On December 7, 2022, the Chinese government announced a 10-point plan signalling a shift away from its zero-tolerance COVID-19 policy. The measures were announced as China\u2019s short term economic indicators continued to weaken, with local governments in particular coming under acute financial strain.<\/p>\n\n\n\n
Retail and tourism are set to be the main beneficiaries of the policy easing. Given the performance of other Asia Pacific markets since their relaxation of pandemic-related policies, CBRE expects retailer expansion to pick up as early as Q2 2023, supported by rising demand for prime retail space and the bottoming out of shopping mall rents as infections gradually subside and the population adjusts to a living with COVID-19 policy.<\/p>\n\n\n\n
With regard to the office market, the easing of pandemic restrictions will bring about an increase in site inspections. A rebound in office demand is likely to follow in another three to six months as occupiers\u2019 business outlook brightens along with the economic recovery.<\/p>\n\n\n\n
Improving economic fundamentals should boost commercial real estate investment volume in 2023, which will continue to be driven by domestic institutions. With the Five-Year Loan Prime Rate (LPR) standing at an historically low 4.3%, cheaper lending costs will strengthen China\u2019s relative appeal to cross-border investors.<\/p>\n\n\n\n
CBRE recommends long term core investors focus on built-to-rent multifamily, business parks and industrial parks around tier I cities, along with trophy office assets in Shanghai and Beijing. Opportunistic investors are advised to target distressed assets. Mainland China\u2019s re-opening will eventually benefit the retail and hotel sectors in Hong Kong SAR, Japan and Thailand, as well as the student living and residential sectors in Australia.<\/p>\n\n\n\n