Economy: CBRE expects China to register GDP growth of 8.2% in 2021, underpinned by the new “dual circulation” development strategy. Although the quantum of financial stimulus in 2021 will be reduced from 2020, there will be a continuation of stable monetary and fiscal policy. Challenges related to deglobalisation and relations with the U.S. remain, but the recent signing of the Regional Comprehensive Economic Partnership (RCEP) is set to play a key role in facilitating the “opening-up” policy.
Office: Nationwide office net absorption is forecasted to exceed 5 million sq. m. in 2021, a rise of 60% y-o-y. The TMT, finance and business services sectors will continue to dominate net absorption, aided by the “dual circulation” policy. This year’s total new supply will reach a historical high of 9.6 million sq. m., led by new stock in tier II cities. CBRE expects vacancy in core CBDs to decrease after peaking in 2021, with that in tier I cities set to fall below 10%, which should lead to steady rental growth.
Retail: China’s quick containment of the pandemic and swift rebound in consumption has instilled confidence in domestic and foreign brands. This is set to spur further investment in store network expansion this year. CBRE expects vacancy rates to stabilise in 2021, followed by a decline in 2022. As supply and demand rebalances, shopping mall ground floor rents are expected to rise slightly in 2021 and then recover to pre-pandemic levels in 2022. The rental recovery will be stronger in tier I cities compared to tier II locations.
Logistics: Demand is anticipated to recover faster than expected in 2021, supported by structural growth and a cyclical upturn. While 7 million sq. m. of new supply will come on stream, an increase of 30% y-o-y, net absorption is likely to increase by 30-50% y-o-y. This year will be an ideal period for new leases and expansion as landlords look to fill vacant space. There will be opportunities for occupiers to upgrade to Grade A warehouses to improve efficiency or sign longer leases at attractive rates.
Capital Markets: Investment market sentiment and purchasing activity staged a brisk recovery in H2 2020, and momentum has continued to accelerate in the early weeks of 2021. CBRE expects commercial real estate investment volume to increase by 15-20% y-o-y this year. Cross-border investment is expected to pick up, with China-related real estate fund-raising reaching US$17.9 billion in 2020, 23% above the five-year average.