Resetting the Office Supply-Demand Balance

This year marks the culmination of China’s 14th Five-Year Plan. Since 2020, the economy and commercial real estate market has witnessed high-quality development driven by the adoption of the “3060” goals; dual-cycle strategy; the launch of REITs; and technological innovations such as artificial intelligence. There have been numerous challenges, however, including the COVID-19 pandemic; trade conflict with the U.S.; aging population; and real estate deleveraging.

This CBRE report analyses the dynamics of China's commercial real estate market over the past five-years and explains how we expect the market to develop during the 15th Five-Year Plan period from 2026-2030.

Key Messages:

• While demand has undergone a cyclical decline, oversupply has been the most prominent factor affecting the office market in tier I cities.
• Office land supply decreased in the years after the 13th Five-Year Plan due to the combined impact of urban planning and industry deleveraging.
• Beijing authorities’ measures to control and reduce office land supply have proven to be highly effective and will significantly improve the supply-demand balance during the 15th Five-Year Plan period. In Shanghai, the supply of new office buildings in major business districts is expected to decline after 2028.
• The total floor area of office buildings aged 30 years or above will reach 10.2 million sq. m. from current 1.1 million sq. m. by the end of the 15th Five-Year Plan in 2029, making now the opportune moment for landlords to conduct building renovations and upgrades.
• Conversion of idle land and ageing buildings will be essential to limiting stock reduction; rebuilding the supply-demand balance; and transforming pure business districts into comprehensive dynamic areas. Establishing a vertical ecosystem will play a key role in helping landlords improve operational performance.