The Future of Commercial Spaces in Asia Post-Pandemic


Comparative Analysis of Post-Pandemic Recovery: ASEAN vs. China and Hong Kong

Contrary to what some might expect, the post-pandemic economic recovery in several ASEAN countries, notably Thailand and Singapore, has been more rapid than that of China and Hong Kong. This swift resurgence highlights the dynamic nature of these markets and suggests a potentially changing balance of economic power in the region.

The reopening of China and Hong Kong has led to a clear delineation of winners and losers in the business world. Investors must be mindful of the residual impacts of lockdowns and the spread of COVID-19. A prime example is one of China’s largest snack food producers, which faced supply chain disruptions and production shutdowns in 2022. Despite efforts to ramp up production post-reopening, they were unable to meet the demand for the Chinese New Year season.

Conversely, China’s largest over-the-counter drug brand reported organic sales growth exceeding 20% year-over-year in the first quarter of 2023. This growth, driven by demand for cold and flu medicine, continued into the second quarter as non-COVID flu outbreaks spread across a population with weakened immunity.

Permanent Shifts in Consumption Patterns: A New Business Reality

The pandemic has led to enduring changes in consumer behavior, which in turn are significantly influencing business models. What started as pandemic-specific consumption trends have now cemented themselves into the fabric of consumer habits, presenting both challenges and opportunities for businesses adapting to this new reality.

New consumption patterns that emerged during the pandemic continue to influence consumer behavior. For instance, a leading supermarket chain in Singapore noticed that even a year after the economy reopened, customers largely maintain the habits that significantly boosted profitability during the pandemic. Consumers continue to shop locally and retain a higher average basket size, indicating a preference for eating at home and buying fresh groceries.

In response to the population growth projection, the Singaporean government has resumed public housing construction, aiming for a population of up to 6.9 million by 2030. The supermarket chain is expanding by opening new stores in these housing estates, having successfully bid for several locations in 2022 and planning to continue this expansion in 2023.

In Taiwan, a major convenience store chain expanded its market share dominance during and after the pandemic. With over half of the convenience store market share in Taiwan, the chain capitalized on the increased consumer reliance on these stores. Management noted that convenience stores have surpassed supermarkets as the highest-grossing retail sector in Taiwan, a trend that continues post-pandemic. The chain is diversifying its offerings to include fresh food and e-commerce pick-up services.

Investment Trends and Strategies in Post-Pandemic Asia

The lockdowns experienced in China have distinctly delineated winners and losers in the business world, creating a complex landscape of investment opportunities and risks. This divergence underscores the importance of strategic and discerning investment approaches in navigating the post-pandemic economy.

Central to effective bottom-up, fundamental active management is the necessity of travel – not just for data collection, but for the invaluable purpose of evaluating management quality firsthand, forging relationships, and inspecting key assets. The reopening of China and Hong Kong presented us with a compelling reason to revisit these markets. Our extensive journey, encompassing 48 company visits in two weeks across five key markets, provided profound insights.

During our travels, it became evident that it is a mistake to generalize Asian markets. Each has its unique trajectory and factors at play. It is equally critical to recognize that the pace and manner in which China and Hong Kong emerge from the pandemic may not mirror the path taken by ASEAN countries. Investors should be wary of making broad assumptions and instead pay close attention to local conditions and the distinct forces shaping each market.

Commercial Real Estate Dynamics in the Post-Pandemic Era

In Singapore, despite tourist levels being approximately 65% of their pre-pandemic numbers, a Singapore-focused Real Estate Investment Trust (REIT) has seen foot traffic and occupancy rates in their malls return to pre-pandemic levels. On the other hand, Hong Kong’s tourist figures are around 30%. A major retail and commercial property landlord in Hong Kong expects further negative rental reversions in 2023, following a 30% reduction in rent during 2022. Despite some positive indicators, such as a 20% year-over-year increase in sales for some tenants in February, they predict it will take another two years for Hong Kong’s retail sales to recover to pre-pandemic levels.

Navigating the Evolving Office Sector in 2023

As we progress into 2023, nearly three years since the pandemic began, the future of the office sector remains shrouded in uncertainty. According to the latest CommercialEdge office report, this year is expected to bring more unpredictability to the industry. We are witnessing a diverse range of company responses: while some are increasingly advocating for a return to the office, others are wholeheartedly embracing hybrid and remote work models.

The primary source of this uncertainty stems from unknown variables. We are yet to fully grasp how the ongoing effects of the post-pandemic era, fluctuating interest rates, and inflation will influence commercial real estate. These factors necessitate continuous monitoring and adaptation.

Despite these uncertainties, there is substantial knowledge to guide us. The office sector has undeniably shifted towards hybrid work models and seen a decrease in office utilization. A surplus of vacant and outdated office spaces is expected, with office space per worker projected to reduce by up to 15% from pre-pandemic levels.

Many companies are reevaluating management strategies to boost office attendance. This shift is driven by employees’ preference for hybrid work and their desire for improved working conditions. Consequently, there is growing demand for new and repositioned office assets. Modern offices need to be versatile, offering wellness amenities, advanced technology, user services, and placemaking features to entice workers.

Identifying Opportunities in the Office Sector

In this changing landscape, opportunities are emerging. While older and outdated buildings may experience increased vacancies, smaller, upgraded offices are likely to remain in demand. Flexible and on-demand office spaces are becoming increasingly popular, especially those that are utilized intermittently. These spaces are characterized by shorter-term leases, coworking-style design amenities that maintain company branding, and multifunctional areas adaptable for both collaborative and individual work.

Five Critical Office Building Trends

  1. Flexible Floorplan Design and Modular Furniture: A trendsetter in this space is Anywhere Real Estate Inc., which has revamped its headquarters to feature a blend of tech-enabled collaboration spaces, training studios, and event areas alongside individual ‘hoteling’ stations, eliminating permanently assigned offices.
  2. Advanced Technology: Essential in the modern office sector, advanced tech systems should facilitate efficient and intelligent work. These systems are invaluable for energy management, monitoring occupancy rates, smart parking solutions, and HVAC systems. They also benefit tenants through features like easy booking of meeting rooms, smart lockers, and navigation aids.
  3. Sustainability: To mirror the comfort of home-based work environments, offices should consider switching to LED lighting, incorporating more natural light, and adding plants. These changes not only enhance the comfort and health of employees but also contribute to energy efficiency.
  4. Outdoor Access: Studies, like the one from Texas A&M, show the benefits of connecting with nature, such as reduced stress and enhanced creativity. Creating outdoor spaces at work can foster team-building and improve interpersonal relationships.
  5. Compelling Amenities: Today’s employees expect more than just a coffee shop or an on-site fitness center. The challenge lies in identifying amenities that truly appeal to and motivate employees.

Given these insights and trends, now is the opportune moment for property owners and managers to plan and implement upgrades to their office spaces. Anticipating and adapting to these changes will not only benefit employees but also positively impact the bottom line.

The Importance of an Active Investment Approach in Asia

Asia’s dynamic economic landscape offers a wealth of investment opportunities, particularly in its real estate sector. The Clementi Ave 1 Condo stands as a prime example of the potential for growth and profitability in the region. This burgeoning development highlights the importance of an active investment approach in Asia, where markets are marked by their distinct economic drivers and dynamism. To effectively navigate these diverse markets, a bottom-up, fundamental approach to company analysis and active stock-picking is crucial. This strategy is particularly pertinent in high-potential areas like Singapore’s thriving property market, where developments like the Clementi Ave 1 Condo Showflat showcase the region’s investment promise.


In conclusion, while the allure of Asia’s rapidly growing economies and consumer markets is undeniable, the key to unlocking their potential lies in a tailored, hands-on investment approach. The region’s markets are not monolithic but are instead a tapestry of unique opportunities and challenges. Therefore, a discerning and active investment strategy, underpinned by thorough company analysis and selective stock-picking, is essential to capitalize on the dynamic and diverse investment landscape that Asia offers.



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