60 AGENTS GO ONLINE
HONG KONG SHINE FADES 87
68 OFFICE CULTURE RETURNS
URBAN ENERGY IN CAMBODIA 26
42 DESIGNS ON NISEKO
USD10; SGD13; IDR135,000; MYR41; THB330
GENTING TO THE POINT 58
NO. 169 asiapropertyawards.com/newsroom
building materials conglomerate
Saint-Gobain affirms its market
leadership by green initiatives
Saint Gobain Vietnaml (Complimentary by Graphic team)
Driven by its global vision of going above and beyond to make the world a better home, the conglomerate Saint-Gobain, commits to deliver a variety of innovative, top-notch, and environmentally-friendly building materials to better unite humanity and nature for the common good in Vietnam.
Making the World a Better Home
To "Making the World a Better Home," all products of Saint-Gobain are moderately outstanding and leading among various other items on the market. For example in Vietnam market, Vinh Tuong and Gyproc provide innovative solutions for ceiling and plaster walls; DURAflex is known as a super-fast construction material. The extra durable fiber cement board is a new material for interior and exterior application of wall and floor, meeting
the need for rapid completion for all construction works. DURAflex is good for health for not consisting aminoang. Besides, ISOVER - a trademark of the Saint-Gobain Group, is a leading global provider of sustainable solutions to sound and heat insulation for living areas across a wide range of projects. ISOVER is present in numerous industries such as residential, commercial, marine, industrial, HVAC. At the same time, CLIMAVER air duct made from glass wool, a brand of ISOVER, is ideal for ventilation, air-conditioning ductwork and adapted to any project.
Saint-Gobain’s products and solutions promote energy efficiency and reduce CO2 emissions. By innovating and evaluating the performance of solutions, the company can
Saint Gobain Vietnaml (Complimentary by Graphic team)
increase profits and adapt our offer to the new opportunities associated with the transition to a low-carbon economy. The company re-cycles most of the production wastes, thus reducing investment needs, total industrial carbon emissions and minimizing noise pollution as much as possible. Saint-Gobain technology-driven products' excellence is also broadly recognized on a national and global scale, illustrated by a range of partnerships with high-profile names such as Vietnam Green Building Council (VGBC), World Green Building Council (WGBC). With 350 years of history, Saint-Gobain aims to make a massive difference and advancement in Vietnam's construction material market while finding a path to reduce carbon emission in this exceptionally challenging economy.
ISSUE 169 Publisher Jules Kay Editor Duncan Forgan Deputy Editor Al Gerard de la Cruz Senior Editor Richard Allan Aquino Digital Editor Gynen Kyra Toriano Senior Media Relations Executive Tanattha Saengmorakot Media Relations & Marketing Services Executive Piyachanok Raungpaka Product Lifecycle Marketing Manager Marco Dulyachinda Editorial Contributors Liam Aran Barnes, Bill Bredesen, Diana Hubbell, Steve Finch, George Styllis, Jonathan Evans Head of Creative Ausanee Dejtanasoontorn Senior Graphic Designer Poramin Leelasatjarana Sales Director Udomluk Suwan Regional Manager of Awards Sponsorship Kanittha Srithongsuk Business Development Executive, Sponsor Partnership Priyamani Srimokla (Priya) Thaikom Chaitrakulpibuool (Chris) Regional Solutions Manager Orathai Chirapornchai Solutions Manager (Australia) Watcharaphon Chaisuk (Jeff) Solutions Manager (Cambodia) Phumet Puttasimma (Champ) Solutions Manager (India and Sri Lanka) Monika Singh Solutions Manager (Indonesia) Amanda Michelle Wulan Putri Solutions Manager (Mainland China, Hong Kong and Macau) Huiqing Xia (Summer) Kai Lok Solutions Executive (Malaysia) Samuel Poon Solutions Manager (Myanmar) Nyan Zaw Aung (Jordan) Solutions Manager (Philippines) Marylourd Pique Maria Elena Sta. Maria Business Development Manager, Corporate Sales (Singapore) Alicia Loh Solutions Manager (Thailand) Kritchaorn Rattanapan Rattanarat Srisangsuk Solutions Manager (Vietnam) Quan Nguyen (Val) Distribution Manager Rattanaphorn Pongprasert Editorial Enquiries email@example.com Advertising Enquiries firstname.lastname@example.org Distribution Enquiries email@example.com PropertyGuru Property Report is published six times a year by
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SANITIZING SOLUTIONS IHI ASIA PACIFIC (Thailand) Co., Ltd. 11th Floor Ramaland Building, 952 Rama IV Road, Suriyawongse, Bangrak, Bangkok 10500, Thailand
Interested? Inquiries? Phone : +66-2-236-3490 E-Mail : firstname.lastname@example.org 13 Web : https://www.ihi.co.jp/ihiapt/en/
CONTENTS | Issue 169
Make your loved ones feel remembered with a little something for the holidays
Ring in the new year in style by sprucing up your space for a party
Accessories and gear that will cover you in either hemisphere this holiday season
Project Confidential: Doing it for the kids
Interview: Putting people first
Design Focus: Man in motion
Urban Village and Factory Phnom Penh harnesses Cambodia’s youthful energy through artsy, repurposed industrial spaces and towering condominiums
Curtis S. Chin has been a tireless advocate for sustainability both in his role as US ambassador to the Asian Development Bank and now as a consultant for think tanks and private sector firms
Drawn to Japan by its unique culture and his hunger for knowledge, well-travelled architect Riccardo Tossani is still mining design manna from his wanderlust
CONTENTS | Issue 169
Neighbourhood Watch: Genting Highlands
Special Feature: The great tech-over
Special Feature: Back to work
The Malaysian hill station is prospering as developers and investors seize on its climatic advantages and existing range of attractions
Advances in proptech, accelerated by the pandemic, point to a near future where the buying process may be completed digitally
The future for Asia’s commercial real estate sector looks more secure as hybrid and more traditional office models regain momentum
Special Feature: Late to the party
Dispatch: Will the centre hold?
Dispatch: Down from its peak
The buying ambitions of young property seekers around Southeast Asia are being stymied by a range of factors
Investors are on guard for evidence that the crisis surrounding China Evergrande may be spilling over into broader markets
Hong Kong’s status as a hub for monied expatriates has been endangered by a range of factors and the luxury rental sector is suffering
EDITOR’S NOTE Issue 169
Well, what a year it has been! Cast into turmoil by the global pandemic, our traumatised world is placing its hopes of recovery on a range of vaccines developed at hyper-speed by some of the brightest brains in science. Wait, sorry, I’ve just checked my calendar and realised that I’ve missed a year. Many of us — your editor included — probably feel a little like Rip Van Winkle, forced into a waking stupor by the ongoing stasis of pandemic life. But there’s been much more to the 12 months just passed than homeschooling, vaccine selfies and an overriding sense of angst. Indeed, in many ways, 2021 has been just as epochal as the year that preceded it as the shape of the next few years begins to crystallise. There has certainly been plenty of note to look back upon as we near the turn of another cycle. Of course, the pandemic is still top of mind for most of us. In our three special features in this issue, we look at some of its implications for real estate in Asia. These include the changing role of agents, the remarkable resurgence of commercial real estate and the challenges facing aspiring homebuyers in a region where inflation looks likely to send property prices even higher. Elsewhere, we analyse the debt crisis surrounding China Evergrande, hit the slopes for a tour around Riccardo Tossani’s designs in Niseko and take in the air at Genting Highlands. Until next year – remember to mark your diary!
Duncan Forgan Property Report email@example.com
DETAILS | Gadgets
PRESENT FORM Whether you’re celebrating Christmas or just taking some time out over winter, it’s always great to make your loved ones feel remembered with a little something for the holidays
HIGH KICKS To the sneakerhead in your life, give the Hypelev Levitating Sneaker Display Stand. Powered by electromagnetic currents, the machine puts on a spectacle straight out of a sci-fi movie, suspending your prized footwear in mid-air.
MANE EVENT Dyson’s Airwrap styler is manna from hairdresser heaven. Never suffer a bad hair day again, whatever your hair type, with this luxurious set of curling and waving barrels, along with brushes for instant volume, smoothing, and control.
KEYS TO YOUR HEART The writer in your life can harness creative nostalgia with this Bluetooth- and USB-enabled typewriter keyboard by veteran retailer Hammacher Schlemmer. It’s the same office piano you’ve loved decades ago, but with your tablet, phone or computer as “paper.”
HOVER EASY APPLE OF MY EYE The iPhone 13 is a real upgrade over the iPhone 12: leapfrogging its predecessor with a longer-lasting battery life, an A15 Bionic chip, and a larger camera sensor. It also boasts Cinematic video recording capabilities, focusing on subjects right when they enter the frame.
From USD699, apple.com
The luminous Jetson Plasma hoverboard makes a speedy space-age gift. It takes you places at 10 miles per hour on an anti-slip grip mat while LED liquid lights swirl through its deck and wheels with all-terrain tires.
DETAILS | Trends
BETT ER DAYS Ring in 2022 in style with a party venue that will have your guests doing a double take
RECLINING DIVA The Cayenne lounge chair and ottoman set boasts lacquered, high-gloss armrests and a wooden frame of solid oak or walnut. Featuring a mid-century design by Marie Burgos, this seating is a joy to experience at any party, with a choice of soft finishes including velvet.
ET VOILÀ Bring the City of Lights to your bar with the Carson counter stool, which is directly inspired by an actual French antique. Built of handcrafted mahogany, this barstool instantly draws your admiring eyes with a seat and backrest wrapped with handwoven natural fiber and dyed abaca.
RATTAN OUT Let your guests gather around the Mico coffee table, a statement piece to have with its lacquered rattan body, metal frame, and solid teakwood top. The latter can be slid off to reveal extra space, good for storing those squishy pillows and cushions.
USD399, castlery.com BAR STAR Serve your revelers from Three Posts’ Hershel home bar. With its make of Brazilian pinewood and purposefully distressed markings, it has that nice rustic look that guests love. Hershel can store 12 bottles of wine in its rack, apart from five shelves and two drawers.
SAY GRACE Now here’s a side table that won’t get sidelined. Theodore Alexander’s 60cm-high Grace accent table boasts a moulded zebra black marbletop and maple veneer with brass moulding detail—truly a conversation starter at any party.
DETAILS | Style
POLAR SHIFT Whether you’re skiing down the slopes of Niseko or frolicking along the shores of Sydney, these accessories and gear have you covered in either hemisphere this holiday season
BLOW IT UP Ride those waves like a pro on board ROC SUP Co.’s Alliance HD Pack, which includes an inflatable paddleboard that comes with a heavy-duty, padded backpack. It also contains a dual-action hand pump which cuts inflation time in half.
I SEE The Spy Optic Marauder goggles are as eye-catching as they are eye-opening. Designed sans frames, they free your field of vision, with a dual-lens system to prevent fogging. Deadbolt magnets also secure your lens in place for effortless elegance on the slopes.
SNOW PIERCER Like all things 1990s, the Kemper Flight snowboards are making a comeback, vintage graphics and all. The snowboards, which feature a classic twin-tip shape and camber-rockercamber design, are built for all-mountain riding, be it on powder snow, groomed runs, and backcountry.
CHAIR PERSON If you’re summering Down Under, you might as well carry around with you the Sunset Chair by Helinox, which offers a relaxing high-back design and headrest. Don’t mistake its three-pound weight for frailness as it can support up to 320 pounds. Rocking feet are optional.
HOTHEADED Trend alert: Fashionistas are trading bucket hats for crocheted winter hats in the heat of summer. Start with the scarlet floral hat by Memorial Day, whose crochetwork of 100% cotton yarn will surely keep you in vogue.
DOING IT FOR THE KIDS From artsy, repurposed industrial spaces to towering condominiums, Urban Village and Factory Phnom Penh harnesses Cambodia’s youthful energy BY AL GERARD DE LA CRUZ
HOUSING PLUSH CONDOMINIUMS, FLEXIBLE COMMERCIAL SPACES, ARTISANAL F&B BUSINESSES, AND A SPACIOUS CREATIVE HUB, URBAN VILLAGE AND FACTORY PHNOM PENH IS A LYNCHPIN OF INTELLECTUAL, TECHNOLOGICAL DEVELOPMENT IN CAMBODIA
ambodia has one of the youngest populations in Asia with two-thirds of its people under the age of 35.
Therefore, it is fitting that one of the country’s bestselling mixed-use developments, Urban Village and Factory Phnom Penh, is inundated with youthorientated draws. Hong Kong conglomerate Goldfame Group has a long history in the country as an operator of some of its most prolific garment factories. Its knowledge of the nation’s demographics meant it knew what it was doing when it kitted out its ambitious live-work-play showpiece. As well as the country’s first trampoline and skateboard parks, Urban Village and Factory Phnom Penh features many cultural arts and co-working spaces. “We are now employing our third generation of employees,” says Catherine Chan, director of Goldfame Group. “We did a lot of due diligence work and compared different countries in Southeast Asia. Cambodian people are friendly, energetic, and the population is very young.” With a USD1 billion price tag, the project is regarded as the largest investment by a Hong Kong developer in Cambodia. “At first, we just wanted to improve the housing for our employees through real estate development,” explains Chan. “It was getting more difficult to find decent and affordable housing in Phnom Penh due to its rapid growth.” While this is not Goldfame’s first livework-play project—that honour goes to Urban Loft in Phnom Penh’s fringe Sen Sok district—it is the company’s most centrally located: set between Samdech Hun Sen Boulevard and National Road 2. Over the last 12 years, Goldfame made moves to acquire and develop the strategically located site. With China Construction (CC3) as contractor and structural consultant, Goldfame was able to complete the first phase of the project last year.
Four 23-storey buildings now tower above the site, offering 828 residences that run the gamut from studios to three-bedroom units. A second phase, launched in early 2020, will rise even taller: three 51-storey buildings interlinked with a 60-floor tower, housing 1,850 “luxury but affordable” condominiums. The brownfield site was an industrial complex—Levi’s jeans and Speedo garments used to be manufactured in the factories. But rather than demolish the factory complex, the multi-pronged design team of Atelier Cole, Bloom Architecture, Eden Landscape, and Mutro Design embarked on one of the largest adaptive reuse projects ever witnessed in the country. They have since revitalized the industrial edifices into Cambodia’s citadel of cool: The Factory Phnom Penh. “As with any project of this size, the phasing was difficult but the idea to split the project between The Factory and Urban Village proved to be a good one
APART FROM ACCESS TO THE WORKSPACES AT FACTORY PHNOM PENH, URBAN VILLAGE RESIDENTS ENJOY AMENITIES LIKE A SWIMMING POOL, RETAIL STREET, AND EVEN A PET PARK, A FIRST IN THE CITY
MANY SOCIAL INTEGRATIONS IN A KHMER VILLAGE HAPPEN OUTSIDE, IN THE STREET OR AROUND THE MARKET SPACE. THE MAIN IDEA IS TO CREATE A COMMUNITY RATHER THAN A HOUSING DEVELOPMENT
THE DEVELOPER CREATED GENEROUS LOBBY SPACES AND INCORPORATED LUSH PLANTING ON EVERY FLOOR IN THE FIRST PHASE OF URBAN VILLAGE
overall,” says David Cole, principal and founder of Atelier Cole. “The site provides a wonderful connection between National Road 2 or the river and the wider development to the west.” The 3,500 square metres of award-winning office spaces in The Factory Phnom Penh were converted in part out of a former sewing hall. Bloom architects wanted to “retain the look and feel of a shed,” exposing the hall’s hardwood structure and keeping the cement, concrete, and corrugated steel elements in the material palette. Even a derelict water tower was turned into an oversized “plant pot” for a tree. “We did not want to demolish this historical building,” says Cole. “As much as possible, the building fabric of the factory has been retained. Any addition has been carefully thought through.” The Factory Phnom Penh, in hindsight, would not be out of place in Goldfame’s native city Hong Kong where cotton mills and textile factories have similarly been repurposed into creative hubs.
The 3.4-hectare complex exudes youthful energy with skateboarders and trampoline gymnasts rubbing shoulders with creative types ranging from artists to dancers to musicians. The Factory Phnom Penh’s 2,200-squaremetre “Artspace” is the nation’s largest creative hub, filled with art galleries and artisanal studios. Outdoors, spectacular murals from Khmer and foreign artists adorn the complex’s alleyways. A fleet of 50 bicycles is available for visitors to ride for free around the campus. The thought process behind Urban Village and The Factory Phnom Penh tries to reconcile life in a traditional Khmer village with Goldfame’s urbanite sensibilities. “Much of the social integrations in a Khmer village happen outside, in the street or around the market space,” explains Cole. “The main idea is to create a community rather than a housing development. Historically, a village has the elements that provide us with 31
THE SECOND PHASE OF URBAN VILLAGE IS DISTINGUISHED BY TALL, INTERLINKED BUILDINGS WITH LARGE APERTURES, WHICH HELP TO LIGHTEN THE WIND LOAD AND REDUCE THE VERTICAL NATURE OF THE BLOCK
the means to live comfortably. Urbanisation gives us the promise of greater financial stability.” Atelier Cole has taken such communal elements to the next level in Phase 2 of Urban Village, where a podium roof boasts raised gardens and recreation spaces, plus offices, shops, and other conveniences.
“There was a huge amount of optimisation in the design that took inspiration from other high-density cities such as Hong Kong and Singapore,” says Cole. “The core layouts and circulation were designed to minimise waste of space. Facades and balconies were designed to be mindful of distances between units to avoid any issues.”
“If the Factory is the soul of the development, then the podium has been designed as the heart,” says Cole. “It’s a publicly accessible mixture of a town square, high street, and park. The design concept balances the desire to keep an active streetscape level with the need to provide a substantial amount of car parking.”
Myriad educational facilities have become integral to Urban Village and The Factory Phnom Penh. By the same token, the megadevelopment now caters to a different kind of resident beyond homeowners and property seekers. Every year, The Factory Phnom Penh runs the Anyone in Residence (AiR) programme, giving artists, creatives, and startup hopefuls short-term access to the ArtSpace facilities.
The upcoming towers in Phase 2 appropriate a ubiquitous quirk of high-rise Hong Kong architecture: larger-than-life building holes. Punctured into the buildings in Phase 2, at heights of 80 metres and 121 metres, respectively, are apertures that facilitate airflow through the interlocked buildings and cool down their exterior walls.
“I hope that The Factory can continue to be a place that nurtures homegrown arts and tech-based startups while bringing new opportunities to residents of Urban Village,” says Cole. “Seeing all the happy faces of the visitors satisfies us the most.”
FAME AND FORTUNE Goldfame Group has put Cambodia on the map in more ways than one. Known as one of the biggest knitwear manufacturers in the world, the Hong Kong conglomerate serves such big-hitting apparel brands like Zara, C&A, Uniqlo, Calzedonia, Lidl, Matalan, Dunnes Stores, H&M, PVH, IZOD, Arrow, GAP, Old Navy, Costco, and Walmart from its factories and headquarters in Cambodia, China, and Spain. Over the last few years, Goldfame has forayed into Khmer property development, egged on by the country’s promising fundamentals. Cambodia’s GDP has grown at a rapid rate of 7% for 10 consecutive years, making the nation a “favourable investment environment,” notes Catherine Chan, director of Goldfame Group. “Its rental returns are some of the highest in Southeast Asia. Cambodia is also the only country in Southeast Asia with no restriction on using and exchanging USD currency.” A signatory to many bilateral free trade agreements, including one inked with China in September, Cambodia has emboldened Goldfame Group to develop large-scale residential projects such as Urban Village and Urban Loft in recent years. “Many foreign direct investments have led to an increase in housing demand,” notes Chan. It has also delved into commercial development with The Factory Phnom Penh, a strong lynchpin of startup culture in the country. “We see a lot of smart, hardworking people in Cambodia,” says Ben Li, founder and chairman of Urban Village and The Factory Phnom Penh, in a statement. “Now you have options. You not only work for an employer—now you can be the employer.” FACTORY PHNOM PENH EXEMPLIFIES GREAT ADAPTIVE REUSE, HAVING TRANSFORMED A DEFUNCT MANUFACTURING COMPLEX INTO A VIBRANT COMMERCIAL AND CULTURAL ARTS SPACE WHERE STARTUPS AND SUBCULTURES CAN THRIVE
Putting people first Curtis S. Chin has been a tireless advocate for sustainability both in his role as US ambassador to the Asian Development Bank and now as a consultant for think tanks and private sector firms BY BILL BREDESEN
decade has passed since Curtis S. Chin served as the US Ambassador to the Asian Development Bank under Presidents George W. Bush and Barack Obama. Yet many of the issues he spoke about and advocated for then—including those related to sustainable urban development—have only grown more urgent to everyday citizens as well as boards of directors and city leaders.
During his nearly four years on the ADB Board of Directors, Chin spoke regularly about the need for change if the ADB was to fulfill its mission to help developing member countries reduce poverty and improve quality of life. “The need for more responsible and sustainable development has become more evident and more complex this last decade as cities have grown,” Chin says.
CURTIS CHIN VIEWS POLLUTION AS A MAJOR ISSUE FACING ASIA’S CITIES. TO THAT END, HE IS LENDING HIS ENTREPRENEURIAL SKILLS TO A RANGE OF ‘CLEANTECH’ INITIATIVES GEARED TOWARDS IMPROVING THE ENVIRONMENT
“While the needs and issues have become clearer—witness the shared concerns over Asia’s increasingly polluted skies and water—we should recognise that putting in place solutions will not be any easier without the engagement and support of all stakeholders.” After stepping down from his ambassadorial post, Chin was named the inaugural Asia Fellow of the non-profit, non-partisan Milken Institute in 2014, and is also involved in a range of board and advisory work, splitting his time between the United States and Southeast Asia. His appointment—and the establishment of the Milken Institute Asia Center in Singapore—underscored the economic and policy thinktank’s belief in the critical importance of the Asia-Pacific region to the global economy, and the role it will play in shaping future cross-border solutions. From your tenure at the ADB to today, you remain an advocate for sustainable development. What is your focus? I advocated then and now for a greater focus on what I call the three Ps of responsible development—a focus on people, planet and partnership. That is a focus on understanding the real impact of development projects on people, especially the most vulnerable in Asia-Pacific’s poorest and least developed nations.
The private sector has unique responsibilities in shaping the future of Asia’s cities. I hope that it recognises that diverse, thriving communities can be at the heart of sustainable urban development
A focus on the planet means ensuring development projects are done more sustainably and with due regard for the environment. And the focus on partnership means recognising that the best solutions draw together resources and lessons learned from across the public, private and nonprofit sectors. I have been blessed to work across all three sectors and see the challenge and opportunity in each. What are some ways the ADB and others can promote sustainability, particularly amid the urban sprawl in so much of Asia? The ADB—along with other multilateral development banks, international financial services institutions and a range of private
sector and civil society institutions and enterprises—can play a key role in achieving a more sustainable future. These institutions can do so by helping shape policies, and also critically through their decisions as to what gets financed—and not just what gets built but how something gets built. According to the UN, 60% of the world’s population will live in cities by 2030. Change can be driven by policy and innovation and “the next great idea.” Yet something that’s been underscored to me in my work with the Milken Institute, and in the world of private 38
equity, is that you might have a great idea for a new business, institution, product or service. But if you don’t have the money or access to capital, that idea might simply remain just an idea. Here’s where the ADB and similar institutions can have an impact. They can push for policy changes but also help ensure that capital is available and mobilised to flow to the ideas, projects, companies and institutions that can drive change.
CHIN BELIEVES IN PRESERVING THE VIBRANT STREET LIFE IN ASIA’S CITIES THAT IS A STRONG PART OF THEIR APPEAL
Planners must consider not only the impact of a city’s design and construction on traffic and parking but also on fundamental values such as social equality. The private sector’s seeming embrace of strong “environmental, social and governance” or ESG standards must go beyond the rhetoric of marketing to investors to actual measurable and impactful behavioural change. Amid the rush to maximise real estate returns, cities and their developers should also commit to incorporating public, open spaces to build a sense of community, cultivate street life and encourage social interaction. Such an approach to development can be a driver of long-term value and sustainable change that fosters a sense of community that spans all walks of life and income levels. In other words, liveable cities need more than tall buildings. This is something that real estate developers and the city, provincial and national authorities who regulate them must take to heart. The people, the street life and the neighbourhoods must not be lost and forgotten in the shadows of ever-taller buildings and ever-larger shopping malls. Asian cities must keep three benchmarks for liveability in mind: community, resilience and sustainability. You’ve written frequently on the challenges of urban sustainability, particularly on issues like pollution and waste management. What more can be done in this regard? What are the private responsibilities in all this?
With access to capital and return on capital driving development, the private sector—as a source and user of capital—has unique responsibilities in Asia’s urban development. I hope that the private sector recognises that diverse, thriving communities can be at the heart of sustainable urban development and long-term profits.
Governments and businesses must recognise that there are better ways to align short-term economic interests with the longer-term goal of ending the rampant pollution that much of the increasingly urbanised Indo-Pacific region is known for. There is hope, as evolving Asian consumer behaviour and activism further encourage the transition away from a focus on “development at any cost.” I see this in my work with impact investors and start-ups, including through serving on the advisory board of Equator Pure Nature, a 39
MAXIMISING GREEN SPACES FOR RESIDENTS IN URBAN AREAS WILL HELP ASIA’S CITIES BUILD RESILIENCE, SAYS CHIN
Thailand-based “cleantech” company that produces, markets and sells a line of natural, environmentfriendly, biodegradable household cleaning products under the brand name Pipper Standard.
many of our cities and property developments postCovid. Access to capital and a drive for short-term profit or revenues may understandably remain nearterm barriers to major change.
With growing numbers of consumers in Asia concerned about the impact of polluted skies and water, the trend toward healthier products that began in Europe and the US has come to this region. It is time for all of Asia to transition to a greater focus on sustainability—and to put an end to the type of pollution that leads to hashtags like #smogageddon and #airpocalypse trending on social media.
That is one reason that I often underscore that newer does not always mean better, and that small, simpler, and “low-tech” changes can also lead to key longer-term differences.
What do you think the “new normal” looks like for our cities and property developments postCovid, in 2022 and beyond? The reality is that financial constraints and competing agendas might well ensure that lessons learned will not be applied as much as they should in 40
In my work with TAEL Partners, a private equity partner to businesses in Southeast Asia, I see the tremendous value of proven technologies like wasteto-energy, which helps turn what might otherwise have been seen as refuse into a source of income and electrical power. Understanding and embracing the concept of a circular economy are key to more resilient and sustainable cities. One other point to add here: Across the region, and indeed around the world, Covid has shone a spotlight
CHIN SAYS THAT LIVEABLE, DYNAMIC AND VIBRANT CITIES ARE A MUCH GREATER TESTAMENT TO A COUNTRY’S PROSPERITY AND POLICY SUCCESSES THAN ANY NUMBER OF SKYSCRAPERS
on the inequality that continues to haunt and hinder national development. This is particularly true when we look at the region’s healthcare infrastructure and what has been described as a K-shaped recovery, where the richest recover first and a “new Covid poor” continues to suffer. Access to capital and access to healthcare are critical drivers of prosperity. How can local and national governments work together to promote “greener” cities and create more public spaces for people and nature? Asia’s cities must build resilience, and that includes “greener” cities with more public space for people and nature. Governments and developers have too often been at odds on these issues. This is especially important in Asia, a region prone to natural disasters, from earthquakes to flooding. Beyond skyscrapers, Asia’s cities must develop more comprehensive security, effective public health
systems, inclusive housing and labour policies, and diverse transport networks, as well as efficient delivery of emergency services. Here, the private sector, including insurance and reinsurance companies, must play an important role, alongside government policies that foster a more enabling environment for urban sustainability. With more people moving into cities, environmental challenges are increasingly an urban concern. Incorporating innovations and technologies in areas such as infrastructure, energy and transport will be essential to building smarter cities, if not “smart cities.” The contribution and partnership of the public, private and non-profit sectors will be vital. Liveable, dynamic and vibrant cities are a much greater testament to a country’s prosperity and policy successes than any number of skyscrapers, no matter how big, how dazzling or how tall.
Man in motion
Drawn to Japan by its unique culture and his hunger for knowledge, well-travelled architect Riccardo Tossani is still mining design manna from his wanderlust BY DIANA HUBBELL
t an age when most students are searching for direction, Riccardo Tossani was already a fully practicing architect. It was the 1980s and concepts like a holistic approach to urban design and sustainability had yet to fully permeate the mainstream, but they were already exuding a powerful influence on the Australian architecture student. By the time he sat for his graduation at the University of Adelaide in his early twenties, he already had a thriving practice that showed signs of the ethos that would go on to define an illustrious career. “I was still in my early twenties, but with a desire to do two things: one, expand my mind beyond the idea of architecture as just a way to create a building,” Tossani recalls. “I wanted to understand the resonance between built form and the environment that surrounds it.” To better do so, Tossani embarked on a grand Australian tradition: the walkabout. His travels carried him throughout Southeast Asia and China. The year was 1984 and the latter had only just opened to foreign travellers. Tossani traversed the nation on slow, coal-powered trains and was awed by what he saw. While the architecture of Australia was, in a global sense, relatively new, the Chinese cities he saw bore visible traces of generations of political and social upheaval. “During my travels, I discovered cities that were the product of their various dynasties culminating in the revolutionary architecture infused with Soviet influence and ultimately exhibiting a desire to become international in their stature,” Tossani says. “I discovered that I could read the history of a city through its buildings the way one reads sheet music.”
“During my travels I discovered that I could read the history of a city through its buildings the way one reads sheet music”
RICCARDO TOSSANI’S LOVE AND RESPECT FOR JAPANESE CULTURE AND ARCHITECTURE HAVE SEEN HIM FORGE A FORMIDABLE REPUTATION IN THE COUNTRY
Tossani would go on to settle and work in Florence, where his family roots lie, and gain an even deeper appreciation for the impact of history on urban spaces. By the time he was 30, he had enrolled in the Harvard University Graduate School of Design, where he graduated top of his class. He built a flourishing practice in Los Angeles along with his partner, Atsuko Itoda. While the two could easily have stayed in the United States, Tossani found himself drawn back east. “I was fascinated by the elements of Japanese culture that gave rise to Metabolism and brutalism and contemporary minimalism and wanted to better understand it all,” Tossani says. “I thought, ‘Maybe if I spent six months in Japan I’ll figure it out.’ Long story short, I probably understand less now about Japan than I did then.” In 1997, Tossani and Itoda founded Riccardo Tossani Architecture in Tokyo and the rest is history. The duo quickly realised that Japan offered opportunities to fully realise ambitious projects far faster than they could ever hope to achieve in the west. The combination of Japan’s building frenzy, and a mutual love and respect for the culture has kept them based there ever since. “Tokyo in the 1980s and the 1990s was just a crucible of fashion and music and graphic and design,” Tossani says. “There was a new nightclub opening every week. This is a very sophisticated culture. The complexity and idiosyncratic nature of this society are beyond understanding and that makes it so much more interesting.”
Although Tossani and his multinational team of architects have projects all over the globe, much of their focus in recent years has centered on the burgeoning luxury ski resort area of Niseko. Tossani’s projects are especially noteworthy both for their attention to sustainable design and for the way that they echo and accentuate the region’s breathtaking natural splendour. “You can’t really think about environmental design without thinking about energy sustainability and cultural sustainability,” Tossani says. “There was a growing understanding in the profession that architecture had to enhance the cultural environment and the natural environment and respect the diminishing resources of the planet.” When Tossani first began building in the region, he was something of a maverick in this regard. The authorities were so quick to encourage development projects and generate revenue that little thought was given to the potential lasting negative impacts. Tossani spent years advocating to preserve as much of the natural landscapes as possible. As locals began to realise what was being destroyed by irresponsible construction, there was a mass rebellion. Today, Niseko’s approach to development adheres far more closely to the one Tossani has always held. There’s a powerful belief in the importance of creating buildings that are more than mere structures, but rather an extension and an expression of the utmost respect for their environments.
R-Residence “This is a glass building, but it is surrounded by brise soleil and automatic solar blinds, so even though its skin is glass, we’re preventing the sun from penetrating the building in a detrimental way,” Tossani says. “It’s double-glazed and the whole skin window system of this building is designed to insulate from thermal transfer, and yet allow light and views to be permissible.” The façade system allows heat to enter in a controlled way, while warming in winter and cooling in summer the entire space with an elegantly concealed system of radiators. “On top of the roof of this building is a solar farm that produces the amount of energy necessary to make this house over a typical one-year period independent of the grid. This is a classic example of our approach to sustainable design in an urban environment.”
K-Residence “This is a very large residence and the idea was to create very deep verandahs, which create outdoor protected spaces that are pleasant places to sit in winter even when the snow is falling,” Tossani says. There’s plenty of incentive to want to sit outside, given the unbelievable location. “The house faces two primary directions, both of which have spectacular views. On one side of the house is the volcano, Yotei, on the other side the illuminated ski mountain. The deep verandahs make it possible to enjoy both. The idiosyncratic, angular columns are a metaphoric gesture to the tree geometry of the local silver birch forests.”
Hanaridge Residences 1 + 3 “A requirement of this estate was to have pitched roofs with a 13m height limit, so we had to work within this limit to create a prosaic roofline that provided as much ceiling height as possible with views that provided exposure to the volcano,” Tossani says. “Remember, there’s an average of 15 meters of snowfall every winter, so managing the snowfall on the roof in Niseko is serious business.” An indoor and outdoor onsen, both protected from the elements and boasting stunning views, add to the building’s allure. “we used natural & local materials throughout and we tried to preserve as many trees as possible. We believe in creating light and space by wrapping view-oriented rooms to staircases in glass.”
Corniche Villas “These villas are on a cliff edge that drops down into a valley. In order to stay within the generous 22-metre height allowance, and maintain resonance with the 13-metre-high middle village adjacent, we don’t go up, we go down into the river valley, which brings principal rooms closer to a bubbling stream—you can hear it from every room in the house,” Tossani says. Rather than try to cram as many floors into the structures as possible, Tossani opted to make the best use of that vertical drop by designing fewer floors with higher ceilings including impressive 5.5-metre-high ceilings in each of the living rooms, creating a sense of space and light with views of Mount Yotei and the ski mountain. As a bonus, each of the villas comes with a breathtaking outdoor bath.
Muse Niseko “We try to inject as much art as possible into the design,” Tossani says. In the case of Muse Niseko, he included a sculpture of his own creation, as well as custom commissioned works. “The murals are by Rieko Kawabe, Japan’s premier calligraphy artist, who reinterpreted the indigenous Ainu culture’s script to create something truly spectacular.” Even the building itself feels like a work of art. “If you look at the skin of Muse, the custom tiles are angled and projected in order to catch the powder snow and cast dynamic shadows,” he says. “A signature of our buildings in Niseko is that our architectural skins are designed to catch the powder and react to snowfall and changing light conditions in a really beautiful way. Micro-shadows shift with the sun as it moves across the building.”
Haven Niseko “Not every building in Hirafu Village has unlimited panoramic views,” Tossani says. When an architect is lucky enough to have access to them, it pays to make the most of them. “Wraparound windows highlight the spectacular views, while external landscape lighting accents the surrounding silver birch at night.” “The site itself has an angular edge to it, which we’ve reflected in the building to create these very dramatic angular living spaces with cantilevered balconies,” he says. “Abundant use of natural materials accentuate the alpine environment without competing with it.”
Highlands fling BY JONATHAN EVANS
A cool refuge from the heat of the lowlands, Genting Highlands is prospering as developers and investors seize on its climatic advantages and existing range of attractions
Grand Ion Majestic
Tropicana Grandhill from Tropicana Corporation Berhad is an integrated resort covering 112 acres. Promoting what it calls a “community lifestyle”, the project encompasses an adventure park, swimming pool, children’s playground, putting green and mountain-view cafés with cantilevered decks. With colleges and wellness businesses rounding out the package, it’s easy to see why its developers are calling Grandhill an all-in-one “holistic living concept”. The first township development in Genting Highlands, Grandhill’s 1,443 units include the serviced suites TwinPines, whose units range from 379sq ft to 1,330sq ft.
Grand Ion Majestic by developer NCT Group is set to be a namecheck-worthy address upon its scheduled completion in 2022. Located more than 6,000 feet above sea level, the spectacular two-acre condominium development consists of three towers — two of which are already 75% reserved for occupancy—and affords sublime views of the surrounding Titiwangsa mountains. Despite its feeling of splendid isolation, the condo is still only a six-minute drive away from the First World Hotel. Luxurious facilities include a sky lounge allowing panoramic vistas, a topfloor swimming pool and a gymnasium. The 1,668 smartly designed units vary in size from 380sq ft to 1,500sq ft. The project is slightly set apart from Genting’s commercial centre, but eateries, mosques, petrol stations, churches and hospitals are within proximity.
Famed for its French-tinged Japanese cuisine by chef Kenji Yamanaka, Béni is regarded as one of Singapore’s top tables. Its acclaimed cuisine is now available to savour in Malaysia at the SkyAvenue mall in Genting Highlands, where chef Shiro Onishi runs the kitchen, and where the five-course lunch or six-course dinner degustation menus give diners a chance to sample its greatest hits. The Ozaki A5 Wagyu steak, imported from Miyazaki prefecture, is a must-try. Another Béni speciality is its mushroom quartet, a medley of maitake, shimeji, enoki and white-button fungi with black truffles on egg custard. In the restaurant’s elegant dining room, diners can choose from two areas: one with turquoise velvet chairs, white marbletopped gold tables and pink cushions, the other with gilt-accented dark wallpaper and walnut leather chairs.
A short drive from Kuala Lumpur, Genting Highlands has flourished since being identified by late Chinese businessman Lim Goh Tong as a prime location for a hill resort. In the late 1960s, Genting Highlands Resort was born and the destination hasn’t looked back since. A boom in the 1990s saw a second cable-car skyway constructed to reach Ulu Kali’s peak, along with three mega-attractions: two theme parks and a music venue. The brightly daubed First World at Resorts World, the primary destination for many visitors, boasts the distinction of being one of the world’s largest hotel with 7,351 rooms. In common with the rest of Malaysia’s tourism hubs, the pandemic hasn’t been kind to Genting Highlands. But high-end developers are banking on long-term recovery, a fact illustrated by a range of enticing-looking new projects in the area.
Genting Premium Outlets
Chin Swee Caves Temple
Genting Premium Outlets are drawing a fresh influx of designer brand-seeking shopaholics, with up to 70% off on renowned brands including Michael Kors, Coach, Hugo Boss, Nike, Ralph Lauren and Kate Spade. The spacious outdoor mall centres on a central courtyard, and is handily located next to the Awana station at SkyCentral, a new transport hub for buses and cable cars. Only Southeast Asia’s second premium outlet centre, this is also the world’s first hilltop venue offering such a consumer experience. An extensive list of stores, with goods from fashion to sportswear, is sure to keep punters occupied. In Southeast Asia, eating is often as important as shopping. And an array of dining options—a spacious food court, numerous restaurants and cafés—cater to every culinary requirement.
Genting Highlands cafés don’t get any classier than Cafés Richard, which arrived at SkyAvenue mall in 2017. That opening marked the storied French brand’s first overseas outing. Aesthetically, the cafe neatly replicates a Parisian ethos with black-and-white mosaic floor tiles, cloth awnings, wicker chairs, pendant lamps and quintessentially French murals. Well trained baristas dish out the café’s famed coffee sourced from plantations in Africa, Asia and South America. In addition to signature coffee, high tea and dessert offerings, the café serves a full complement of savoury French classics, making this one of the most refined gourmet stops in Genting Highlands.
Undeniably spectacular, the mist-shrouded Chin Swee complex—the brainchild of Genting’s founder, Lim Goh Tong—stands 4,600 feet above sea level, and overlooks lush virgin-forest slopes. Chin Swee is named for a Buddhist monk (Qingshui) considered a deity in China’s Fujian province, a statue of whom sits in the Taoist temple. It’s arguably outdone by an enormous Buddha and a nine-storey pagoda with 2,000 blessing lamps, and inscriptions depicting Qingshui’s life. Meanwhile, a man-made stream gurgles gently: its clear “Dragon Mineral Water” reportedly possesses healing properties, as grottos contain graphic descriptions of the “10 Chambers of Hell”. The sublime panorama, though, is Chin Swee’s USP.
THE GREAT TECH-OVER Advances in proptech, accelerated by the pandemic, point to a near future where the whole buying process may be completed digitally— without buyers needing to be a physical presence BY STEVE FINCH
t a recent residential sales launch in Singapore, the city’s traditional and often chaotic balloting system used to allocate units to buyers had all but disappeared from physical view. Apartments were fully digitised on an inventory management system by PropertyGuru Group called FastKey and its associated feature StoryTeller, a threedimensional tool that immerses the wouldbe buyer in a cityscape of fully rendered listings.
SINGAPORE IS FLYING THE FLAG IN SOUTHEAST ASIA WITH THE REGION’S BIGGEST NUMBER OF PROPTECH FIRMS
This is a tool that has brought timely functionality since its launch in May last year in the teeth of the ongoing global pandemic. From the end of September, Singapore permitted just one client per day to visit a property, down from four previously. During certain periods of the pandemic in 2020, property viewings were barred altogether. “If you can’t visit the sales gallery in person, what do you do?” says Jason Gregory, managing director of FastKey. Instead of crowds gathering at the sales studio, ballot in hand, some 1,500 lots were drawn digitally in minutes across multiple locations, and 450 units sold in a day. The only part of the process conducted manually were payments, says Gregory: “It remains an online-to-offline world, but things are changing quickly.” Investment data so far this year suggests that the global pandemic is causing the proptech industry to explode. Venture capital-backed real estate companies raised USD10.6 billion by July, a nearly 28% surge on the same period a year earlier and the largest spend on record, according to data compiled by Crunchbase which tracks deals across sectors. “While real estate technology adoption was on the rise before the pandemic, it has become essential for today’s leading real estate players,” says Ben Breslau, chief research officer at JLL.
The current state of play in proptech across Asia highlights the technology differences at play between countries, and how quickly technology adoption can change the market landscape
SPACEWORX TAKES FLIGHT IN SINGAPORE Singaporean proptech firm Spaceworx has launched a pioneering platform in the city-state which combines the whole of the real estate industry into one neat, digitalized package. Builders, landlords, occupants, and everyone in between will be catered for with the new market offering, according to the company—even waste disposal companies are featured amid a surge of company signups ahead of the launch. The new tool “enables a business to compose their integrated digital solutions with the help of an ecosystem of building blocks: pre-integrated products, pre-configured automation, and expert service providers”, Spaceworx said in a statement
announcing its new integrated business-to-business platform. The company currently operates in Singapore and Malaysia only but plans to expand across the AsiaPacific region, and later into global markets including Europe and North America. Included in this planned expansion will be entering into new, property-related sectors including furniture, utilities including gas and electricity, insurance and even property security. Spaceworx says it remains committed to sustainability and green building design, as well as to an open property ecosystem using its unique integration platform called Lucy. 63
WHILE IN-PERSON DEALINGS FOR PROPERTY TRANSACTIONS ARE STILL IMPORTANT, THERE’S LITTLE DOUBT THAT THE ROLE OF THE AGENT OR BROKER HAS CHANGED IN RECENT TIMES
Property management led investment in the wider real estate sector, swallowing up USD2 billion or nearly 20% of every dollar spent, followed by construction. North America continues to lead, followed by Europe and then Asia, but there are signs that this region is catching up. When the Hong Kong property intelligence service Mingtiandi and Yardi, a real estate software company based in California, polled hundreds of Asian real estate executives on their adoption of technology at the end of last year, the results pointed to a seismic shift. In an industry dominated by wealthy, multigenerational families who had been slow to take up data analytics and artificial intelligence, suddenly 70% said they were adopting more technology. Still, 35% of respondents said Asia was trailing North America and Europe, but that was down from 56% in 2017, while just 6% of those surveyed in China believed the east was now behind the west. “There’s a growing perception that Asia is closing the gap,” says Bernie Devine, Yardi’s Asia regional director in Hong Kong. India leads the region by the number of proptech companies with 170 such firms recorded by late August, according to London-based proptech data and research firm Unissu, followed by China with 144 such businesses but still by far the largest in level of investment. In Southeast Asia, Singapore leads with 84 proptech companies—more than the rest of the region combined—while Vietnam has become the most dynamic recent market with a host of new players and outside companies pouring in. The current state of play in proptech across Asia highlights the technology differences at play between countries, and how quickly technology adoption can change the market landscape. When democratic and economic reforms in Myanmar led to the rolling back of economic sanctions and a surge in foreign investment in 2012, there had been only a couple of websites listing properties, according to 65
WITH PHYSICAL VIEWINGS ALL BUT IMPOSSIBLE DURING THE PANDEMIC, VIRTUAL WALKAROUNDS OF PROPERTIES HAVE BECOME AN ESSENTIAL TOOL FOR AGENTS
Stuart Deed, executive director of Picon-Deed Property Consultants in Yangon. “Many people were still using real estate papers and journals to find properties, while foreigners engaged a broker who usually worked alone or in a loose clique,” he says.
to circumvent government blocks against Facebook. But western technology and property firms including Telenor and Colliers have exited the country amid political uncertainty and a severe economic downturn. Although Myanmar and Laos are yet to register a single Proptech company, according to Unissu, Thailand and Vietnam are booming.
Ordeoo of Qatar and Telenor of Norway soon won licenses to build out Myanmar’s mobile phone infrastructure, at the time the least developed and populated in the region, and state restrictions on social media eased.
In Singapore, real estate firms and agents are now receiving grants to pay for the adoption of newly digitised services.
“The game-changer was Facebook and the various [international] real estate groups [coming in],” adds Deed.
The problem is not how quickly technology is being adopted, but that companies and agents are left behind.
Fast forward to this year, and the influx of foreign firms has turned into an exodus following a military coup in February, meaning the use of technology in the real estate sector has stalled and focused on survival rather than the adoption of cutting-edge technology.
The Council of Estate Agents in Singapore forecasted its membership will decline as a direct result of technology uptake. PropertyGuru Group has begun funding courses to help retrain older property agents more used to taking would-be buyers to the “real world” viewings.
Virtual private networks have become ubiquitous among property agents in Myanmar in recent months
“The role of the agent is certainly changing towards that of a consultant,” says Joe Thor, managing director
of MyProperty Data now rebranded as Datasense, Malaysia’s largest online property data company which was purchased by PropertyGuru Group in November last year.
During the first three months of 2021, the Chinese overseas property buying firm Juwai IQI estimates that as many as 60% of its new home sales were completed sight unseen.
Virtual viewings and calls—necessities during the pandemic—have dramatically increased but it remains to be seen to what extent this upwards trend will continue in many markets in Asia when things return to how they were before the pandemic.
“When buyers are purchasing new homes that are not yet built, they have to purchase sight unseen,” says Georg Chmiel, co-founder, and group executive of Juwai IQI. “They can typically visit the sales office to get a firsthand look at the model and finishes and fixtures, but during the pandemic even this was impossible.”
“The slow adoption of virtual viewings is largely down to the same reason why technology hasn’t wiped out the real estate agent like the travel agent,” says Thor. “Real estate is a major and often emotional decision.” Many agents interviewed for this article said most buyers continue to want to see a property in person before completion. But there are signs that key groups of Asian buyers—Chinese in particular—have already crossed this key threshold. The type of property—notably new versus previously owned—and the country market remains key.
The aim of the Proptech sector, however far in the future, has come more sharply into focus amid the global pandemic: to minimize the difference between physical and virtual viewings to such an extent that the average buyer no longer cares whether they see the property in person or not. “We want the process to be just as easy for the buyer who lives in Shanghai and is purchasing in London as it is for the buyer who is purchasing in their hometown,” concludes Chmiel.
In Myanmar, buying a property without seeing it in person remains almost unheard of, even for new, high-end listings, says Deed of Picon-Deed Property Consultants. But signs are that in China in particular the pandemic has shifted perceptions when it comes to buying sight unseen. VIETNAM HAS BECOME ANOTHER MAJOR REGIONAL PROPTECH PLAYER IN RECENT TIMES
BACK TO WORK Following its nadir in 2020, the future for Asia’s commercial real estate sector looks more secure as hybrid and more traditional office models regain the momentum from WFH BY GEORGE STYLLIS
A GALLERY OF COLLEAGUES’ FACES ON A TABLET OR A SCREEN HAS BECOME ONE OF THE MOST RECOGNISABLE ASPECTS OF THE WFH ERA
t’s easy to characterise the pandemic era as being shapeless.
It’s a fact that the period has taken on the time-looped persona of the classic movie Groundhog Day. With offices, restaurants, parks, schools, shops, and a host of other services in countries around the region slipping in and out of operation to varying degrees, the past couple of years have certainly often felt like an endless series of days blurring into one. Yet there have been some radical shifts throughout the pandemic so far as the sweeping predictions of early 2020 have been chewed over, considered and — often — dismissed.
We now know for certain that virtual cocktail parties are no substitute for real ones. The mass exodus from the globe’s big cities, as predicted by analysts, has yet to occur and is unlikely to do so. Likewise, the irreversible decline of the commercial real estate sector is another prediction that looks increasingly misguided. “According to JLL’s recent survey of 1,500 employees across Asia Pacific, respondents have indicated that their ideal number of remote workdays is slipping,” says Roddy Allan, chief research officer, Asia Pacific for JLL. “People are increasingly missing the office, as home working fatigue rises, and productivity levels decline.” Rewind to the dog days of 2020 and the picture looked very different. Indeed, many believed that the pandemic spelt game over for traditional office culture.
THE REIT STUFF All around Asia central banks have been printing cash to boost moribund economies slammed by the pandemic. And with fears of inflation rising, investors are doubling down on property to hedge against rising prices. Benefitting from this frenzy are real estate investment trusts (REITs), whose valuation are at their highest since before the 2008 financial crisis. “I have been saying for the last two years that REITs are a good inflation hedge,” Charlie Chan, one the region’s best known hedge fund managers told Reuters. “They are easier to value, you get what you see, and you own the building. If there is inflation, the building price will just go up.” Since REITs hold various kinds of properties, from factories to shopping malls and hotels, they benefit from higher rents when economies boom and prices rise. Unlike gold, which doesn’t pay any dividend, REITs also provide a steady flow of income. Yields for REITs in Asia stand at 4.4 percent on average, according to data from StarMine. Spot gold fell 13% this year to May 7. By comparison, the MSCI Asia Pacific REITs index rose 14% according to data from Thomson Reuters Datastream. Lockdowns were enforced around Asia and much of the rest of the planet. While the situation wasn’t welcomed by everyone, many workers embraced the “new normal” of home officing. And for a while WFH did look like the future. Many enjoyed the shorter commute to their kitchen table, sofa or home office, being able to avoid traffic and spend more time with their family. And it was easy to see the clear damage the pandemic was inflicting on the commercial office sector.
“Yield-hungry investors are increasingly being squeezed out of the sovereign bond markets by central bankers everywhere,” David Baran, co-founder of hedge fund Symphony Financial Partners in Tokyo told Reuters. “REITs are an increasingly compelling asset class.”
According to CBRE, office net absorption fell 34% year-onyear to 16.3 million sq ft net floor area (NFA) in H1 2020, the lowest first-half total in a decade. While leasing activity in mainland China tier 1 cities began to recover in March as lockdowns were eased, all other major 71
Preference for flexibility has grown, highlighting that hybrid work arrangements may be the way to go. The model remains top of mind for employees and should be considered by employers if they want to attract and retain talent
markets, especially Tokyo and major cities in India, saw a significant slowdown in demand in Q2 2020 as restrictions on mobility and business activity came into force. Other notably weak markets included Hong Kong, which witnessed two consecutive quarters of negative net absorption and its lowest half-yearly figures on record. The total value of transactions plummeted by nearly 40% in the year to September, as the number of deals fell by almost a third, according to Real Capital Analytics. Indeed, the grim prognosis for commercial real estate was being borne out around the region: with key commercial real estate markets including Bangkok, Metro Manila and Singapore slammed by travel restrictions and investor hesitation. The existential question over whether office culture was really on its way out seemed like a pertinent one to pose. Late in 2021, the picture has brightened considerably even as the pandemic has rumbled on. In stark contrast to its tidings from the same juncture last year, CBRE announced in August that the volume of investments in commercial real estate in APAC leapt 99% to USD41 billion in the second quarter from a year ago, returning to pre-pandemic levels. Increased investment in the logistics and industrial, office and retail sectors indicate an ongoing recovery of the region’s capital markets. 72
Despite the appearance of these robust green shoots, the devastation wreaked by the pandemic continues to have ructions. One of these is the presence of office space oversupply in major cities around the region. “Office space vacancy is at an all-time high,” says Raymond Rufino, CEO of Neo Office PH, a sustainable developer in the Philippines who specialises in commercial real estate. “I think we’re reaching 15% vacancy (in Metro Manila). Vacancies were historically in the low single digits for certain sectors, so this figure is painful. If you’re a landlord and you want your tenant to renew, you must give concessions. It’s a tenant market.” But at least it’s a viable market, indicating that rumours of the imminent death of the commercial real estate sector were — as the saying goes — greatly exaggerated. Indeed, reports like a recent study conducted by CBRE that found that almost half of 109 companies across Asia prefer dedicated seats for their staff suggest that a return to the pre-pandemic model has not been roundly rejected. “Although a hybrid model has been adopted in more recent times, eventually it will be back to the environment before the pandemic,” says Prem Kumar, deputy managing director of Jones Lang Wootton in Malaysia. “However, the platform of a WFH environment is very much more transparent now and as such the capability of adopting a
AS TIME APPEARED TO STAND STILL AND PROJECTS WERE PUT ON HOLD DURING THE PANDEMIC, CONTRACTORS FACED A RANGE OF CHALLENGES INCLUDING CASH FLOW ISSUES AND EXPOSURE TO LIQUIDATION DAMAGES AND TERMINATION
SOLID FOUNDATIONS Asia’s dynamic cities are famous for their constant thrum of building work. Therefore, it was inevitable that the construction sector would be badly hit by factors such as stringent lockdowns and social distancing norms. As time appeared to stand still and projects were put on hold, contractors faced a range of challenges including cash flow issues and exposure to liquidation damages and termination. Even after building work was greenlighted again, contractors were forced to comply with a new normal of health and safety SOPs, shortage of workers, restricted working hours, supply chain delay, rework after the suspension of construction and reduced workforce due to social distancing protocols. It’s no surprise then that projects around the region are running well behind schedule.
governments around the region have pushed forward with ambitious infrastructure plans. “Professionals expect governments to boost infrastructure spending on the road to economic recovery. This will provide a ray of light amid the gloomier outlook for the sector, perhaps pointing to a way out of the current downturn,” commented Sean Ellison, a senior economist at the Royal Institute of Chartered Surveyors (RICS) in a report released last year. Indeed, the long-term outlook for the industry is rosy. According to Future of Construction, a forecast produced by Oxford Economics and Marsh McLennan companies Marsh and Guy Carpenter, the global construction industry is expected to grow by USD4.5 trillion over the next 10 years to reach USD15.2 trillion by 2030. This is up 42% from USD10.7 trillion in 2020, and 35% higher than the previous decade to 2020.
It has not been all doom and gloom for the construction sector, however. Indeed, the industry has benefited as
AS THE PANDEMIC DRAGS ON, EMPLOYEES AROUND SOUTHEAST ASIA ARE CRAVING THE SOCIABLE, COLLABORATIVE ASPECTS THAT TRADITIONAL WORKPLACE CULTURE CAN PROVIDE
similar arrangement in certain specific scenarios will become a reality.” While some analysts see a gradual march back towards the “old normal” of office culture, other industry experts tout a much-trumpeted “hybrid” workplace model that is designed to support a distributed workforce of both in-office and remote workers. “Preference for flexibility has grown, highlighting that hybrid work arrangements may be the way to go, with 90% of the 1,500 employees surveyed wanting to choose their working hours, or have flexible schedules,” adds JLL’s Allan. “This implies that hybrid work remains top of mind for employees and should be considered by employers if they want to attract and retain talent.” 74
As the needs of occupiers evolve, the primary change we are likely to see in the office sector is the redesigning of spaces to make offices safer, healthier, and more sustainable. Analysts, however, do not foresee a significant impact on the amount of space leased, as companies will be looking to use their workspaces differently. They say there is likely to be a greater focus on using space better so workers are happier and more productive. Companies—not to mention developers—will also be forced to up their game to create appealing and hygienic spaces for employees.
WITH ITS GREEN CREDENTIALS AND HIGH-TECH TRIMMINGS, THE PARQ IN BANGKOK EMBODIES MODERN OFFICE DEVELOPMENT
“In the future, offices will feel more like home,” says Ken Ip, assistant general manager and group head of marketing, B.S.C. Group. “There will be a lot in common between this new form of workplaces and domestic workspaces. Features of these environments will include improved cosiness, softened acoustics and more relaxed vibes. “These can be achieved through furniture, specific fabrics and furnishings and even providing music in the workplace. Offices should let in more natural light where possible to give a homey ambience and be enhanced with improved air-conditioning systems for cleaner air quality or with open windows for increased ventilation.”
appears to be growing among employees for a return to the office. That’s good news for developers and investors in the sector, who can look forward to witnessing a resurrection instead of a burial. “The office sector is supported by healthy market fundamentals, and we continue to see positive occupier sentiment across Asia Pacific,” concludes JLL’s Allan. “This gives us reason to believe that markets will steady over the coming months, and office conditions will stabilise before early 2022. We forecast rents will begin recovering in 2023.”
With these lofty visions of the workplace future doing the rounds, it’s little wonder that enthusiasm 75
LATE TO THE PARTY Filial piety and a lack of affordability in housing markets regionwide, exacerbated by the pandemic, are stymieing the buying ambitions of young property seekers around Southeast Asia BY AL GERARD DE LA CRUZ
rom the “Greatest Generation” to “Baby Boomers” to the “MTV Generation,” some demographic cohorts have worn their labels like badges of honour. Those born between 1981 through 1996 got the short end of the baton: “Generation Rent.” Generation Y has held a fascination for real estate pundits over the last decade. Witnesses to once-in-a-lifetime socioeconomic setbacks from the global financial crisis to today’s pandemic, so-called millennials have scaled the property ladder with less precocity than their forebears.
SINGAPORE IS A SHINING EXAMPLE IN SOUTHEAST ASIA ON HOW TO GIVE THE YOUTH A LEG UP IN HOMEOWNERSHIP. HERE, PUBLIC HOUSING COVERS 80% OF THE POPULACE, WITH FINANCING READILY AVAILABLE
Delaying their homeownership goals until later in life, millennials are not “adulting” enough or so the old accusation goes. Their little siblings are not exactly “Generation Buy” either. By 2020, Generation Z, those born from 1997 onwards, became the most populous generation in history at 2.47 billion even as a health crisis depopulated the planet (and diminished their job prospects). Homeownership is even more elusive in Southeast Asia, a melting pot of ethnicities where more than half of the populace is younger than 30. But Generation Rent is not a fair assessment of the region’s youth—they haven’t left the nest in the first place. “Tight-knit family cultures, higher-thanaverage ages of a first marriage, and a lower rate of marriages mean that Southeast Asia’s millennial population have not felt as much pressure to move away from their families, compared to millennials in other parts of the world,” says Christine Li, head of research for Knight Frank Asia-Pacific. “The idea of ‘Generation Rent’ simply has not applied here.” Filial piety still holds sway in Southeast Asia despite how progressive the last generations may have seemed. In a recent survey by PropertyGuru, the majority or 49% of millennials in Thailand and, to a lesser extent, Indonesia (31%) cite taking care of parents as the top barrier to moving out over the next year. In Singapore, being unmarried prevents most respondents (41%) from flying the coop, a social more echoed throughout conservative Asia.
The story of first-time homeownership is one of affordability. Although hyped as a fast-growing economic bloc to rival the EU, Southeast Asia suffers from some of the highest home-price-to-income ratios of any region due to stagnating wage levels in developing economies
PROPERTY FOR THE PEOPLE Singapore is a shining example in Southeast Asia on how to give the youth a leg up in homeownership. Here, public housing covers 80% of the populace, with financing readily available through the government’s Central Provident Fund (CPF) scheme and private banks.
There is less interest for newly launched non-landed private property among younger Singaporeans, the survey further shows. Instead, resale HDB flats remain top choices for Singaporeans in their 30s and those in the 22-29 age group.
“Even in Singapore, one of the most expensive markets in the world to own homes,homeownership level is still maintaining at approximately 88%, aided by robust governmental policies and public housing schemes,” notes Christine Li, head of research for Knight Frank Asia-Pacific.
“On the supply front, cultivating a healthy secondary housing market is important,” says Li. “Supplementing the private supply with public housing schemes at subsidised rates to close the gap is also an important but frequently unpopular tool that can be looked into.”
Around 46% of Housing & Development Board (HDB) flat owners have financed their home with a concessionary loan from the agency, according to a recent consumer sentiment survey by PropertyGuru. Saddled with inadequate cash flow, many millennials in Singapore choose the HDB concessionary loan to finance their mortgage over a bank loan because of the security and peace of mind the former brings.
Owning an HDB flat offers millennials a “place they can call their own, granting them more personal space and flexibility,” according to Tan Tee Khoon, country manager of PropertyGuru Singapore. “They are also likely to be prudent in their housing decisions, thinking long-term with plans like selling the flat after the minimum occupation period (MOP) to upgrade to private property.” 79
“Southeast Asia has traditionally never had a strong ‘rental culture,’ and most households have preferred to own their dwellings as opposed to renting,” says Li. Still, the desire to move out remains strong among ASEAN youth. Even though up to 30% of millennials still report living with their parents in Singapore and Indonesia, as much as 84% of them still intend to move out over the next year, the survey shows. Thailand is an outlier at 42%, with most youngsters unwilling to leave the nest anytime soon. The story of first-time homeownership is one of affordability. Although hyped as a fast-growing economic bloc to rival the EU, Southeast Asia suffers from some of the highest homeprice-to-income ratios of any region due to stagnating wage levels in developing economies, some destabilised by strife and autocracy. It also suffers from unsustainable capital value growth in some cities, boiled to a froth by speculative buying and low-interest-rate environments, especially during the pandemic. “The ASEAN bloc has enjoyed a stellar economic growth over the last few decades, with countries such as Vietnam,
Cambodia and Philippines experiencing the sharp rise of the middle-class population, which resulted in a shortage of affordable housing in many of the capital cities,” says Victoria Garrett, head of residential for Knight Frank AsiaPacific. Portents of a housing unaffordability crisis could make Generation Z the true heir apparent of the Generation Rent tag. “From what we have seen of Generation Z, social trends are reversing as more youths are desiring independence from their families,” says Li. “Despite trends of slower and fewer marriages, more individuals from Generation Z will seek opportunities to move out into their own pads.” Millennials are built differently. Under immense pressure from social media, they have trailblazed the experience economy, given to frequent travel, eating out, and live events at the expense of tangible assets like a car or house. Millennials are not monikered the “Me Generation” for nothing. One in three millennials looks to purchase a luxury home, or those priced above SGD5 million in the long term, according
to the PropertyGuru Singapore survey. Most justify it as a dependable long-term investment (66%) but 30% also cited “social status” as a reason to purchase. LET’S STAY TOGETHER
“There is no doubt that millennials in Singapore are one of today’s fastest-growing segments of home buyers, with savings accumulated from pandemic sheltering,” states Tan Tee Khoon, country manager of PropertyGuru Singapore. “The delay in home buying can be due to millennials’ increasing preference for a larger, luxury property that commands higher prices than typical starter homes.”
Hyped as the best thing to happen to young property seekers priced out of the market, co-living has found some of its prospects floundering throughout the health crisis. The fixed costs of operating co-living spaces have turned exorbitant against the backdrop of pandemic-induced uncertainty; their core clientele of digital nomads have also shied away from travelling. Also, the notion of sharing communal spaces may be anathema to an era of safe distancing.
Digital natives all their lives, Generation Z are torchbearers of the gig economy, favouring access over consumption. Where Generation X and millennials consumed status symbols and experiences, respectively, Generation Z consume the “search for truth” and prefer to make ethically, environmentally informed buying decisions, according to McKinsey. True enough, young Asian home buyers tend to factor in good air quality, proximity to green spaces, and access to good healthcare in their choice of post-Covid residences, reports Knight Frank. A staggering 46% of millennials in Singapore
VIETNAM HAS EXPERIENCED THE SHARP RISE OF A MIDDLE-CLASS POPULATION, WHICH HAS RESULTED IN A SHORTAGE OF AFFORDABLE HOUSING IN HUBS LIKE HO CHI MINH CITY
“Co-living is a relatively new concept and is still penetrating the market with a lot of room to grow,” notes Christine Li, head of research for Knight Frank Asia-Pacific. “Generally, co-living and its alternative residential typologies are considered an excess and a luxury and have mainly appealed particularly to expatriate crowds.” But this could change soon. According to Knight Frank’s Global Buyer Survey 2021, 17% of Asian residents who have moved since the dawn of the pandemic have done so to live closer to loved ones. “With the pandemic creating prolonged periods of isolation, the selling point of the community and shared spaces is accentuated,” says Li. “The growing student, particularly the university undergraduate, population, and the workforce for the burgeoning tech and financial sector in the region also contribute to the growing pool of demand for alternative living spaces such as co-living.” Last year, co-living pioneer lyf announced 13 more properties to open in various cities from Bangkok to Melbourne to Xi’an through 2024. “Co-living remains a great option for the budget-conscious millennials who may not be ready to purchase a property, but still want their own spaces or rightsize their housing needs,” says Tan Tee Khoon, country manager of PropertyGuru Singapore. “Coliving tenants stand to enjoy enormous savings by sharing common living spaces with a like-minded community.” 81
IT’S SUPREMELY DIFFICULT FOR ALL BUT THE MOST MONIED FIRSTTIME BUYER TO GET ONTO THE PROPERTY LADDER IN PREMIUM MARKETS LIKE HONG KONG
are willing to pay a premium to live in “green towns” or sustainable estates, reports PropertyGuru. Around one in three millennials is also willing to pay more for properties with EV charging points. “The pandemic has put health and wellbeing into the forefront of younger generations’ consciousness when selecting new homes,” says Li. Without the Bank of Mom and Dad, lower-income segments among young generations could only do so much without regulatory support. Tools to curb speculative buying like tax penalties, lower loanto-value (LTV) ratios, price controls, and tighter mortgage rules may spur first-time home buying for end-use, but they are not airtight measures. “In South Korea…cooling the market only ended up locking the low- to middle-income groups from purchasing homes over the past three years,” warns Li. “This has impacted younger property seekers in particular, who are at the beginning of their careers and have yet to have built up resources for their first purchase.” On the other end are property seekers who think housing policies are not warm enough. In Malaysia,
only 16% of Malaysians perceive governmental efforts to make housing affordable as sufficient, reports PropertyGuru. Seventy percent of respondents called for further reduction of interest on home loans even as 46% of first-time homebuyers in their 30s expressed hopes of saving enough money to clear their debts. “At the end of the day, as long as policymakers keep in mind the objective of the residential being for fulfilling one of our most basic needs, we will see the target of young buyers ascending the property ladder be achieved,” Li says. Today’s youth will eventually come into money. Millennials stand to inherit over USD68 trillion from their parents by the year 2030, the greatest wealth transfer in modern history. With many families having accumulated wealth in property, the desire for homeownership will surely live on through the years. “Property ownership in Asia has always been aspirational, and I don’t see this changing in the future,” says Garrett.
YOUNG ASIAN HOME BUYERS TEND TO FACTOR IN GOOD AIR QUALITY, PROXIMITY TO GREEN SPACES, AND ACCESS TO GOOD HEALTHCARE IN THEIR CHOICE OF POST-PANDEMIC RESIDENCE
GENERATION BUY While their Southeast Asian and American counterparts were struggling to climb the property ladder or toiling to pay off crippling student loans, millennials in China were buying their first homes— in droves. An estimated 70% of Chinese aged 19-36 own a home, one of the highest homeownership ratios in the world, according to HSBC’s first and latest Beyond the Bricks study. “In China, the ability to purchase a home at a young age symbolises success and buying a home is often seen as an important and sensible financial investment,” says Victoria Garrett, head of residential for Knight Frank Asia-Pacific. “Many from this segment find real estate a haven asset compared to other investment classes.” Young Chinese property seekers have fanned out from the mainland and scoured Southeast Asian markets for suitable investments in recent years. Most were attracted to the neighbouring region’s low barriers to entry and good returns.
“Pairing with their governments’ imposition of restrictions on domestic real estate transactions, it is easy to see the reason why they look at the overseas property market and become the target for many Southeast Asian developers,” says Garrett. Southeast Asian markets are widely popular among the new generation of cashed-up Chinese home buyers for other reasons. In developed economies like Singapore, for example, they are attracted to great access to medical care; secure infrastructure for both living and working; and positive capital gains. The lure of a low investment threshold, as well as freehold land and homeownership, also makes countries like Malaysia, Thailand, and Cambodia popular bets for the Chinese. Adds Garrett, “With rapid urbanisation of these less developed countries, land prices can only rise, which will, in turn, drive property prices to go up.”
Will the centre hold? Worries surrounding debt-strapped property developer China Evergrande have put investors on guard for evidence that the crisis may be spilling over into broader markets By Steve Finch
ollowing a meeting between central government officials and Evergrande Group senior executives in Beijing in late August, Chinese regulators kept silent on the developer’s impending debt crisis for weeks. Finally, in mid-October, central bank governor Yi Gang said the problems facing Evergrande “casts a little bit of concern”, but added: “Overall, we can contain the Evergrande risk.” China, of course, is one of the world’s most expansive nations. Yet narrowly defined narratives like Yi’s—particularly during a crisis—often set the tone in the country.
CHINA EVERGRANDE HAS STRUGGLED TO MAKE REPAYMENTS ON ITS STAGGERING USD300-BILLION MOUNTAIN OF DEBT AND HAS FAILED TO SELL ASSETS QUICKLY ENOUGH TO KEEP CREDITORS HAPPY
Chinese regulators have since made sure to defer to the same watchword— “controllable”—in describing Evergrande’s increasingly urgent debt burden. A headline in the nationalistic daily Global Times perfectly captured Beijing’s official stance: “More bond defaults likely for Chinese real estate companies, but the overall situation will be stable.” Half of the central government’s battle will be convincing investors and consumers that everything will turn out just fine: not least to prop up flagging confidence. But most analysts agree that things will get considerably worse before getting better.
MOST ANALYSTS AGREE THAT THINGS WILL GET CONSIDERABLY WORSE BEFORE GETTING BETTER. INDEED, SOME BELIEVE THAT EVERGRANDE’S DEBT REPAYMENT PROBLEMS COULD TURN INTO A FULLBLOWN FINANCIAL CRISIS IN CHINA, AND POSSIBLY BEYOND ITS BORDERS Indeed, some believe that Evergrande’s debt repayment problems could turn into a fullblown financial crisis in China, and possibly beyond its borders. Evergrande’s litany of woes is extensive. It has struggled to make repayments on its staggering USD300-billion mountain of debt and has failed to sell assets quickly enough to keep creditors happy. Rare tidbits of good news, meanwhile, have been drowned out by something worse. When its suspended shares started trading again in Hong Kong in late October, Evergrande also announced that the potential USD2 billion-plus sale of a banking unit had fallen through. Media reports suggest Chinese authorities have asked Evergrande founder Hui Ka Yan to use his considerable wealth to pay off debts. Yet Hui has lost 70% of his fortune over the past year amid Evergrande’s debt crisis, meaning his assets are reportedly down from USD46 billion to USD11 billion. His fortune could help meet short-term bond repayments, but Hui’s dwindling personal wealth now accounts for less than 4% of the money owed by his company. Transparency concerns remain, especially regarding the identities of the company’s many investors. And these are the dominos expected to fall should debt repayments stall further.
“We simply don’t know who many of Evergrande’s investors are,” said Marco Metzler, a former Fitch analyst ahead of the release of a report he co-authored for the German Market Screening Agency warning Evergrande’s woes could lead to the next global financial crisis. “There could still be some negative surprises here.” Metzler’s analysis lies at the least optimistic end of the spectrum of views on the embattled Chinese property company. But pessimism is widespread. Central bank governor Yi’s comment in October that Evergrande “is an isolated case” appears increasingly far from the mark. The same month, luxury apartment developer Fantasia Holdings defaulted on bonds worth USD206 million, so too did Hong Kong-listed Sinic Holdings to the value of USD250 million, and China Properties Group on USD226 million of debt. Beijing developer Modern Land said in October it needed more time to repay a USD250 million bond. “[Defaults] are leading to a deterioration in consumer confidence and reducing interest from prospective buyers,” BCA Research said in a note in late October. Are these signs of an Evergrande contagion starting to spread? Overseas bond defaults have reached the highest level since records started in 2018, some to around USD8.7 billion, with 34% in the property sector, according to Bloomberg.
The ‘big three’ ratings agencies—Moody’s, Fitch, and S&P—slashed Chinese developers’ ratings a combined 91 times in the first nine months of this year, another record. And that was before a series of further such cuts the following month. Hong Kong-listed Kaisa Holdings saw its rating cut in late October by Fitch which followed rating cuts by Moody’s against Chinese property firms Yango Group, China Aoyuan, Greenland Holdings, R&F Properties, Shinsun Holdings and Zhongliang Holdings all in the space of less than one week, a further sign that debt problems may be speeding up in China’s property sector. Recent liquidity problems follow a surge in aggressive borrowing in the sector between 2016 and 2018, a period in which China has become faraway the world’s leading private borrower with a ratio of well over 200% of GDP. Many of China’s property sales are advance purchases and down payments before units are built, and there are now growing signs that confidence is waning among Chinese homeowners. In September, China’s new home prices fell for the first time in six years, while the real estate sector shrank 1.6%
IN SEPTEMBER, CHINA’S NEW HOME PRICES FELL FOR THE FIRST TIME IN SIX YEARS, WHILE THE REAL ESTATE SECTOR SHRANK 1.6% AND CONSTRUCTION 1.8% IN THE THIRD QUARTER
and construction 1.8% in the third quarter, according to official data from China’s National Bureau of Statistics. The central government is now starting to reverse recent efforts to cool the overheating sector after house prices rebounded too quickly following pandemic lockdowns initiated across the country in early 2020. Analysts reported borrowing costs for home loans being reduced in China from October. “The first signs of easing policies are emerging after weak property sector sales numbers were released,” says Cheng Wee Tan, a senior equity analyst at Morningstar. Forecasts for China’s property sector are grim. S&P forecasts a 10% drop in residential sales in 2022, and a similar slide again the following year. “China’s property market is known for its boom-and-bust cycles, but the current, contagion-tinged downturn is unusually intense,” it said.
Down from its peak Hong Kong’s status as a hub for monied expatriates has been endangered by a range of factors and the luxury rental sector is suffering as a result By Liam Aran Barnes
n 2017, CNN Travel published a widely read article detailing “40 reasons why Hong Kong is the world’s greatest city.”
The listicle, which coincided with the 20th anniversary of the handover from British to Chinese rule, was largely irreverent. It referenced local superstar Maggie Cheung, the solid gold lavatory in a bling jewelers’ restroom, and “wholesome late nights” in Wanchai, capturing the city’s essence — its colour, chaos, and charm. But it also highlighted the myriad reasons why Hong Kong was once considered one of the world’s most liveable cities due to the lowest tax rates in Asia, a diverse culinary
HONG KONG’S SHINE AS ONE OF ASIA’S MOST APPEALING HUBS FOR EXPATS HAS FADED DUE TO CHINA’S INCREASED INFLUENCE ON THE TERRITORY
culture, state-of-the-art public transport, and swathes of green open space. Fast forward four years and most of these factors remain. Yet the ‘world’s greatest city’ narrative has been overshadowed — in the minds of international observers anyway — by China’s increasing influence over the territory. Business confidence had already been shaken by the violent extradition bill protests in 2019 before Beijing last year introduced a wide-ranging security law to curb protests and further reduce the autonomy of Hong Kong. And then there are Hong Kong’s stringent
FOREIGN PROFESSIONALS USED TO BE THE MAIN SOURCE OF LEASING DEMAND FOR LUXURY HOUSING. THEIR DEPARTURE AND THE LIMITED ARRIVALS DUE TO THE RESTRICTIONS HAVE INEVITABLY HARMED THE HIGH-END RENTAL MARKET measures to contain the ongoing global pandemic. Residents have been effectively grounded by travel bans and one of the world’s longest quarantines. Pressure on the Hong Kong government to roll back restrictions is mounting. In August, Frederik Gollob, chairman of the city’s European Chamber of Commerce, wrote an open letter to Hong Kong Chief Executive Carrie Lam, saying the territory must “open itself sooner rather than later”. “This new quarantine regime could lead many in the international community to question if they want to remain indefinitely trapped in Hong Kong when the rest of the world is moving on,” according to Gollob, who represents more than a dozen foreign chambers in the city. The American Chamber of Commerce, meanwhile, released a survey report in May stating that 42% of respondents are considering or planning on moving out. Figures from the territory’s census and statistics department show that its population declined by almost 90,000, or 1.2%, in the 12 months from July 2020, the largest drop since records began in 1961. Given that foreign residents accounted for about 10% of the population before the pandemic, a large-scale departure could potentially impact the high-end residential rental market. According to Max Siu, a research analyst at consultancy JLL Hong Kong, luxury rents dropped by more than 13% between the start of 2020 and the first quarter of 2021.
“Foreign professionals used to be the main source of leasing demand for luxury housing,” he says. “Their departure and the limited arrivals due to the restrictions have inevitably harmed the high-end rental market.” Siu adds however that luxury residential rents increased 1.4% between April and June 2021, the first quarterly rise since Q3 2019. “The market was primarily supported by the current pool of residents in Hong Kong, which offset the significant drop in expatriate arrivals,” he says. The uptick was in part attributed to ongoing work-from-home arrangements, which led some tenants to seek out larger-sized units. For others, a reduction in housing budgets prompted existing expatriates to relocate from premium neighbourhoods like the Peak to the Mid-Levels or even farther away to the New Territories, resulting in stronger demand for high-end rental units in these districts. A recent JLL report notes that the Mid-Levels experienced the highest rental growth, 2%, among the major submarkets, largely on the back of limited availability. Other analysts believe that the departure of foreign professionals is more likely to affect the mid-scale market rather than the luxury segment. According to Vincent Cheung, managing director of local real estate consultancy Vincorn Group, most apartments more than 1,000sq ft in premium locations are currently available for HKD80,000-100,000 (USD10,300-
USD13,000) a month. And this correlates with the average housing allowance provided to foreign senior executives in the banking and IT sectors. “Still, there aren’t many expats in Hong Kong on such a package right now,” he explains. “The majority of foreign professionals currently here are most likely teachers who are earning at least half that amount. “What’s more, the numbers of Chinese from the mainland relocating to Hong Kong to work in the financial and IT sectors are increasing by the day.” There are clear indications that mainland firms are eyeing Hong Kong in the wake of the international community’s uncertainties and China’s increasing influence within the territory. A recent survey, jointly conducted by InvestHK, an investment-promoting department of the HKSAR government, and the Census and Statistics Department, revealed that the number of business operations in Hong Kong with parent companies overseas and in the Chinese mainland increased 10% from 8,225 in 2017 to 9,049 in 2021. Mainland companies now account for almost 23% of these operations. Real estate consultancy Colliers, meanwhile, published a report in September stating that
HONG KONG WAS ONCE CONSIDERED ONE OF THE WORLD’S MOST LIVEABLE CITIES DUE TO THE LOWEST TAX RATES IN ASIA, A DIVERSE CULINARY CULTURE, STATE-OF-THEART PUBLIC TRANSPORT, AND SWATHES OF GREEN OPEN SPACE
mainland companies are likely to require an additional 4 million sq ft of office space in Hong Kong by 2025. And this steady influx across the Shenzhen River is already influencing the luxury rental market. “During the last couple of years, we’ve started to see some eye-popping transactions recorded in the top-end segment for both investment and leasing market, many of which are senior management from Chinese corporates who are considered the ‘new locals’ of Hong Kong,” Siu says. “We believe that this trend will become more apparent as more mainland Chinese firms set up in Hong Kong.” There’s little indication of when Hong Kong will fully reopen its borders to the rest of the world. Therefore, the extent to which the fallout of recent years impacts its haven status within the international business community — and the implications this has for the luxury rental market — remains to be seen. It will be interesting to see whether major western media outlets are quite as keen to champion Hong Kong as the “world’s greatest city” when the territory celebrates 25 years since casting off the British yoke in 2022.
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