With the World Health Organisation (WHO) declaring coronavirus a global health emergency, fears are mounting about the impact of this epidemic on the world economy. According to the latest reports, more than 200 people have died in China, and the virus has spread to 18 countries where several positive cases have been confirmed. Currently, nine people have been diagnosed with lethal coronavirus in Australia who have been kept in isolation.
Amidst this growing health crisis which has engulfed the entire world, Australians are witnessing an increasing fear in visiting shopping centres. The deadly disease is expected to have a profound and clear impact on the Australian industry, and the worst-hit sectors will be tourism, education and retail.
As people stop visiting crowded places and abstain from shopping in malls, the commercial real estate sector will automatically come under the radar of a slowdown. Naturally, people looking for commercial property for sale in Australia will be reconsidering their decision in the current situation. Let us understand how coronavirus fear will impact Australian shopping centres.
The Virus May Cost $1 Billion To Australia
While people are still trying to fathom the details of the outbreak, the investment bank UBS has come out with a report stating that the coronavirus might make Australia lose $1 billion. Although it is too early to estimate the losses, the group travel ban imposed by the Chinese Government has already ensured that tourists will not be visiting Australia this year.
The money spent by Chinese shoppers will not come into the economy and many products and services exported by China will not be entering our markets due to the temporary shutdown of the Chinese industry to control the spread of the virus. Australian casinos are going to be among those sectors affected by the travel ban as they are dependent on the VIP gamblers coming from the Asian country.
The travel agencies operating in Australia will also have to face financial challenges. If the virus becomes dominant and spreads rapidly, then booming airlines like Qantas and Virgin will have to bear heavy losses this year. A similar pattern will appear in the education sector as over 20,000 Chinese students get admissions in Australian universities every year. The next and the most significant blow will be suffered by shopping centres where the markets are dependent on the affluent Chinese buyers and their spending potential.
Locals Plan To Stay Away From Asian Markets
Australians visiting Asian food markets in the suburbs have been showing signs of panic and are wearing masks to avoid contracting germs and infection. With scare mongering taking place on social media, it is being expected that the bustling shopping centres are going to become less crowded with each passing day. People are avoiding visiting areas with a dominant Chinese population and wet markets that are selling meat and seafood.
The virus is suspected to have started from a seafood market in Wuhan, China, which is the epicentre of the outbreak. Earlier, the disease was thought to have originated from snakes, which are sold in the Wuhan market. However, a report from Wuhan Institute for Virology stated that it seems to have originated from bats, which carry a variety of viruses without getting sick.
It is now transmitting between humans, and the entire international community is taking all the required measures to restrict it. The epidemic has brought back the memories of the SARS virus. The number of coronavirus cases has already surpassed the SARS count and is expected to create widespread challenges for the global economy if it doesn’t get curtailed.
Lower Spending Can Make The Retail Sector Plummet
With less number of Chinese travellers and exports coming into the Australian markets, the retail sector will have to brace for a challenging first quarter. As the number of shoppers will decline, the foot traffic will decrease and affect the sales of the commercial real estate assets, especially the CBD assets in NSW, Queensland and Victoria. T
hese states will experience the maximum impact as most Chinese travellers and students visit these regions for travel, shopping and education. Since February and March used to be the months with the highest spending from Chinese travellers, the first quarter results of the industry will take a massive blow in this financial year.
If the low sales lead to bankruptcies of retailers and bring about a slowdown in the commercial property sector, the occupancy rates will also get affected. However, experts are hopeful that the virus will get restricted in the coming months and bring the economy of China back on track, and in turn, the tourism, education and retail sectors in Australia.
What Happens Next?
The Chinese authorities are continually working to curb the movement of its people, and the city of Wuhan has been under a complete lockdown. The manufacturing hub in the city has also been closed down as the lunar New Year holiday has been extended and international travellers are undergoing thermal screening at the airports. The mayor of Wuhan recently accepted publicly that correct information about the virus was not released in time.
The people who have already travelled to other countries are being quarantined and kept in isolation in hospitals until their test results arrive. With the WHO making it a global health emergency, things are expected to move faster as more and more people will become aware of the symptoms and ways of staying away from the virus will be made public.
The Australian authorities are working overtime to contact people who have come back from China in January or were in proximity of the people who are infected with the virus. The government is also taking the advice of the WHO into consideration in controlling the spread of the virus. Meanwhile, it will be a period of wait and watch for the Australian industry until things settle down and fall back in place.
The Australian economy has already been suffering due to the bushfires, and the additional burden of missing Chinese investment is going to make an impact on the industry. However, if you are planning to purchase a commercial property for sale in Australia, then it would be better to invest in offices and warehouses than retail shops at the moment.
Sophie Barrett is an experienced real estate marketing professional with a specialisation in commercial property market. She has a Masters degree in marketing from the esteemed Melbourne Business School and has several property management certificates to her credit. Her shrewd marketing policies and business acumen have led to the most rewarding property deals in the major capital cities of Melbourne, Sydney and Perth. She is a popular name in the real estate market and has been serving the industry for almost two decades now. CommercialProperty2Sell is proud to partner with her for some astute discussions and advice on the booming sector.
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