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Post-Lockdown Recovery

Mandy Qian • 07/06/2022

Outlook and Emergent Opportunities for the Real Estate Market in Mainland China

 
Cushman & Wakefield today released its Post-Lockdown Recovery -- Outlook and emergent opportunities for the real estate market in mainland China report. According to the report, since 2022, there have been several COVID-19 Omicron variant outbreaks, which have had a major impact on production and life in general in some Chinese cities.
 
Local governments have taken active measures to deal with the epidemic and effectively promote steady economic growth. As production and markets reopen in cities like Shanghai, we believe economic recovery is at hand.
 
To provide a picture of the market in mainland China after lockdown, Cushman & Wakefield Research conducted an in-depth analysis of the impact of the lockdown. In their report, the following were analyzed:
 
  • The macro-economy
  • Government policy
  • The sentiment of investors, developers and occupiers
  • The real estate market
 
Shaun Brodie, Head of Occupier Research, Greater China, Cushman & Wakefield said, “Faced with the COVID-19 Omicron variant outbreak in 2022, the central and local governments actively responded to the difficult challenges posed, especially the impact of factors that exceeded expectations, by introducing a package of policies and measures to stabilize the economy. As Shanghai and other cities speed up the resumption of work and business, Cushman & Wakefield will continue to focus on the post-lockdown recovery, explore opportunities as they arise under the changing situation, and provide professional advice and services to governments, investors, developers, occupiers and other clients.”
 
The Macro-Economy
 
The Q2 economy is bound to be affected by the epidemic, with estimated GDP growth to be the lowest in 2022. Q3 and Q4 GDP will be significant regarding full-year GDP growth.
 
The performance in the second half of the year will be the most critical factor in achieving this year’s goal. The development theme will be "Ensuring steady economic growth," with infrastructure, real estate and consumption being growth -support engines. If the epidemic is effectively contained, manufacturing, the service sector and consumption will gradually regain market dynamism in the second half of the year and help drive further economic recovery growth.
 
Government Policy
 
The government has introduced a package of economic stimulus measures, including tax cuts, the issuance of consumer vouchers to encourage consumption, and lower interest rates on house loans to boost domestic investment and consumption confidence.
 
Our Survey
 
From May 1 to May 15, 2022, Cushman & Wakefield Research conducted a questionnaire survey by interviewing executives across a broad spectrum of real estate-related enterprises in China. Through this survey, we were able to gain an understanding of the current confidence these enterprises have in the Chinese market and what their future business development strategy will be in the short- to medium-term.
 
China Post Lockdown Retail Estate Investment Intention
Source: Cushman & Wakefield Research
 
Post-lockdown in Shanghai, China will continue to be an important market for both domestic and overseas real estate investors and developers. Post-lockdown in Shanghai, real estate investors and developers do have a varied opinion on their real estate investment strategy:
 
  1. Nearly a third of surveyed enterprises will look to increase their investment. Many believe now is a good time to seek bargains in China's real estate market.
  2. About 40% of surveyed enterprises will maintain a stable operation and uphold their original investment scale.
  3. Meanwhile, even though China is considered an important market, around 30% of surveyed enterprises are not sure what their immediate future investment strategy holds. Some enterprises are worried that repeated future epidemic and lockdown measures could affect the Chinese real estate market. For this group, it’s a wait-and-see game until the future picture becomes clearer.
 
China Post Lockdown Business Intention
Source: Cushman & Wakefield Research
 
Post-lockdown in Shanghai, China will continue to be an important market for occupiers of real estate. Private and small enterprises have been more susceptible to business risks posed by lockdown. The service, retail, F&B, hotel and tourism industries have been greatly impacted:
 
  1. 42% of enterprises are not sure which direction their immediate future leasing footprint size will take. At the height of the lockdown, some were concerned that their supply chain and capital chain would be compromised under the impact of the epidemic. Some were not sure whether they could maintain a normal mode of operation for much longer.
  2. Having said this, most enterprises (at nearly 58%) will either keep their leasing footprint size the same or pursue an expansion strategy. Their requirements for leased property will, however, be more stringent than before.
 
Real Estate Market Outlook and Opportunities
 
Into Q2, real estate investment in mainland China is expected to see volume dips in certain real estate sectors while others will continue to pique investor interest.
 
Investment buyers will be cautious, but some will look for bargains.
 
Warehouses, data centers and life sciences-related real estate will continue to be looked upon favorably by investors.
 
Office market supply volume is expected to slow, with demand expected to rebound in H2.
 
Neighborhood retail and the interaction between on- and off-line shopping will be strengthened. 
 
After the resumption of production, the logistics industry will quickly recover. Investment in warehousing space will be a focus for many investors investing in mainland China real estate.
 
Finally, residences with a greater amount of common area green space for activities are expected to become more popular with buyers.
 
Click here to download the full report.
 
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms in the world, with approximately 50,000 employees in over 400 offices and 60 countries. In Greater China, a network of 22 offices serves local markets across the region, earning recognition and winning multiple awards for industry-leading performance. In 2021, the firm had revenue of $9.4 billion across core services including valuation, consulting, project & development services, capital markets, project & occupier services, industrial & logistics, retail and others. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.  

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