Activity is returning to real estate markets in the Asia-Pacific region as key markets exit lockdown,  with activity in the mainland China, South Korea, Taiwan and New Zealand markets described as having returned to ‘relative normality’, according to a recent report.

The report, a sentiment survey of Knight Frank brokers and researchers in 18 markets, notes that the industrial real estate sector remains the most resilient, with 33% of respondents reporting an increase in leasing activity in May, compared to only 13% in March. For corporate occupiers, large-scale expansion and relocations remain on hold.

Pent-up demand, accommodative monetary policies and lower asking prices have bolstered the residential sector, which is recovering at a faster pace than the commercial sector in the region, according to the report.

Capital markets investment volumes were down 52% year-on-year in the first five months of 2020, though sale-and-leasebacks have gathered pace as owner-occupiers look to their portfolios as a source of capital.

“Markets in Asia-Pacific which saw an earlier onset of the Covid-19 pandemic are setting the blueprint for the reopening of real estate markets globally,” says Kevin Coppel, Knight Frank’s managing director, Asia-Pacific. “Residential markets are generally recovering more quickly than commercial sectors, although industrial, e-commerce and prime office is holding up compared to retail and hospitality assets which are encountering headwinds.”

“The pandemic has accelerated real estate trends already in motion over the last few years, including offices as hubs of creativity, collaboration and innovation rather than centres for administration and retail moving toward consumer services and experiences,” he adds. “For commercial real estate investors, the flight to quality and core assets is expected to gather pace in the year ahead.”