Latest RRR cut bolsters economic and commercial real estate market recovery

On March 17, 2023, the People’s Bank of China (PBoC) announced it would cut the Reserve Requirement Ratio (RRR) for all major banks by 25 bps, effective March 27, 2023. This marks the third consecutive RRR cut since 2022 and underlines the PBoC’s commitment to enhancing banking liquidity to support China’s economic recovery while decoupling monetary policy with the west.

Economic activity picked up strongly in the first two months of 2023. Despite weaker exports, CBRE expects China’s consumption-led recovery to gain further momentum in the coming months, underpinned by the stronger growth of discretionary spending on the back of the improving job market and brightening economic outlook.

What does it mean for commercial real estate?

• Office demand will gradually pick up
• Retailers to resume expansion
• New logistics supply to fulfil pent-up demand in tier I cities
• Commercial real estate investment volume set to increase