Experts see bright spots in Chinese real estate market

Resilient market demand should make business parks, logistics facilities and data centers highly recommended options for major real estate investors this year, according to the latest forecast by global property adviser Colliers International.

"Compared with other property types such as hotels and retail malls in core areas, business parks, logistics facilities and data centers have received less impact from the coronavirus outbreak," said Jimmy Gu, executive director of capital markets for Colliers' East China operation. 

"In particular, online commerce, pharmaceutical and health-care companies as well as TMT (technology, media and telecommunications) firms are driving office-leasing demand in business parks while continuously expanding online consumption and services sectors, partly accelerated by the COVID-19 outbreak, are boosting demand for warehouses and data centers, with rapid development of 5G and cloud service also fuelling the latter,” Gu said. 

China will enhance new infrastructure development, including information networks, to boost industrial and consumption upgrading, Premier Li Keqiang told a State Council's executive meeting held on Tuesday, the latest vow of its kind made by the central government.

And the current situation will offer domestic investors, including developers, fund companies and insurers, good opportunities to bargain over prices as many of their international counterparts are still constrained by bans on international travel as the COVID-19 pandemic remains largely uncontained around the globe.

"China's real estate investment market is expected to see a major rebound as soon as the second half of this year with properties capable of providing stable cashflow and offering notable price adjustment being the most sought-after among investors," Gu predicted.

En-bloc investment deals totaled nearly 50 billion yuan (US$7.05 billion) in China during the first three months of 2020, a drop of 30 percent from same period a year earlier, according to a recent report released by CBRE.

"The COVID-19 outbreak will leave a rather short-term impact on the country's real estate investment market as international travel bans imposed by multiple countries will prolong the decision-making process, but the long-term confidence in the Chinese market should remain unchanged," said Sam Xie, head of research at CBRE China. "As more cities have resumed work and production since March, we've already noticed a gradual recovery in investment sentiment with domestic institutional investors being the most proactive players."