2023 China Market Outlook

February 16, 2023

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Despite weaker external demand resulting from slower growth in Europe and the U.S., a recovery in domestic consumption along with expansionary fiscal and monetary policy will help China's GDP growth rebound to 4.9% in 2023.



Office demand is forecasted to stabilise and recover, with net absorption expected to reach 5 million sq. m. Demand will be led by the finance, tech and manufacturing sectors. New supply is forecasted to reach the pre-pandemic five-year average, while the rental decline will lose momentum.



The relaxation of pandemic-related control measures, coupled with the economic recovery and measures to boost consumption, will help consumer goods sales log solid growth in 2023. Strong leasing demand, particularly for retail units in prime malls and locations, will offset the impact of substantial new supply.



The domestic consumption rebound will support the recovery of logistics demand, with warehouse net absorption in China’s major cities projected to increase by 30% y-o-y to 6.4 million sq. m. in 2023. Despite the emergence of live-streaming e-commerce as a new demand driver, the addition of new supply deferred from 2022 will push up vacancy to a five-year high.



Low interest rates will provide a sound foundation for a rebound in the capital markets this year, while the active fund-raising environment will also provide liquidity for commercial real estate investment. CBRE expects commercial real estate investment volume to increase by 15%-20% y-o-y to RMB 250 billion.