Real estate investors in Asia Pacific are steeling themselves for impacts stemming from the coronavirus, the threat of which would add to existing economic headwinds in the region.
While it’s too early to know exactly how commercial real estate markets could be affected, the increasingly important position of China on the world stage means economic repercussions are likely, according to a JLL report on the topic.
“The virus is untimely for China given that it’s the start of a new calendar year and the spread escalated during the country’s most important holiday of Chinese New Year in late January,” says Roddy Allan, chief research officer, JLL Asia Pacific. “This has made it more difficult for the Chinese economy to reopen fully.”
The coronavirus virus – which originated in Wuhan, China, in December late last year – has spread globally, with cases reported in Southeast Asia, Europe and United States. In China, factories, malls and tourism have been affected, adding to strains from trade tensions with the U.S. last year.
“The Chinese government understands the central role it plays to keep the global economy stable and has moved swiftly and decisively to manage the fall-out, avoiding a sharp correction,” Allan says.
Adding to the strain
While the final 2019 figures aren’t yet out, Asia Pacific’s gross domestic product likely slid to 5.8 percent last year compared to 6.3 percent in 2018, according to a World Bank report in October, due to the trade war and lower global demand for exports.
While the region’s real estate had a strong showing overall in 2019, rental declines were evident in key markets such as Hong Kong and Beijing.
“Even before the coronavirus crisis,…