Knight Frank Daily Update Thursday 2nd July
Singapore's wealth hub ambition and phase two of the great workplace experiment
3 minutes to read
Good morning,
Need to know
Boris Johnson’s government will allow almost 3 million Hong Kong citizens to move to the UK following the introduction of a new sweeping security law on the former British colony.
The status of British National (Overseas) passport holders will be upgraded to offer them a path to citizenship. BNO passports are held by 350,000 people in Hong Kong, with a further 2.5 million eligible for them.
We talked in yesterday's note about a growing number of important voices, including Bank of England chief economist Andy Haldane, who believe a V shaped recovery is on the cards for the UK. Manufacturers responding to a closely watched survey published yesterday reported a small increase in output in June, further fuelling hopes of an economic rebound.
The IHS Markit/CIPS UK manufacturing Purchasing Managers’ Index (PMI) rose to 50.1 from 40.7 in May, edging above the 50 line that signifies growth for the first time since February.
Lots hinges on the scale of job losses, and on that front much remains uncertain. The Times this morning has a roundup of more than 10,000 jobs that have fallen victim to the pandemic in the past two days, with high street retailers and the aviation sector bearing the brunt.
In a clue as to the trajectory of the global recovery, Goldman Sachs said it expects demand for oil to fall by 8% this year, before rebounding 6% in 2021 and fully recovering to pre-pandemic levels by 2022.
The debate over the distribution of effective treatments is likely to intensify over the coming months as developers move through clinical trials. The US Department of Health and Human Services caused a stir earlier this week when it said it had secured all of Gilead’s projected production of Remdesivir for July and 90% of its production in August and September. Tests suggest the drug cuts recovery times, though it is not yet clear if it improves survival rates.
Britain and Germany said they have sufficient reserves of the drug for now, and the EU is in talks to reserve more for its members.
The property market
Kate Everett-Allen this morning updates our Global Residential Outlook.
Since the start of Covid-19 Southern European cities have seen a sharp increase in the supply of rental homes. Over 185,000 new properties have been listed for rent in Madrid, Barcelona, Milan, Rome, Porto, Lisbon and Athens since early March, according to the online platform BrainsRE. This may lead to softening mainstream rents in the coming months.
Our new Hong Kong report confirms that sentiment in the residential market improved in May although heightened China-US tensions weighed on the economic outlook.
Evidence of pent-up demand in Hong Kong is emerging, with strong sales interest at a number of newly released residential developments. Transaction volumes increased 46% in May month-on-month to 5,984 sales. Prices remain resilient, edging 0.8% so far this year, according to the latest official residential price index.
Meanwhile, a new corporate structure in Singapore was announced this week, designed to lure fund managers and family offices from low-tax jurisdictions such as the Cayman Islands and Luxembourg. The battle to secure market dominance as the Asia’s de facto wealth hub is hotting up, with Japan also burnishing it’s credentials.
Lee Elliott, Knight Frank's global head of occupier research, provides his view on the second phase of the great workplace experiment, as people begin to reoccupy offices while others continue to work from home.
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