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China Commercial Real Estate Market Trends 2023

Mandy Qian • 20/02/2023
  • Retail industry recovery expected on tourism revival
  • Cold chain and life sciences real estate sectors to present major business opportunities
  • Shanghai office market leasing demand to sustain; Beijing, Guangzhou, Shenzhen office market rents expected to pick up in 2024
  • Commercial real estate investment market set for bumper transaction year
A panel of senior Cushman & Wakefield subject matter experts shared an in-depth discussion of China’s key commercial real estate market trends for 2023 at an online seminar held on February 9, 2023.
Opening with the retail industry real estate market, Duke Zhen, Head of Retail Services, China, Cushman & Wakefield, said, “This year we can expect domestic tourism consumption to be particularly hot, helping to drive a new boom in tourism real estate sales activity. And with the gradual reopening of international tourism, we believe that tourism consumption, and in turn the hotel industry and consumer services industry, will be able to welcome in a renewed period of long-term growth.
“In the traditional retail industry, I think retailers and developers will focus on two ends of consumer needs this year. The first is trying to aim at the ‘top’ of the market. Here, enterprises who strive to be industry leaders will need to develop and maintain strength through applying the best resources to operations and marketing, nurturing consumers, influencing the market, and introducing new brands. And secondly, at the ‘bottom,’ successful players must perform well in the basic market, to capture the large volume of essential consumption and rigid consumption present within the market. We should note as well that China’s 14th Five-Year Plan highlights a need to focus on and support the 15-minute community life cycle strategy, and industries related to people’s livelihoods. Hence, it will be very important for retailers and developers to perform well at either end of the market this year.”
In terms of industrial real estate, Tony Su, Head of Industrial & Logistics Property Services, Cushman & Wakefield, observed, "The cold chain logistics facility product is rapidly evolving into a standardized offering. The biggest opportunity will be for those who can first establish the industry standards for high-quality cold chain facilities in mainland China. 
“Elsewhere, life sciences real estate, including biomedical facilities and life science and technology factories, has drawn increasing interest internationally in the past two or three years, and the sector is now highly sought after by capital in China. However, life sciences real estate is a relatively narrow industry, which involves many technical issues, such as whether the corresponding environmental impact assessment can be obtained, whether the local government supports such an industry, and whether there is a qualified operator to undertake the project, in order to support future rental growth. 
“A very high degree of professionalism is required to execute well in life sciences real estate projects, and operators with sufficient experience are required. One channel is to acquire the IP of start-ups or early-growth life medicine companies, and as these firms grow and the area required for scientific research continues to expand, investment funds will follow. This can be a great opportunity to grow together,” added Su. 
Regarding the office property market, Jonathan Wei, Head of Project and Occupier Services, China, Cushman & Wakefield, stated, “Shanghai enjoys the strongest office building leasing demand among the Tier 1 cities. In the past three years, Shanghai’s office market net absorption has maintained a leading position. While a number of cities in China have seen negative net absorption in recent times, notably in the last quarter of 2022, demand in Shanghai has stayed firm, due in part to international firms remaining active in the market, accounting for more than half of the office leased transaction area in the last quarter."
In terms of office market rental levels, Catherine Chen, Head of Capital Markets Research, Asia Pacific, Cushman & Wakefield, added, “When compared with other city office markets, Shanghai’s average office rental level has shown relatively high resilience over the past two years. In contrast, Beijing, Guangzhou and Shenzhen have been more impacted by new supply entering the market, and average rents in these city markets are expected to continue to undergo adjustment this year, before an expected pick-up next year."
Finally, in the en-bloc investment transaction market, Stephen Qiu, Managing Director, Co-Head of Capital Markets, Mainland China, Cushman & Wakefield, commented, “We expect that with China's anticipated full reopening this year, both domestic and foreign capital will return to the China market, and 2023 could be a bumper year for investment transaction volume. In the month of January alone, nearly RMB10 billion in major transactions were concluded in Shanghai, and the full-year turnover in Shanghai may reach RMB100 billion this year. En-bloc transaction volume in the entire mainland China market for 2023 is expected to be in the RMB250 billion to RMB280 billion range.
“Among investment categories, we expect institutional investors to continue to pay attention to industrial real estate and logistics portfolio deals. From a regional perspective, we expect to see investment become more decentralized in first-tier cities. In Shanghai, for example, previously the majority of transactions have been in core areas such as Lujiazui, Jing’an and Xujiahui. Now, many decentralized markets including Yangpu, Zhangjiang, and even Kangqiao are attracting growing attention from investors.
“At the same time, development of the Greater Bay Area is guided and supported by national policies, including for retail and office properties in Shenzhen and Guangzhou, and we expect to see increased investment activities in these markets this year,” added Qiu. 
Please click here to download the full Cushman & Wakefield report The Forecast Report: Greater China Commercial Real Estate — What to Watch in 2023
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms in the world, with approximately 50,000 employees in over 400 offices and 60 countries. In Greater China, a network of 23 offices serves local markets across the region, earning recognition and winning multiple awards for industry-leading performance. In 2021, the firm had revenue of $9.4 billion across core services including valuation, consulting, project & development services, capital markets, project & occupier services, industrial & logistics, retail and others. To learn more, visit or follow @CushWake on Twitter. 

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