The effect of the Covid-19 pandemic has been felt in every area of the Czech economy, as the government here introduces increasing restrictive measures that will, in all likelihood, remain in place for some time yet. But there is light at the end of the tunnel: China reported no new domestic cases of coronavirus for two days last week and the updates I am receiving from our extensive operations in China and across Asia are increasingly positive, some of which I’d like to share with you here.

There is plenty of information coming through the Savills network, especially pooled learning from our global and Asian teams – where we employ 30,000 people across 58 offices in the region – which is helping us to react to events, to forecast the timescales that might apply to our current situation, and to apply this is in our discussions and advice to our partners.

Overall, the indications are that immediate business interruptions caused by Covid-19 are containable within a two-quarter timeframe, conditional on an appropriate public policy response and social compliance, both of which many believe are largely in place here in the Czech Republic. Our Chinese business, which encompasses 18 offices located in major cities across the country, is now approaching full operations again and incredibly active in many real estate disciplines following the shutdown before Christmas.

Based on what has happened in China with Covid-19 as well as previous epidemics like SARS in 2003 and H1N1 in 2009-2010, Savills China has looked into how the rest of 2020 might pan out. If the virus is, as hoped, contained in China by the end of March, we should expect to see a recovery in certain sectors over the following months. This recovery looks set to kick start with manufacturing and logistics in Q2 as back orders are fulfilled, with physical retail later in the quarter starting to pick-up as business and life return to normal. By mid-year, pent-up demand will support residential sales. As we enter Q3, the number of travellers and tourists should rise as the summer season and national holidays take hold, while leading retailers will start focusing on second-half sales to bring about a full recovery of the sector by the end of the year and into 2021.

Of course, the above scenario feels somewhat ‘rose-tinted’ right now and obvious observations concern how long border controls will remain, what state the airlines will be in Q3, and ultimately how the finance sector will stand up to stress tests of mortgage relief, defaulting retailers and financial market turbulence. Clearly for retail, 2020 will be a black mark and strategies will centre on cash conservation, liability minimisation and, ultimately, survival.

The short- to mid-term strategies of governments to combat this health crisis will be crucial for determining the extent and duration of the impact on the real estate markets. Chinese regions, for example, instituted various policies targeted towards helping SMEs, such as real estate tax and land use tax exemptions, and rent holidays and reductions for tenants occupying state property.

In the Czech Republic, I am encouraged by the measures so far announced by the government to help large firms, small businesses and households offset the effects of the pandemic, as well as the Czech National Bank’s decision on March 20 to cut key interest rates by 50 basis points to 1.75 percent. Such supportive monetary action should create more favourable future business conditions, if the crisis does not prove to be protracted. 

It is certainly going to be a strange and difficult period, but confirmation that the period of time between the first cases of Covid-19 being reported in Wuhan and the Chinese economy showing green shoots of normality was nine weeks may be of some comfort to us all at a time when good news seems in short supply.