Beijing Figures Q2 2022

Investment and leasing outlook brightens after challenging opening to 2022

Office

Leasing volume fell 30% q-o-q as pandemic-related restrictions forced tenants to postpone new lease commitments and the TMT sector continued to consolidate. Net absorption turned negative for the first time since Q3 2020. Demand in the CBD and emerging areas was stable but other submarkets reported weaker activity. One new office building was completed in Lize.

Retail

Two refurbished mid-sized projects were added to the market as consumer confidence and retailer demand were hindered by the resurgence in COVID-19 cases. Despite there being no large-scale store closures, some landlords adjusted rental strategies, which pushed down average rents by 1.4% q-o-q.

Logistics

One new logistics facility was delivered in Shunyi Airport this quarter. Shunyi Airport Zone and Daxing were the two most active submarkets during the period, with both witnessing the emergence of flight-for-cost activity. Rental growth slowed in Beijing but the recovery in demand across the Greater Beijing area led to rents fluctuating to varying degrees in satellite markets.

Business Park

Two life sciences parks were delivered in Daxing and BDA this quarter, both of which achieved high occupancy. Life sciences eclipsed TMT to become the main driver of leasing demand. Due to increasing availability, previously sharp rental increases in Greater ZGC paused in Q2 2022.

Investment

Five major deals fetching a combined RMB 6.82 billion were completed in Q2 2022. Sellers turned more active in attempting to dispose of high-quality assets, contributing to a slight rebound in transaction volume. The availability of core and core plus properties increased over the quarter.