Taipei and Ho Chi Minh City might outperform their regional peers in recovering economically from the COVID-19 pandemic as they benefit from realignments in the global supply chain, CBRE Taiwan said yesterday.
The pandemic has prompted global manufacturers to reassess their supply chain networks and security as the disease has exposed the danger of depending on a single market, the international property consultancy said in a mid-year report.
Rising geopolitical tensions between China and other countries would facilitate the shifts, it added.
Future supply chain decisionmaking would be guided by “China for China” and “China plus one” strategies, CBRE said.
The “China for China” strategy means that the world’s second-largest economy would remain a base for foreign manufacturers producing goods for local consumers, with production capacity expected to expand along with domestic demand, it said.
Under the “China plus one” strategy, foreign manufacturers would diversify risk by establishing operations in alternate markets for sourcing or producing goods, undercutting China’s status as the world’s factory, CBRE said.
Potential beneficiaries include India and Vietnam for making low-end technology products, and Taiwan and South Korea to accommodate the high-end segment, it said.
“Taiwan quickly held the virus at bay, allowing the local property market to stand resilient in the first half of the year,” CBRE Taiwan managing director Cynthia Chu (朱幸兒) said, adding that a de-globalization trend would support property purchases from buyers with self-occupancy needs.
The record-low interest rate and excess liquidity shored up land and commercial property deals by 3 percent from a year earlier to NT$194.5 billion (US$6.59 billion) in the first six months, CBRE said.
That is because local developers actively built up land inventory, while life insurance companies sought to better utilize idle cash, it added.
De-globalization is expected to extend into next year as geopolitical tensions escalate between China and several other countries, CBRE said.
CBRE maintains that all major cities in the Asia-Pacific region would undergo a rental correction this year, with the retreat to worsen from 6 percent to more than 9 percent, due to a dimmer outlook for Hong Kong.
Meanwhile, Taipei and some Japanese cities have shown relative rental strength, thanks to low vacancies and limited new supply, it said.
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