China Figures Q2 2022

Leasing and investment fall sharply but recovery already underway

Office

New office supply in the 18 major cities tracked by CBRE reached 627,000 sq. m. in Q2 2022, representing a decline of 56% q-o-q. Lockdowns weighed on leasing activity over the quarter, with nationwide net absorption falling 74% q-o-q and 88% y-o-y to 260,000 sq. m. Weaker demand pushed up nationwide office average vacancy by 0.2 pps to 21.8%. Rents declined in all 18 cities, dragging down the nationwide average rental index by 0.5% q-o-q.

Retail

850,000 sq. m of new shopping mall supply was completed nationwide in Q2 2022, with most new projects concentrated in tier 2 cities that were relatively unaffected by the pandemic. Nationwide net absorption stood at just 270,000 sq. m, a decline of 44% m-o-m and 87% y-o-y. The overall nationwide retail vacancy rate climbed by 0.4 pps to 7.8%. Ground floor shopping mall rents fell 0.5% q-o-q to RMB 19.4 per sq. m. per day.

Logistics

Logistics net absorption totalled 880,000 sq. m., an increase of 19% q-o-q and well above the 237,000 sq. m. registered at the onset of the pandemic in Q1 2020. The impact of COVID-19-related measures on the logistics sector continued to be limited, ensuring the nationwide logistics rental index edged up by 0.1% q-o-q. With national container throughput reaching new highs in June and express delivery volume rebounding swiftly in May, CBRE expects warehouse demand to pick up rapidly in Q3 2022.

Investment

Commercial real estate investment volume totalled RMB 50.1 billion in Q1 2022, representing a fall of 33% q-o-q and 7.8% y-o-y. Industrial and logistics remained the most sought-after asset class, with transaction volume rising to RMB 9.6 billion, a record-high.