Industry experts from around the world convened both online and in person at the 2020 ULI China Mainland Summer Meeting in July. While many speakers were bullish overall, opinions were mixed on traditional office and retail as the economy recovers from the global pandemic.

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Eddie Ng, managing director for East China, JLL, moderated a panel titled “How the Real Estate Industry Will Evolve,” challenging participants to make predictions on the state of the industry in the coming three to five years. He was accompanied by Stuart Mercier, managing director of real estate, Brookfield; Jon Zehner, global cohead of Client Capital Group, La Salle Investment; Jon Tanaka, cohead of Japan Real Estate, Angelo Gordon; and Hei Ming Cheng, founder and chairman, KaiLong Group.

Mercier’s outlook for the Chinese real estate industry remained bullish. With the virus now largely under control in Mainland China, he said, markets there have rebounded faster than others around the world. The domestic economy will therefore inevitably be stronger than elsewhere, with high consumer confidence levels trickling down to drive growth and demand. In his view, “There is certainly an opportunity to put capital to work in China at the moment.”

Low interest rates and plentiful liquidity mean that the key differentiator from an investment perspective is likely to lie in asset management. According to Mercier, the current conditions have leveled the playing field, with potential for landlords to reap generous returns by simply outperforming their peers in this area.

Still, the road ahead may be rocky for some asset classes. In particular, while acknowledging that sentiment regarding the office sector is mixed, KaiLong’s Cheng saw demand for conventional office assets decreasing in coming years due a combination of a slowing global economy and accelerating work-from-home trends.

His views on the retail sector were similar. The pandemic will serve to fast-track a shift toward more online purchasing, he believes, although there will still be scope for innovative investors to pursue new opportunities.

In general, Cheng saw a rocky path going forward. While some sectors—such as data centers—continue to offer good investment potential, niche areas are operationally more complicated than most investors imagine, requiring technical expertise and a disciplined approach.

Brookfield’s Mercier was more bullish about prospects for the office sector, pointing out that while office space per person has declined drastically over the last decade, new social distancing policies are likely to reverse that trend. Though companies will undoubtedly become more flexible in their operations, electronic alternatives cannot fully replicate the experience of face-to-face contact, whether in collaborating with others, making deals with partners, or meeting with clients. In addition, in China, high-quality office spaces worthy of a Fortune 500 company remain fundamentally undersupplied compared with other global markets.

Mercier was confident, therefore, that over a three-to-five-year timeline strong demand for high-quality office space will continue.

Zehner, meanwhile, pointed to potential opportunities in the logistics sector, where growth remains strong across the Asia Pacific region. Although developers have been building new resources across the region for years, technologically sophisticated logistics facilities are still lacking—especially in China—and the fact that the real estate industry is becoming more service oriented bodes well for ongoing demand: “Investors today really want logistics and residential; they’re not sure about office, and they’re sure they don’t want retail. The only issue with logistics is if you think the pricing is justifiable in today’s market.”

With interest rates in most markets likely to remain depressed for the foreseeable future, Tanaka suggested that Japan might provide a template for the evolution of markets elsewhere in the world. Japanese rates have hovered around zero for the last decade, contributing to increased focus on real estate assets among domestic investors. With Japanese real estate investment trusts (REITs) now trading at a 4 percent dividend yield (compared with corporate bond yields averaging just 2 percent), real estate in Japan offers an excellent spread over the cost of debt and has provided a good source of stable income for years.

With much talk now surrounding China’s new legislation to create a domestic REIT market, Tanaka believes that this will be a welcome change for domestic and international investors who desire more liquidity and would like to overcome the challenges of buying and selling physical assets from a distance.

RYAN CHIAO is an undergraduate student at Yale University, where he writes and photographs for the Yale Daily News.