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As China Reopens, Real Estate Is Poised for a Comeback
A new report by KPMG stresses how technology can boost the besieged industry.
They say when China sneezes, the world catches a cold. That has certainty been the case in the pandemic era, as the country’s Zero-Covid policy impacted markets and sectors around the world.
With the latest easing of restrictions, however, China’s reopening presents opportunities for investors.
“As the second-largest economy in the world, China’s reopening has important economic and market implications, both in the country and beyond,“ Loomis Sayles analyst Bo Zhuang wrote in a blog post Tuesday. While he said reopening may cause “chaos“ in the short-term, Zhuang predicted the move would have a “broadly positive impact on Asian markets.“
“I expect Chinese equities and corporate bonds to be beneficiaries, and volatility could provide potential buying opportunities,“ he wrote.
Real estate may present another opportunity as China reopens. In its 2023 outlook, J.P. Morgan Asset Management argued that recent liquidity and credit injections into the besieged real estate sector will also be a catalyst for the Chinese economy.
Technology will be another driving force propelling China’s property sector, according to KPMG’s PropTech 50 report released Wednesday.
“With China’s continued emphasis on digitalization initiatives in the past few years, online services have continued to proliferate across various industries, contributing to the growth of the country’s software-as-a-service industry,” the report stated. “Despite the real estate industry downturn, we have found in this year’s survey that SaaS remains booming in the industry.”
According to KPMG, software-as-a-service products for the real estate industry have become “increasingly sophisticated and diverse, covering core business functions along the value chain, such as marketing, bidding, procurement, supply chain, commercial operations, leasing, and property management services.”
On the whole, the real estate industry has been a laggard in terms of technological advancements — including capabilities for automating and generating data on real estate transactions, investments, financing, and operations — but this is where China stands out.
The country has been rapidly developing and integrating SaaS technology across various industries since 2015 and has maintained a compounded annual growth rate of 35 to 40 percent in market size — despite the pandemic.
“We believe that technology will reshape the approaches real estate companies use do business and construct their industry ecosystems, which will enable users to live, study, work, and play in ways that are more comfortable and accessible, safer, and greener,” the report stated.