CRE: 5 Ways to Struggle Against the Headwind (Coronavirus)

CRE (commercial real estate) involves a complete chain of land acquisition – development – operation – exit. Investment and financing are two of the core businesses. Without market capital support, this sophisticated business chain will break with unimaginable consequences. Due to the outbreak of Coronavirus, CRE that relies on investment and rent to collect funds has lost two major wings. In the face of offline demand that is almost stagnant, how should China’s CRE save itself?

1 Keeping merchants is keeping the future

Affected by the “coronavirus” outbreaks, all walks of life have been impacted to varying degrees. For CRE where “customer flow is life”, this is undoubtedly a difficult winter. No customers – no merchants – no rent, the perfect business chain breaks down. So, keeping merchants pretty matters for CRE at the moment, various CRE have implemented rent reductions to varying degrees, which way is not only a welfare choice in a short term but also a business choice in a long term. That means the cost burden for merchants is reduced and gives them more confidence at the same time. What’s more, it is a good way to build a better social image for the CRE company, which is convenient for lease renewal and investment promotion after coronavirus.

2 Get loan assistance by making full use of local policies

Various commercial real estate associations have called for the exemption or reduction of related tax burdens such as “property tax” for CRE owners who have already given rent reductions to tenants. Because CRE is the carrier of the real economy, which is fundamentally different from residential properties, the reduction and exemption of the “real estate tax” of CRE owners do not violate the principle of “house just for living”. Various policies have been published to support enterprises from the central to local levels after coronavirus. So far, no national subsidy policy has been issued that directly benefits CRE, but some local governments have done. Take Beijing as an example, the Municipal Bureau of Commerce has launched a “1 + X” business service policy to help CRE reduce burden.

3 The premise of resuming business is to ensure safety

A few days ago, a well -known restaurant “Fang Zhongshan” in Zheng zhou resumed business, a huge crowd of people is waiting to eat in a queue. Netizens tease: “this is enjoying charming food with their lives”. This shows the strong consumer desire of people who have been at home for a long time. Opening sooner is of course a good thing, it can ease the pressure of cash flow, but the coronavirus is not over yet, doing so is a bit risky. At present, most domestic CRE operators are increasing investment in epidemic prevention. Some of them, like Wanda, Longhu, Poly, have already upgraded their epidemic prevention measures, covering communities, shopping malls and sales outlets across the country. This includes requiring all employees to wear a mask, monitoring the temperature of all personnel entering the mall, strengthening all-round no-dead-end disinfection, keeping the air fresh and ventilation, etc. Only by comprehensively protecting consumer safety can make consumers no worries about shopping.

4 An urgent need: Digital transformation

More than three months of the coronavirus outbreaks, which not only increase the size of an online shopping crowd but also make consumers more dependent and accustomed to the online shopping, reducing the proportion of offline consumption, which will bring long-term and far-reaching effects, the digital transformation of CRE is imminent! Digital transformation is not a new thing for CRE, many operators are trying all the time, but the market always lacks some sparks. Offline CRE almost shocked because of coronavirus, the owners of the shopping mall have to seriously consider the issue of digital transformation and have a deeper understanding of digitalization. Self-built information system platforms are essential infrastructure for shopping mall, coupled with digital marketing methods such as online malls, live broadcasts, and WeChat communities, complete digital marketing solutions can be formed to be effective. With the development of 5G technology, smart commerce can better combine technology and consumption, and the combination of online and offline will play a greater role.

5 Focus on-demand changes and make strategic adjustments

People’s concepts of living, office, shopping, vacation, retirement and even children’s education will appear completely different from the past suffering from the coronavirus. Perhaps a consumer revolution will occur in some areas, and CRE operators will naturally need to keep up with this change. The community business may be the first to revive, and community commerce combined with e-commerce will be popular. Modern logistics and distribution will completely transform community commerce, and the “last mile” home service will also face new development opportunities. In terms of investment promotion, health-related demand will rapidly rise to just need, and related consumption such as medical treatment, protection, elimination, health care, and physical examination will show an upward trend. What’s more, open space, environmental sanitation, air circulation, security monitoring, and online access will become rigid requirements for offline space soon.

Some companies will fall, and some will rise more strongly after each shock in history. coronavirus is not a dead way, it just mentions CRE, it is time for changing. If you have any questions about the article or want to discuss with us, please leave us a comment below or email us:

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