Transpacific trade war a negative, but not a death blow, for China’s office and industrial property, analysts say

China’s office and industrial property market will suffer from weaker leasing demand as a result of the escalating trade tensions between Washington and Beijing, as multinationals review their China strategy and manufacturers speed up factory relocations to countries such as Vietnam, according to market watchers.

“From the real estate point of view, many decisions in the second half of the year and next year will be delayed in both investment and leasing markets as corporates are waiting out the political storm,” said David Ji, director and head of research and consultancy at Knight Frank Greater China.

Other industry watchers agreed that foreign companies have adopted a cautious approach amid heightened trade tensions between China and the US.

“It is possible that some foreign companies may pause on their occupancy decisions until the impact of the trade war is clear. However, a majority of demand for commercial real estate properties in China, especially in first-tier cities, comes from domestic instead of foreign companies,” said Elysia Tse, head of research and strategy, Asia-Pacific LaSalle Investment Management.