Stay Invested in 2021

Residential, Industrial, and Warehouses are amongst the better-performing sectors in 2020, with Retail and Hotels as the least-performing sectors. We identify the three overarching key themes to watch to stay invested in 2021.

Looking back at last May’s “Sink and Swim webinar”, and our proprietary Resilient and Rebound Ranking report, we identified Manufacturing and technology as the top two sectors with the best sector GDP growth, stock returns and future earnings growth post-crisis.

Fast forward to the end of 2020, how have these sectors fared?

Residential has been resilient, as everyone works from home; Industrial, Warehouse did well from e-commerce and Manufacturing; unsurprisingly and as predicted; Retail and Hotels were the least performing sectors.

So what will 2021 bring?

As travel restrictions will remain in place for most of 2021, we forecast a pent-up demand driving a V-shape recovery by 2023 in the Hotel sector. Colliers expects visitor arrivals and Revenue Per Available Room (RevPAR) to recover to 55% and 72% of pre-COVID levels, respectively by Q4 2021. Office rents will increase by 5.5% towards the end of 2021, vacancy will tighten to 5% from the 5.2% as of December 2020. Demand will continue to be led by the technology and the overall business recovery.

“We expect logistics rents to increase by 1.3% as logistics remains one of our preferred investor segments in 2021.”

Retail rents in the Central Region fell 14.7% in 2020, as lockdowns and safe distancing measures hurt retailer sales. There will be an uneven recovery among trades, landlords will rejig tenant mix which will probably lead to flat rents and vacancy rates rising marginally to 8.9%.

We expect Residential private land sales via en bloc and collective sales to recover in 2021. On the back of strong developer sales and limited land sales in 2020, unsold private residential inventory has come off to 27,000 units, close to the 24,000 units, a trigger point for the collective sale back in 2017-2018. Developers' hunger could be seen in the 15 bids for the last residential tender site, the highest number of bids since 2017.

Logistics warehouses and data centres have risen in demand on accelerated e-commerce and cloud computing in 2020. We expect logistics rents to increase by 1.3% as logistics remains one of our preferred investor segments in 2021.

Overall, Colliers see three overarching key themes for 2021:

1. Recovery

An economic rebound widely expected in 2021 should lift most property sectors. Retail rents fell 15% in 2020 and could stabilise in 2021, while hotels could see RevPAR recover to 72% of pre-COVID levels in Q4 2021.

2. Sustainability

Occupiers and Investors should place high priority on Sustainability and ESG (Environment, Social and Governance) considerations for building selection.

3. Flexibility

Occupiers should increasingly gravitate towards flexible workspace components. Investors could tap incentives to redevelop older properties in the CBD, while developers should incorporate technology, wellness and multi-functional space in residential developments.

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