In this thesis, the Corona Virus Disease 2019 (COVID-19) pandemic is used as a natural experiment to investigate how commercial real estate reacts to extreme events. The pandemic (e.g., COVID-19) uniquely affects commercial real estate, unlike other extreme exogenous events (such as flooding and earthquake), which have already been discussed.
Does the COVID-19 outbreak exert a significant impact on the price or volume of commercial real estate transactions? In this thesis, relevant data on the commercial real estate market are collected, such as the disposable income per capita in urban areas, the interest rate, and the pandemic index. These data are adopted to explore the variation of commercial real estate in the spread of COVID-19 and then estimate the effect of the pandemic on the commercial real estate market.
Before the outbreak of COVID-19, the commercial real estate market of Zhengzhou was on a declining trend. According to CBRE’s report, Zhengzhou's retail property market vacancy rate has risen 3.2% in 2019 before the COVID-19 outbreak. China real estate information consulting data platform (CRIC) reported that the office building’s average prices in Zhengzhou increased by 13.33% in 2019, apartment’s average prices fell by 2.01%, and the store’s average prices decreased by 3.64%. After the pandemic outbreak, will commercial real estate continue its previous trend and magnitude, or present a dramatic response to the pandemic?
In this thesis, 38678 purchase record data of commercial real estate were collected, including office, apartment, and store, three types of commercial real estate. After selection, 23050 records were retained as valid data. The following conclusions are drawn by sorting out and classifying the data and using statistical analysis software (STATA) for empirical analysis. 1) COVID-19 has a negative impact on both the price and transaction volume of commercial real estate in Zhengzhou. The impact of the trade volume is significant, while the impact on price is insignificant. 2) In the first year of the COVID-19 outbreak, the correlation between the average monthly rent and the Pandemic Index is extremely strong. With the continuation of the pandemic, this correlation demonstrates a trend of gradual weakening. 3) Different types of commercial properties respond differently to COVID-19.
