China Figures Q4 2022

February 23, 2023

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New office supply in the 18 major cities tracked by CBRE reached 1.55 million sq. m. in Q4 2022. Measures to contain the spread of COVID-19 and the resulting economic slowdown combined to ensure office net absorption in the 18 major cities fell by 12% q-o-q to 510,000 sq. m. Weak demand and industrial consolidation pushed up nationwide office vacancy by 0.6 pps q-o-q to 22.9% at the end of 2022. Nationwide office rents continued to decline, falling by 0.7% q-o-q.


Approximately 2.6 million sq. m of new shopping mall supply was completed nationwide in Q4 2022. Nationwide net absorption was 1.1 million sq. m., an increase of 37% q-o-q but down 43% from the same period of 2020. Overall nationwide retail vacancy climbed to 8.9% in Q4 2022. Ground floor shopping mall rents fell 0.7% q-o-q to RMB 18.7 per sq. m. per day, representing declines of 0.7% q-o-q and 1.3% y-o-y.


Business activity continued to be heavily impacted by the pandemic as evidenced by weak PMIs, export growth and parcel delivery volume. Warehouse demand contracted by 44% y-o-y and 19% q-o-q to 1.4 million sq. m. Short-term leases from year-end promotions led to a higher volume of early surrenders, while several cities saw lease withdrawals by 3PLs and e-commerce platforms. New stock increased 30% q-o-q to 3.2 million sq. m. National vacancy rose to 18.2% in Q4 2022, while rents contracted by -0.4% q-o-q.


Commercial real estate investment volume totalled RMB 63.9 billion in Q4 2022, an increase of 32% q-o-q but a decline of 15% y-o-y. Full-year transaction volume reached RMB 219 billion, a drop of 22% y-o-y but nevertheless an improvement over 2020. Activity involving “new economy” assets cooled slightly over the quarter.