The COVID-19 Pandemic and Commercial Property Rent Dynamics

Roddy Allan, Ervi Liusman, Teddy Lu and Desmond Tsang
Additional contact information
Roddy Allan: Jones Lang LaSalle (JLL), 7/F One Taikoo Place, Hong Kong, China
Ervi Liusman: School of Hotel and Tourism Management, The Chinese University of Hong Kong, 7/F Cheng Yu Tung Building, 12 Chak Cheung Street, Shatin, N.T., Hong Kong, China
Teddy Lu: Jones Lang LaSalle (JLL), 7/F One Taikoo Place, Hong Kong, China
Desmond Tsang: Desautels Faculty of Management, McGill University, 1001 Sherbrook Street West, Montreal, QC H3A 1G5, Canada

JRFM, 2021, vol. 14, issue 8, 1-24

Abstract: This paper utilizes timely proprietary data to examine the contemporary impact of the COVID-19 pandemic on commercial property rent dynamics in the Asia–Pacific region. Given that the Asia–Pacific region was the first to be impacted by the public health crisis, it is important to examine how the COVID-19 pandemic has affected the real estate markets in this region and to assess how the region has been recovering since then. Our regression analysis, controlling for different macroeconomic fundamentals and city and property type fixed effects, documents substantial declines in rents of approximately 15% during the first six months of 2020 across the Asia–Pacific commercial property market. We further observe that the most significant declines in rent occur in regions where exposure to the COVID-19 pandemic is the more severe, and in the retail property sector, where we have been observing continued declines of over 30%, with little recovery as of the second quarter of 2020. In additional analysis, we examine capital values and show that while capital targeting the retail property sector has been muted, there is some evidence showing capital flows into the residential and industrial sectors. We also show that fiscal stimuli imposed by governments have moderated the adverse impact of the pandemic. Overall, our study shows that while the effect of the COVID-19 public health crisis is detrimental to commercial real estate, its impact varies significantly across different regions and property sectors.

Keywords: COVID-19; rent dynamics; commercial property; Asia–Pacific market; capital values; fiscal policy (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
https://www.mdpi.com/1911-8074/14/8/360/pdf (application/pdf)
https://www.mdpi.com/1911-8074/14/8/360/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jjrfmx:v:14:y:2021:i:8:p:360-:d:609511

Access Statistics for this article

JRFM is currently edited by Ms. Chelthy Cheng

More articles in JRFM from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().