Coronavirus is wreaking havoc on China’s landlords
Quarantines and other measures are reducing activity
The devastating coronavirus outbreak in China is starting to take its toll on some of the country’s biggest landlords.
Measures meant to curb the spread of the deadly virus have effectively put renting on pause in some parts of the country, while some short-term rental businesses are hurting without the seasonal bumps they banked on, according to Bloomberg.
The outbreak is also affecting the housing market — year-over-year price growth was the slowest in January since July 2018.
In Wuhan, the center of the outbreak, rental management company Danke — owned by Phoenix Tree Holdings Ltd — won’t pay rent to landlords for 90 days. Landlords rent units out to the company, which refurbishes, rents and manages them. The company is offering discounts to tenants who sign long-term contracts to drum up business.
Cities outside Wuhan, the center of the outbreak, have also adopted containment measures. Some rental associations want landlords to waive rents.
Landlords in Shenzhen and Hangzhou also have to alert authorities of any tenants from Wuhan’s province living in their buildings or face penalties. In some places, landlords are responsible for screening tenants and disinfecting common areas.
Renters in some cases can’t get into their own units because of lockdowns. Long-term rental startups Ziroom and You+ have received requests for waivers and refunds because they can’t return to their units. Airbnb recently announced it would freeze all business in Beijing for two months as well.
The financial pressure on those companies could have a knock-on effect — venture capital funds managed by Tencent, Warburg Pincus, and Sequoia Capital are among the investors who have poured billions of dollars into the rental management sector over the last few years.
In the United States, Coronavirus has not yet had a significant impact on the real estate trade, The Real Deal reported earlier this month.
[Bloomberg] – Dennis Lynch