The spread of the dreaded Coronavirus in China from late last year has affected both social and economic activity. In China where it was originally cited, thousands have been infected and several have died as the deadly virus permeates even wider. What was initially a China only problem has now spread beyond borders to every part of the globe. Infections and deaths have been recorded in Europe, America, Asia, Middle East and Africa and there is still no known cure for the infection.
Efforts to contain the spread of the Coronavirus have led to quarantines being declared on large provinces like Wuhan in China but this could still not stem the rapid growth of the infected numbers. Such efforts have now been escalated to include total closure of manufacturing plants, restrictions on local and international travel and haulage of goods. The US has unfortunately not been spared and there have been reported cases of infected persons with fears of more growing by the day.
One of the worst affected industries is travel. It all started with restrictions to travel outside the affected areas in China but it is now spreading to include almost every country where cases have been reported. The US, like other nations has taken measures by restricting entry of flights and ships from areas with reported cases and this has affected tourism.
Millions of Chinese tourists visit the US every year but the travel restrictions resulting from Coronavirus have started to reduce the numbers. Tourists contribute a lot to the growth of hospitality business which includes hotels, restaurants and accommodation. All these are real estate related for that reason, a slowdown in the travel sector results in a slowdown in these businesses.
The closure of manufacturing plants in China also affects businesses in the US as a good number of them depend on supplies and manufacturing g in China. A slowdown in manufacturing will reflect in low wages and less disposable incomes which might affect investments in property both personal and corporate.
The continued spread of the Coronavirus across the globe is casting a dark economic shadow given that China is the second largest economy and plays a pivotal role in the global economy. Investors can only sit and hope that the virus is soon contained to allow China and the world to go back to work. A prolonged economic slowdown always leads to recession which cascades into every sector of the economy.
The effect of Coronavirus on the US real estate market is for now insignificant but the threat to growth is already evident.
See the picture below to see how Coronavirus has impacted various other real estate related industries. Photo credit: Cushman & Wakefield
Stay safe out there everyone!