December 27, 2022, Shanghai – Amidst the global headwinds and financial markets volatility in 2022, many real estate investors have been taking the opportunity to review, strategize and reposition their portfolios to better weather these changes going forward. According to JLL’s latest "Positioned for Growth – Investing in China Real Estate in 2023" report, global growth is expected to slow significantly in 2023, with weaknesses in many developed markets while Asian economies continue to show resilience. Meanwhile, with the removal of Covid-19 control measures and strong policy support, China's economy shows strong prospects of rebound with sustainable growth in the post-epidemic era, signalling positive prospects for commercial real estate investment. 

According to Eric Pang, Head of Capital Markets, JLL China, in times of uncertainty and high inflation, real estate assets are often seen by investors as an effective partial inflation hedge. When formulating real estate investment goals and plans for 2023, investors should fully understand the divergent economic trajectories in the major economies in the coming year, be well prepared for future uncertainties, and capture the price correction window to increase their real estate portfolios for future growth. 

Asia remains resilient against rising global uncertainty, while China leads global economic growth in 2023

The US Federal Reserve raised rates six times in 2022, at the fastest pace in the last forty years, and many central banks around the world followed suit with close synchronicity in raising rates as well. Exacerbating the already high inflation in many countries is Russia’s war against Ukraine, which boosted energy and food prices and created additional upward pressure on inflation, especially for European countries. Prices for gas and electricity have risen by 29% on average in local-currency terms in western European cities. 

In IMF’s World Economic Outlook (October 2022), global real GDP growth will slow dramatically from 6.0% in 2021 to 3.2% in 2022 and 2.7% in 2023, while re-opening of Asia Pacific economies in 2022 has resulted in recoveries in economic growth with lower inflation than in the West.

According to Consensus Economics, forecasts of China’s GDP growth in 2023 range between 2.5% and 6.0%, with median of 4.8%, significantly higher than the rest of the world (except India). With the recent relaxation of epidemic prevention measures, China’s 2023 GDP growth may be revised upwards as momentum of post-pandemic recovery becomes clear.