China MarketView Q2 2021

Commercial property continue recovering while demand nears record quarterly high

OFFICE

In Q2 2021, Robust leasing demand pushed up nationwide net absorption to 2.09 million sq. m., slightly below the record quarterly high. Tier 1 cities account for over 50% of overall net absorption, other tech-driven Tier 2 cities such as Chengdu and Hangzhou, registered 100,000 sq. m. to 200,000 sq. m. of demand. Overall vacancy rate has been pushed down 0.6 ppts to 22.2% by robust demand, nationwide office rents fell by 0.2% q-o-q.

RETAIL

Domestic consumption continues to recover strongly, new shopping mall supply and net absorption in 18 major cities tracked by CBRE totalled 2.14 million sq. m.  and 2.12 million sq.m. in Q2 2021, the strongest quarterly figure since the onset of the COVID-19 pandemic. Overall vacancy fell 0.3ppts from the previous quarter, reaching 7.7%. Ground floor shopping mall rents continued to rise, registering growth of 0.6% y-o-y.

LOGISTICS

New logistics supply totalled 1.17 million sq. m. in Q2 2021, with total retail sales growing to 21.2 trillion in H1 2021. up 51% q-o-q. Beijing, Shanghai and nearby logistics hubs accounted for 40% of new stock added this quarter, which led to net absorption in these markets rising by 100,000 sq. m. as new supply encouraged the release of pent-up demand.

INVESTMENT

Commercial real estate investment volume reached RMB 96.6 billion in Q2 2021, an increase of 74.1% q-o-q and marking the highest quarterly transaction volume since 2019. H1 2021 investment volume stood at RMB 152.1 billion, a rise of 31% from H1 2020 and a figure well above the level of the same period in 2019.