On January 8, 2023, China announced the reopening of its borders, signaling a major shift in the global travel and real estate industries.
According to Kashif Ansari, co-founder and group CEO of Juwai IQI, this will be the first opportunity in three years for most Chinese to visit overseas real estate markets. During the pandemic, China imposed travel restrictions, decreased the number of passports issued, and mandated quarantine for Chinese citizens returning from abroad. However, with the easing of restrictions, Chinese citizens will once again be permitted to travel abroad.
Kashif believes that property investing will be a priority for these travelers, in addition to visiting family and friends, studying abroad, doing business, and traveling. Juwai IQI data on Chinese buyer inquiries shows that Australia, the United States, and Canada were the top three destinations for Chinese buyers of real estate in December. Malaysia was also on the list of top 10 countries for real estate investment, along with Japan, Thailand, the United Kingdom, United Arab Emirates, Vietnam, and Canada and Australia.
In response to China's opening borders, here are the efforts taken by other countries in light of making space for this initiative:
In response to China's COVID-19 situation, Canada has extended COVID-19 screening requirements for air travellers from China, Hong Kong, and Macao. Proof of a negative COVID-19 test is required for anyone over the age of two who lands in Canada from these areas, regardless of citizenship or vaccination status. The restrictions are in place as a precautionary measure and will be reassessed as more data becomes available.
Australia's approach to the recent opening of China's borders is one of cautious optimism as the country continues to prioritize the health and safety of its citizens. Nevertheless, there has been a noticeable spike in search interest for outbound flights from China, signalling a growing excitement for international travel among Chinese citizens. The rise in international flight bookings is a positive indicator of a surge in Chinese tourism in the near future. Despite some challenges, such as passport and visa processing delays, high flight prices, and limited flight capacity, many remain optimistic about welcoming Chinese travellers back to Australia.
Vietnam has relaxed its COVID-19 restrictions at the Mong Cai border gates with China, which had a detrimental effect on cross-border trade in the past few years. This easing of restrictions should facilitate easier cross-border trade and is expected to boost the manufacturing industry, which relies on key components and raw materials from China. Regular flights have also resumed between the two countries, with compulsory quarantine lifted. Vietnam Airlines is planning to increase its flights to China in March. The reopening of the border and easing of restrictions is expected to help the struggling tourism industry, but it may take time to reach pre-pandemic levels.
Malaysia has emerged as a top destination for foreign investment, particularly from China, due to its strategic location, low cost of living, skilled workforce, government support for various industries, and well-developed infrastructure. The government has provided incentives and support for companies to set up Global Business Services (GBS) centers in the country. The GBS industry is expected to grow significantly in the coming years. The Bursa Malaysia stock market also offers investment opportunities for Chinese investors. Despite the opportunities, investors must conduct thorough research and due diligence to understand their investments' potential risks and returns.
Kashif expects Chinese outbound travel and accompanying property investment to increase rapidly in January, although he acknowledges that it will not return to 2019 levels all at once. He predicts that outbound travel from China will snowball and may reach pre-pandemic levels by mid-2024.
According to Kashif, Chinese international property investment has already begun to recover from its pandemic lows, with drops ranging from 50% to 60% depending on the destination. The reopening of China's borders will provide a significant boost to this recovery, leading to increased opportunities for real estate investment in markets around the world.
As Chinese investment in international real estate increases, it is important to consider the potential impact on local markets. While the influx of capital may lead to rising property prices and economic growth, it may also raise concerns about the displacement of local buyers and the potential for real estate bubbles.
Additionally, cultural differences and language barriers may make it difficult for Chinese investors to navigate foreign real estate markets. It is important for governments and real estate professionals to understand Chinese buyers' unique needs and perspectives to ensure that their investments are successful and sustainable.
Despite these challenges, reopening China's borders represents a major international real estate market opportunity. As Chinese travellers and investors return to the world stage, they will bring new economic growth and investment opportunities.
In conclusion, reopening China's borders will significantly impact the global travel and real estate industries. While challenges and potential risks will be associated with increased Chinese investment in international real estate, the benefits will likely outweigh these concerns. As the world continues to recover from the pandemic, the reopening of China's borders will play a key role in driving growth and investment in the real estate market.
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