Covid-19 spike in Beijing highlights uncertainty and challenges in recovery

On 11th June, following a 55-day stretch without any locally-transmitted cases, a second outbreak of Covid-19 was traced to a wholesale market in the south of Beijing.  The Chinese authorities confirmed there were 256 local cases in the period between 11 June and 23 June in the city.

On discovering the new outbreak, the response in Beijing was fast and effective: schools were closed, access to the infected areas was strictly controlled and mass coronavirus testing was carried out. Tracking and tracing anybody who had been anywhere near the market through mobile phones and apps was an important part of the response.

The raising of the public health emergency response from level 2 from level 3 led to the city going back a number of weeks in terms of the opening of the economy. The number of flights into Beijing was cut, temperature checks reintroduced, and a number of businesses have faced further restrictions on opening.

By the beginning of July, things were back under control – but the outbreak and the necessary response has understandably had an impact on economic activity in the city.

Impact on real estate

Those establishments immediately affected were bars and restaurants, some were closed, or put on limited hours – and with the added uncertainty, many companies saw business drop significantly in the second half of June. Smaller business, despite government support, are likely to have found the last few weeks a further strain on their finances.

Hotels saw their number of guests, which had been steadily rising, fall dramatically, with the drop in domestic travel into the city leading to single digit occupancy levels.

Less directly impacted, but just as important, the outbreak has added further uncertainty to many businesses who occupy offices. Before the outbreak, many thought that the city had returned to normal, however this outbreak has brought a new level of caution to many business plans. A number of corporate occupiers of office space are now going through a level of decision paralysis, unsure about how conditions will look in the coming months and putting off expansions or relocations.

Other cities living out similar experiences

The challenges witnessed by Beijing have also been seen across much of the Asia Pacific region in recent weeks. The state of Victoria in Australia has just announced a lockdown for a further six weeks following an outbreak. The number of locally transmitted Covid-19 cases has increased in Singapore and Hong Kong, while in Chennai (India) saw an intense 17-day lockdown following a serious spike in cases.

Uncertainty likely to be with us until a medical solution is identified

The experiences of Beijing and other markets across the region are showing us how difficult it really is to get the virus under control, and also how an outbreak can impact directly and indirectly businesses and the economy.

Certainly, it seems that until an effective medical solution (either therapeutic or vaccine) is truly introduced, many markets are likely to go through similar patterns of outbreaks, restrictions and economic consequences. While many economies are slowly getting back to their feet, this pattern is likely to continue to bring challenges to a full recovery.

Download our Asia Pacific Residential Highlights June 2020 Report