International, institutional investors are yet to see light at the end of the tunnel when it comes to China’s real estate market.

They have voted with their feet, with the country’s investment volume down 55 percent year-on-year in the third quarter of 2022, from $7.3 billion to $3.3 billion, according to broker JLL.

On top of the government’s efforts to deleverage the market, the country’s ongoing zero-covid stance does little for investors looking to return to China’s real estate market. The policy was reinforced at this month’s party conference.

President Xi said on Sunday the policy has ensured economic stability by keeping China’s infection count low, describing it as the “people’s war to stop the spread of the virus.”

Yet these measures have cost the country, both economically and socially. Some 77 percent of American businesses have either left or refused to relocate to China for this reason, according to a 2022 survey by the American Chamber of Commerce China survey.

The Economist Intelligence Unit, meanwhile, has revised down its forecast for GDP growth in China this year from 4 percent to 3.6 percent.

Hong Kong, after following mainland China’s strict border control for over two years, finally relaxed its covid measures in late September by ending its hotel quarantine policy. There is already some nuance in sentiment there.

A Q3 2022 report by broker CBRE said the move could prove a turning point for Hong Kong’s reopening, though investment activities may not return to normalcy until travel with the mainland is resumed.

Indeed, its status as a special link between the West and mainland China has not stopped the Special Administrative Region’s real estate transaction total from falling 75 percent year-on-year, from $2.8 billion to $720 million, in the third quarter of 2022, according to JLL.

From an international, institutional standpoint, other Asian countries, meanwhile, have made more hay since the end of their covid-induced lockdowns. Vietnam, for example, has further benefited from the “China-plus-one” shift, which has seen foreign investors complement their China options by expanding productions into the Southeast Asian country. Accordingly, Vietnam saw a 118 percent year-on-year climb for real estate investment volume in the third quarter of 2022.

Elsewhere, Singapore, Indonesia and the Philippines also saw upticks of 116 percent, 99 percent and 294 percent respectively during the same period, per JLL.

A stark dichotomy of policy is proving to have a similarly stark divergence in international behavior. A reverse will prove hard to see until China makes itself and its property market more accessible once more.

In the meantime, the Chinese real estate market will increasingly be the preserve of Chinese investors.