China’s Covid-19 recovery - should real estate decision makers remain cautious?

As the world continues to trudge deeper into the unfamiliar as a result of the Covid-19 outbreak, some policymakers are beginning to see a light at the end of the tunnel and are keen to restart their economies, hoping to minimize the economic fallout from the virus. 

China, where the virus first originated, has successfully contained its outbreak and since late-March has started to ease its draconian movement restrictions to get its economy back on its feet. As a result, we have seen factories reopening and PMI data return to expansionary levels seen pre-Covid-19. 

However, there are concerns that China could be moving too quickly and earnestly with its re-opening - risking a second wave of infection. This lingering concern is acting as an inhibitor for decision makers in the real estate space, as they rightly prioritise employee health and safety. However, we believe the Chinese government’s move to gradually reopen almost all its schools by the end of April is sign that the outbreak is well and truly contained in China. 

In China, children are generally treated as the most important assets by its citizens and this traditional mindset is well entrenched into its culture. Furthermore, this phenomenon has been greatly enhanced by China’s One-Child policy which was only recently abolished. Hence, it is not uncommon to see a Chinese family focus almost all its resources into their children’s upbringing, and in some cases can extend well into adulthood.

With this background knowledge, while lockdown measures and movement restrictions eased in late-March and early April, the Chinese government continued to keep its schools along most of its major coastal population cities closed. This is reflected in the map below which provides a snapshot of the provinces which had reopened their schools at the beginning of April. 

However, fast forward to the end of April and we can see that the Chinese government has already started to reopen most of the schools across the country - with the exception of Hubei, where the virus originated, which is expected to open in early May. 

While concerns over a second wave in China are valid, we believe the Chinese government’s actions speak louder than words. Their decision, after what we can assume is much careful thought, to gradually reopen and allow their young population back into schools, knowing full well the importance the child is viewed by its citizenry, is a strong indicator that the outbreak is well and truly contained. As such, we believe real estate decision makers in China still hesitating and waiting on the side lines should reconsider their positions lest should they miss out on participating in China’s recovery.