China, the second largest economy in the world, has always been an attractive destination for businesses seeking to tap into its large market and work force. However, the impact of the pandemic on the supply chain and local labour forces drove many companies to shut down or partially relocation their operations to other countries like Vietnam and India. As the COVID-19 pandemic subsided in 2023, international borders gradually reopened and many companies began considering their return to China.
The decision to return to China may be influenced by many factors, like geopolitical tensions and regulatory risks. But the lifting of COVID borders means new opportunities for companies looking to resume operations in the country. Through our APAC office and local support in China, Movenet is ready to support companies looking to restart their China plans for growth!
Shanghai and Beijing have yet to feel the impact of the lowering of restrictions due to the newness of the border openings, accompanied by the short time between the Solar and Lunar New Year holidays. If there will be added pressure to the housing markets, schooling options on the mainland, and to the reports of people returning to Hong Kong is still unknown.
Time will tell if the pressure on Singapore will be relieved with the return of these major markets reopening. The pace of the return to normalcy is unknown, but it's certain nothing will change overnight. Therefore, companies should anticipate higher costs for the first half of the year minimum.
The Asia Pacific region shows stabilisation as the pace of change slows to normal in most locations and majority of 2022's restrictions are lifted. However, costs and pricing continue to remain high proving that we have not reverted to the status quo of pre-pandemic availability and pricing. What is happening is a reset that considers lower availability and higher pricing as the current norm.
Competitive housing markets will continue to impact assignees, requiring a combination of higher rates, expansion of searches outside typical expat-style neighbourhoods, and limited negotiation with landlords. This has been most notable in Singapore where 50% rises in rental accommodation rates is currently not uncommon. Changes to procedures first appeared in Singapore. One example being the payment of a tenant-side realtor commission came into effect, has now become a permanent feature adding yet more additional up front costs.
On average, economists predict a 60/40 chance of a recession in 2023. But, even if a global recession doesn’t arrive or isn’t as bad as expected, companies are anticipating one and taking steps to mitigate the impact, contributing to a hesitant start of the year.
We will keep you updated on all upcoming market news!