Hotels, Logistics, and Office Spaces Poised for Growth Amid Renewed Activity
China’s shift away from its zero-Covid policies after nearly three years has sparked optimism for the global economy, particularly in the Asia-Pacific region. The reopening of borders is set to revitalise key sectors such as hotels, logistics, and office markets, driven by increased movement of people, goods, and businesses.
A Boost to Economic Recovery
China’s gross domestic product (GDP) growth faltered in 2022 due to prolonged lockdowns, but the country’s reopening lays the groundwork for an economic rebound. While the recovery may initially stem from the restoration of mobility rather than capital flows, it is expected to significantly impact regional commercial property demand.
China’s reopening aligns with the symbolic traits of the Rabbit in Chinese astrology—patience and hope. While the benefits may not be immediate, the changes are anticipated to unfold gradually, propelling economic activity closer to pre-pandemic levels.
Hotels Lead the Revival
The hospitality sector stands to gain first from China’s reopening. Following the announcement of eased travel restrictions, searches for international flights and accommodations surged to a three-year high, with Chinese tourists quickly resuming international travel.
Southeast Asia, particularly tourism-dependent economies like Thailand, is expected to be among the earliest beneficiaries. Thailand anticipates welcoming 5 million Chinese visitors in 2023, boosting its GDP by up to 3%, according to Goldman Sachs. Although this is still far from pre-pandemic levels, the revival of Chinese tourism is expected to gain momentum in the coming months.
Logistics Benefit from Smoother Trade
While e-commerce has already driven demand for logistics spaces, the easing of supply chain disruptions will further support regional manufacturing hubs. Vietnam, heavily reliant on trade with China, is set to benefit as the flow of goods between the two countries becomes more seamless.
As supply chains stabilise, the demand for manufacturing, storage, and delivery facilities is expected to increase, supporting growth in industrial and logistics properties across the region.
Office Markets Show Signs of Recovery
The office sector in China experienced subdued activity in late 2022, but the reopening of borders is likely to reinvigorate demand. In Hong Kong, the renewed mobility of multinational corporations (MNCs) and mainland enterprises is expected to strengthen the market, despite ample office supply keeping rents stable.
Singapore, often viewed as a safe haven, could also see increased demand for office spaces. Over 500 Chinese companies have reportedly re-domiciled in Singapore as of late 2022 to mitigate geopolitical risks. With borders now open, the process of establishing operations in the city-state will be more accessible, further driving demand for office properties.
A Path to Renewed Growth
China’s reopening marks a pivotal moment for the Asia-Pacific commercial property market. As people, goods, and businesses begin to move freely once again, key sectors such as hospitality, logistics, and office spaces are well-positioned for sustained growth, bringing renewed vibrancy to the region.
