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Bouncing back: Real estate market in China (Pexels)

Those in the property sector are looking to the real estate market in China looking for signs of what is to come, and there are reasons to be optimistic

Given that the coronavirus pandemic is likely to have started in China – the outbreak of COVID-19 was first reported to the World Health Organization on December 31, 2019, after a cluster of cases in Wuhan – their post-lockdown progress serves as an indicator as to what other countries can expect. The state of the real estate market in China offers both warning signs and hints of more positive trends.

Wuhan officials ended the city’s 76-day lockdown on April 8. The latest Knight Frank Asia Pacific Bulletin: COVID-19, published at the end of April, showed that almost three-quarters (73 per cent) of the region’s 15 major office markets – including Beijing and Shanghai – recorded a decline in leasing activity in the four weeks to April 14. 

However, Hong Kong, Guangzhou and Shenzhen registered stable leasing activity. “The need to preserve cash and reduce capital expenditure is inevitably putting a hold on corporate real estate decisions,” says Tim Armstrong, Head of Occupier Services and Commercial Agency for Knight Frank in APAC. 

The Knight Frank report notes that there is likely to be a benefit for tenants, with landlords across mainland China and Hong Kong lowering asking rents. Indeed, some 70 per cent of the region’s office markets have now swung in the balance towards tenants, the research suggests.

Further, in the survey of 150 organisations in the region – spanning Japan, Malaysia, the Philippines, Indonesia, Singapore and Thailand – Knight Frank reported that 28 per cent of respondents expected to reduce the amount of office space taken up. That figure compares to 5 per cent who projected an increase, while the remaining 67 per cent the rest anticipated no changes.


The messages about real estate markets in China are mixed, showing no apparent trend, at least concerning leasing activity. That over two-thirds of organisations expect things to remain as they were is perhaps telling. To better understand the picture, MillGens sought out the insight from an on-the-ground expert.

Doris Chen, who is Managing Partner in China of global architects 10 Design, and based in Hong Kong, believes real estate and related markets will soon “bounce back”. She says: “Construction across China has slowly resumed since March, with construction companies well prepared to ensure they can provide a safe environment to their staff in terms of exposure to the virus and its impact. 

“Each company must submit its application to resume documentation in compliance with government legislation before the construction sites are opened again. The process usually takes two weeks to gain approval.”

Ms Chen believes the real estate market is robust enough to recover quickly, as the number of coronavirus cases in China continues to dwindle. At the time of writing, there are currently 84 infected patients in the country, with eight in a critical condition. Some 82,883 cases have been closed, with 4,634 deaths recorded – though many people have questioned the integrity of China’s figures.


Ms Chen continues: “The property sector has become highly sophisticated and mature over the last 20 years. The real estate market in China has been significantly affected by the coronavirus outbreak mainly on the sales period of residential projects. 

“Usually the mid- to end- of Q1 is the first prime sales period in China. But sales have been halted almost completely over the past several months. Developer’s cash flow has suffered a significant short-term impact. However, other sectors – such as office and retail mixed-use projects, where short-term sales are not a factor in the business plan – are far less impacted.”

10 Design’s ongoing sites have not been adversely affected by the lockdown in China, according to Ms Chen. “All of our clients were working from home until the beginning of April, which was a difficult period. But since then, our clients are highly organised and have been back to working at full capacity,” she says. 

“The major difference is that we have no travel requirements to meetings in China, which are all held via video conference calls. This results in a level of higher efficiencies. For some projects which are under construction – including Zhuhai ICC, ISC, Jinwan Shopping Mall, Hengqing MixC and Guangzhou Pazhou mixed-use project to name a few – progress has been resumed entirely.”


There are other signs of encouragement that the real estate market in China will heal quickly. “Since Wuhan re-opened in early April, all factories have been back to full employment,” says Ms Chen. “Manufacturing and the supply chain have almost completely recovered in tier-one cities – Beijing, Shanghai, Guangzhou, and Shenzhen – with the supply of construction materials being back to normal.” 

She adds: “I still have confidence in the real estate market in China. Currently, the demand for the residential market in tier-one cities is going strong. Home prices have even gone up after Chinese New Year, despite the pandemic. Other cities may need to take longer to recover. Land for new development is being acquired at similar values and intensity as 2019, though, and it is expected that the overall real estate sector will continue to bounce back in full force.”

Those involved in the property sector intently watching China’s progress will be hopeful that Ms Chen’s prediction comes true, and soon.