy bounces back. This mostly depends on how rapidly COVID-19 is contained. We believe that real estate in general will see strong investor support in the medium term due to the increased need for yield alternatives given record low bond yields on one hand, and, even if the equity market bounces back, a desire for stable asset classes on the other.

The first couple of months of 2020 have been dominated by fears of the novel coronavirus’s impact on global economies and property markets. Historically, investors tend to become more cautious in their investment choices during periods of heightened uncertainty, and this year has been no exception in the Asia Pacific region. However, a closer analysis of Real Capital Analytics data shows that investor risk aversion had already been growing over the prior months.

For commercial real estate, the price declines needed to inspire buyers to come back to the market need not be as extreme as the 22% drop in the RCA CPPI seen from ’07 to ’10 during the Global Financial Crisis. Consider the office market in Manhattan in 2017. The top of the bidder pool disappeared as Chinese investors stepped away from the market and office sales plummeted as buyers and sellers wondered where the bottom would be found. A 20 bps change in cap rates, though, was enough to inspire buyers to come off the sidelines.