Outside of China, ASEAN will be the first to rebuild after the pandemic, says property consultant.
As the Coronavirus pandemic continues its destructive path across the world, huge changes in lifestyle and how businesses are conducted, are being seen. However, instead of seeing this as a negative development, renowned property consultant Dato’ Sri Gavin Tee views this as a positive way forward.
“Events that have rocked the world in the past 10 years have culminated in a new era beginning 2021; and the pandemic has accelerated the turning point quite dramatically,” he told Asian Property Review in an exclusive interview recently.
He cites the ‘China factor’ as ‘one big continuous event’ that has moved the ‘epi-centre’ of world power from the west to the east. “Ever since 2015, China has made global news when it began investing in cities all over the world. Its massive Belt and Road Initiative spanning several continents has also garnered lots of talk.”
As a result of the investments, the real estate landscape around the world has completely changed in all aspects, including architecture, design, construction, marketing, valuation, digitalisation and demographics. “The changes are phenomenal to say the least; even back in 2017 when a group of us set up the Malaysia Proptech Association, we have already foreseen that the digital world will seep into our lives and businesses and become the norm. That has already happened – developments like the smart home, design of property, digital marketing, 3D printing, drones, 5G and many other high tech inventions are stuff that are slowly becoming the norm,” the consultant notes.
“2020 can be considered a total wipe-out in terms of developments and activities in the real estate sector, but it also marked a new beginning especially for ASEAN. As I have predicted in my 10-year prediction previously, ASEAN will encounter a new era of renewed vigour and prosperity from 2021 onwards and this will last for the next 10 years.”
Tee lists three major developments that would influence the next decade:
1. Mega Political Changes
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The political game has changed. No longer are nations welcoming foreigners and even foreign investments. While the last 10 years has seen globalization never seen before in history when
nations liberalized their economy and promoted friendly foreign investment policies, the focus now is on domestic developments and solving their internal issues. The biggest impact will be on the real estate sector as it has to adapt to new domestic demands.
All the major countries including China, the US a nd Europe will be very focused on their own domestic issues such as food and medical supply, and political power. Nations will become more nationalistic in their outlook. International relations will suffer even more even though that has already started since Donald Trump became US president four years ago. China is no longer on friendly terms with the US, Australia and parts of Europe.
“Hence, my forecast for real estate is that there won’t be much international real estate investment in 2021 due to the focus on domestic issues and the cooler bilateral relations among some countries,” Tee predicts.
2. Real Estate Changes
Contrary to popular belief that the colder economic climate among nations is bad overall for the world, some regions of the world will actually benefit from it. The standout is ASEAN which has seen its economy leapfrog over the last decade with even reclusive Myanmar, Laos and Cambodia becoming targets of foreign direct investment. As predicted by Tee 10 years ago, globalization was indeed the rage during the last decade.
Globalisation has now come to a screeching halt due to the pandemic. With international borders still closed, there is less investment coming to the east from Europe and America. At the same time, the flow of billions of dollars from Asians to educational institutions in the west has also reduced tremendously.
The biggest supplier of students in the world i.e. China will start sending students to Asia n countries instead and Malaysia is poised to be the biggest beneficiary. This is due to its high standard educational facilities, its language diversity and a good environment for study.
Tourism is another beneficiary – Tee predicts that it would become a trend for people to travel to nearer destinations for a shorter duration of time due to lingering Covid-19 fear. They would also prefer destinations which they are familiar and comfortable with. Hence, ASEAN would be the target destination for big tourist exporting countries such as China, Japan, Korea, India and even Indonesia. These nationals would prefer to travel to neighbouring ASEAN instead of Western countries where they might encounter racism.
Tourism would encounter a new life; revenge tourism would help boost tourism especially in 2H 2021. This tourism boom would be more concentrated in established spots like Penang, Melaka, Genting Highlands and the islands since people prefer the familiar in an era of uncertainty.
When people travel to such spots, sometimes they also decide to buy property, hence, it will stimulate the real estate market. Mega projects in new development areas will however not see much interest due to the revived interest towards established spots.
Hotels will be the best investment because they have been almost ‘destroyed’ during the pandemic, hence presenting excellent below market value.
“Hence, in terms of tourism, my forecast for 2021 is that everyone would like to travel but the travelling style has changed to nearer destinations and shorter durations. Moreover, if the borders open, tourism and education will be the first to recover, with tourists and students mainly coming from China. Chinese investors are already investing in manufacturing facilities in Indonesia and Thailand, as well as Malaysia. Some western countries are also investing in ASEAN. As a result, ASEAN will see a revival of fortune – it will be a year of revival for the region.
3. Human Factor Changes
The pandemic has exposed the very human raw emotions of racial profiling and extreme nationalism. Due to racial profiling in western nations, never before has China been so united and protective over its own people. And never before in history have the Chinese been so patriotic. As a result, the Chinese have begun to shun western nations and instead travel, study and invest in ASEAN.
During the pandemic, the Chinese leadership has shown great success in controlling the spread of the virus and in getting the citizens’ support. This contrasts starkly with the situation in America where the pandemic is still out of control. As a result, there is renewed confidence and pride in the eastern way of doing things. Along with that comes pride in eastern products and brands.
This is a marked departure from the past where the western lens dictate tastes in style, culture and quality. In 2021, there will be a shift from western values to eastern values leading to a preference for eastern products including branded goods, high-end properties and holiday destinations. From 2021 – 2023, the shift will be very prominent, predicts Tee.
At the same time, there is also renewed emphasis on deeper interactions such as more interest in spiritual and cultural values compared to the materialism that prevailed in the past.
In summary, 2021 is the start of mega changes in human history where the epi-centre of development will shift from the west to the east. This includes all spheres of life including human values, brand appreciation, holiday destinations and property hotspots. Underlying this will be the technological support in the form of 5G, which will propel real estate into the next level such as improved proptech, architecture, design, construction, marketing and lifestyle.
Outside of China, ASEAN will be the first to rebuild after the pandemic. The world’s biggest markets will come to ASEAN as the region benefits from the continuing trade wars and political conflicts among its bigger trade partners, opines Tee adding that he’s optimistic about the ‘new world’ emerging from the ashes of the pandemic.
Closer home in Malaysia, the popular speaker further predicts that a general election is likely to be held sometime between June – August 2021. “As a result, Malaysia will restart on a new footing a bit slower than other ASEAN countries but still well within this year.”