[ad_1]
Sat, Nov 28 2020-5: 50 a. M.
Hong Kong
The office may never reach its past heights in the post-pandemic world, but the outlook for the Singapore and Hong Kong offices is promising.
Relatively small homes in those cities, short commutes to work, and tenants of tech startups all bode well for real estate trusts that focus on those markets.
The nationally focused real estate investment trusts (Reits) in these centers have outperformed their peers in Australia and Japan this year, and continue to grow thanks to a rotation towards economically sensitive stocks. Hong Kong’s Champion Reit, whose tenants include Citigroup, Singapore’s Keppel Reit and Mapletree Commercial Trust, have outperformed equally weighted trust baskets in Australia and Japan, according to data compiled by Bloomberg.
Certainly, no one expects the Singapore and Hong Kong offices to emerge unscathed from the pandemic. Companies like Citigroup and Mizuho Financial Group in Singapore and Macquarie Group in Hong Kong are giving up on office space as demand fluctuates and they face a future of remote working.
Singapore’s vacancy rates have already risen to 4.9 percent in the third quarter from 3.3 percent a year earlier, while Hong Kong’s Grade A office spaces rose 9 percent in September from 6.1 percent during the same period last year. according to data from Colliers International Group.
But these cities have kept the virus in relative control. The houses are also too small to make a permanent work-from-home future viable, whereas, unlike London or New York, these cities do not have a significant suburb to which workers can flee. That’s probably why its Reits are only 13 percentage points away from erasing losses this year, while the Australian and Japanese office Reits are down an average of 24 percent.
Singapore’s office market is likely to be “in one of the best positions” globally because living spaces are small, supply is tight and tech companies are increasingly looking for office space in the country, Shern said. -Ling Koh, portfolio manager for Principal Real Estate Investors. He said that after the Singapore office, Reits, he likes the Hong Kong office and then the Tokyo office, in that order.
In Singapore, Hong Kong’s imposition of a controversial national security law this year is attracting companies, while tech giants such as China’s Tencent Holdings and Amazon.com are setting up regional headquarters in the Southeast Asian city.
“These new users of office space from these newer industries should make up for what Singapore may lose in others,” said Yoojeong Oh, Singapore-based fund manager at Aberdeen Standard Investments Asia.
Despite all its political troubles and deviations, Hong Kong is attracting Chinese companies, in part due to the boom in initial public offering activity. TikTok owner ByteDance and Alibaba Group Holding have signed leases to add office space in Hong Kong, while CMB International Capital is among financial companies expanding their presence in the world’s most expensive real estate market. Plans announced this week by the government to reduce stamp duties should also boost deals in the city’s commercial real estate market.
It helps that Reits in these two cities are relatively cheap, while offering attractive dividend yields, especially compared to bond yields.
Analysts estimate that Keppel Reit and Mapletree Commercial will yield 5.4% and 4.1% for fiscal 2021, respectively, while Champion Reit will offer 5.3%. That outpaces the performance of less than 4 percent of Japan’s largest trusts, such as the Nippon Building Fund, though they are lower than 7 percent in Australian Reits like the Centuria Office Reit and the Australian Unity Office Fund, where the prices of the stocks have plummeted.
“Remote work will continue to prevail for some time, but the long-term disappearance of the office is an illusion, and it is a good time to buy Reits offices in Singapore and Hong Kong,” said Joachim Kehr, regional and portfolio manager for Asia. Peaceful. at Centresquare Investment Management. BLOOMBERG
[ad_2]
