Of all the inspirational quotes from Britain's wartime leader, Prime Minister Winston Churchill, this comment about overcoming difficulties may serve to inspire the people of Chengdu as they wrestle with the devastation to lives and properties caused by last month's earthquake.

Soon after the quake, property deals plunged and were measured in terms of total space sold. May transactions in urban Chengdu's residential sector was 500,000 square metres, down 32.94 per cent from the previous month, though the average residential price dropped only 1.47 per cent to 5,500 yuan (HK$6,233) per square metre, said Kenny Ho, head of research at Jones Lang LaSalle China.

But a survey by the property agency in the wake of the earthquake showed also 63.4 per cent of would-be homebuyers have now put their plans to buy on hold. Mr Ho said this suggested further falls in house prices in Chengdu in the short term.

Luckily, the main city of Chengdu did not suffer widespread damage and construction work on about 90 per cent of the projects in the city centre resumed after safety checks.

The central government now plans to redevelop 20 cities in the province within three years as part of an eight-year plan to restore the province's economy to its leading position in the country's west.

'The lasting impact of the earthquake will therefore be the human tragedy it left in its wake and the long-term psychological trauma, rather than any economic downturn,' said Roy Lee Kwong-ming, general manager of DTZ's Chengdu office.

The long-term outlook remained strong, as Sichuan province moved into recovery mode and the western region would again be the focus of economic growth in China, he said.

Patrick Kuo, an assistant director at Colliers International's Chengdu office, echoed Mr Lee's view.

He said based on the experiences after the Los Angeles, California earthquake in 1994, the quake in Kobe, Japan in 1995 and the Taiwan earthquake in 1999, it was likely Chengdu would recover quickly.

Analysts believe more residents from the suburban area will move into the city for better quality and higher safety standard of housing. They also say reconstruction work will bring many skilled workers into the city and create ample housing demand and provide opportunity for developers.

'With about 10 million people affected by the disaster, if just 1 per cent of them move into the city, it will create enormous housing demand,' said Eric Wu, director and general manager of Savills in Chengdu.

And since some developers might face financial pressure as buying demand drops in the short term, 'this may be a good time for professional investors to find some good investment opportunities in Chengdu at a bargain, as many weaker local developers will be more willing to accept buyers' terms', said Mr Lee.

It is understood that Singapore property developer Fraser and Neave is actively looking for opportunities for mixed-use projects in Chengdu.

For most potential developers, the earthquake had not affected business outlook or development plans for the city, analysts said. 'Market demand remains potential developers' sole major concern,' Mr Lee said.

Given Chengdu's gateway position, relatively cheap labour and Beijing's commitment to develop the city by investing 100 billion yuan in infrastructure and transport, the outlook was promising, he said.

And the city would continue to be the financial, retail, business, scientific and technological centre, as well as the transport and telecommunications hub in western China.

Tencent Holdings, the mainland's largest internet service provider, is the first investor to show its confidence in the city after the quake, with plans to invest 550 million yuan to set up a research and development centre there with 1,500 staff.

In addition, ASM Pacific Technology will invest US$30 million to set up the first phase of an R&D centre, and Toyota Boshoku will invest 500 million yuan to make vehicle parts. Both projects will be at Chengdu High-tech Industry Development Zone.

Some potential entrants might delay plans to set up office in Chengdu, but rents for newly built grade A offices would keep rising because demand for offices with better quality and safety standards would keep rising, said Mireille Wan, managing director of CB Richard Ellis in Chengdu.

Ms Wan said she was also optimistic on the retail market, given the retailers were confident in Chengdu's long-term potential and its high propensity to spend did not change after the quake.