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China’s Re-Opening and Its Effect On Commercial Real Estate

 January 25, 2023 |  Commercial Real Estate News, Investment |  hotel, real estate trends, business tips

In early January, China officially announced that they were lifting many long-standing restrictions connected to the coronavirus pandemic. For many in the commercial real estate industry, this news was received with much enthusiasm, as it meant the world’s second largest economy might finally be re-entering international trade en masse.

From a tourist perspective alone, China has long been the world’s premier spender in international travel. As journalists at Quartz report, prior to the pandemic, Chinese tourists spent an eye-popping 36 billion dollars in the United States alone. Investment in commercial real estate has always seen considerable activity both ways, as investors from the world’s two largest economies continually search for opportunities in either nation.

When China closed its borders in response to the pandemic, the impact stretched across industries. The Wall Street Journal reports the staggering drop from 170 million trips inbound and outbound from China in 2019 to only 8.8 million in 2021. Investors in both China and the US have been limited in their foreign investment opportunities since then, being unable to physically visit survey opportunities in regions where they were previously active.

With this news, hotel owners and commercial property investors are wondering how their assets might be impacted for the better.

The Expected Impact
While Chinese tourists have expressed clear interest in resuming international travel, it is unlikely that their frequency and rate of spending will reach pre-pandemic levels soon. In an interview with Bloomberg, the Vice President of the Asia Society Policy Institute explains the varied points that have been dampening the potential economic resurgence from Chinese investors and tourists.

She explains that, while this re-opening is good news for the Chinese people, their current economic struggles will likely result in a more tepid re-entrance into the international marketplace. Cutler’s laundry list of domestic distractions for China includes low consumer demand, a stressed property sector, high youth unemployment, and unfavorable demographic trends.

Still, the news is not all so dire.

While this news might not be the first sign of a global real estate boom that some hoped it would be, it should mean another step towards recovery for China and its international trade partners. The tourism and international commercial real estate spheres should both see moderate immediate impacts. In addition, although we will likely never see a full return to pre-pandemic spending from China in the US, a healthier economic relationship could be fully restored by 2024.

While political tensions will always impact trade between China and the West, China is likely to continue to be a large influence in most foreign markets. Investors should continue to track this situation and any other upcoming commercial real estate news to ensure their best ROI.

National Property Inspections has a network of trained property inspectors that provide unmatched service nationwide. Let us know how we can help coordinate your upcoming inspections today!

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