The View | The coronavirus outbreak could bring China’s property investment market back to earth

The disconnect between China’s investment and occupier markets has become less sustainable since the outbreak hit an already vulnerable economy, though some investors will take heart from the prospect of more aggressive stimulus measures

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A man walks in front of the Oriental Pearl Tower in Shanghai, which is projecting the message: “Wuhan, keep going”. China’s efforts to contain the spread of the new coronavirus first detected in Wuhan are giving a shock to the country’s economy. Photo: AFP

Published: 4:00pm, 10 Feb 2020Updated: 10:29pm, 10 Feb 2020

One of the buzzwords in global capital markets these days is “disconnect”.

Asset prices, and sentiment in stock markets in particular, have become detached from underlying fundamentals. The most conspicuous example is the persistent rise in the benchmark S&P 500 equity index – which currently stands at a record high – in the face of the economic shock from China’s draconian efforts to contain the rapid spread of the deadly new coronavirus.

In China itself, the disconnect within the country’s commercial real estate market is just as pronounced, if not more.

Long before the coronavirus outbreak grabbed the headlines, the Chinese commercial property investment market and the occupational market appeared to be in parallel worlds.

In the Chinese investment market, transaction volumes last year reached just over US$45 billion, a 21 per cent rise year-on-year, and one of the main reasons investment activity in the Asia-Pacific region reached a record high of almost US$169 billion, according to preliminary data published by JLL last month.

.css-1m2rp1p{color:#34b8b5;}The View | The coronavirus outbreak could bring China’s property investment market back to earth

The View | The coronavirus outbreak could bring China’s property investment market back to earth