The U.S-China trade relationship has clearly entered unchartered territory. The introduction of new and retaliatory tariffs indicates that no resolution is in sight.

But where commercial real estate is concerned, it is not all doom and gloom, with several factors potentially alleviating any collateral damage arising from the conflict.

Firstly, China’s economy. The economic landscape in China has remained healthy this year on most metrics, despite the slowest quarterly gross domestic product rate in nearly a decade that was just registered.

Secondly, a relatively robust domestic demand story and ongoing infrastructure projects will cushion the short term blows from a prolonged trade conflict.

But there are certain segments of the real estate market that remain more vulnerable. For example, companies operating on a low-cost, labour-intensive business model are most susceptible to the effects of a prolonged trade conflict.

While many of these companies have already moved away from China to cheaper manufacturing locations, the perception of heightened instability in the mainland will further drive more businesses into countries like Vietnam.

To buffer the exodus of firms, China has eased restrictions on foreign direct investment. This policy shift has succeeded in attracting the likes of Tesla, which announced plans to construct a Gigafactory in Shanghai, and BASF, which will develop the first wholly foreign-owned chemicals complex in China.