Beijing Market View Q2 2021

July 20, 2021

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Grade A office take-up hits record high; New malls strengthen appeal of emerging office locations




Three new office buildings came on stream in Q2 2021. Demand was led by the financial sector, with funds and securities firms most prominent. Overall net absorption rose by 81% q-o-q, underpinned by record high Grade A take-up amid robust upgrading demand. Vacancy fell for a second consecutive quarter.




The period saw the addition of two new shopping malls in the emerging office submarkets of Lize and Tongzhou. Demand drivers included high volume F&B, new energy vehicle showrooms and children’s-related retailers. A steady improvement in shopper footfall and occupancy rates in regional shopping centres helped overall vacancy decline by 1.9 pps q-o-q to 8.5%.




Two new projects came on stream in Shunyi this quarter, both of which were almost fully pre-leased by large-sized tenants. The new supply drove net absorption above 100,000 sq. m., the first time since Q3 2018. Overall vacancy fell to the lowest level since Q1 2019, while rents continued to rise amid tight availability.




The period saw a more diverse demand profile, with the TMT sector driving the bulk of requirements, but life sciences, culture and entertainment tenants signing several new leases. Take-up was strongest in BDA district thanks to local policy support to attract high-tech enterprises and life sciences tenants.




Seven investment deals totalling RMB 20.9 billion were closed in Q2 2021. The period saw three transactions exceed RMB 4 billion, one of which was the largest deal recorded in the CBD since 2019. Turnover was flat on a q-o-q basis. Purchasing was led by domestic insurance companies.