MARKET HIGHLIGHTS

Office 

New office supply in the 18 major cities tracked by CBRE fell by 52% y-o-y to 1.2 million sq. m. in Q2 2020. Nationwide net absorption turned positive over the quarter, rising to 350,000 sq. m. Overall vacancy rose by 0.5 pps to 23.9%, but tech, pharmaceutical and domestic financial companies are displaying demand for expansion.

 

Retail 

The suspension of construction and fit-out activity ensured just 220,000 sq. m. of new supply  came on stream in Q2, a decline of 81% y-o-y. Green shoots of recovery appeared in the luxury category . This quarter also saw a few new openings by venture capital-backed retailers. But store closures continued to be witnessed over the quarter, mainly in the F&B, entertainment and offline education trades. Nationwide vacancy increased by 1.4 pps to 7.7%

 

Logistics 

Leasing demand has recovered faster than expected, owing to the quick resumption of economic activity and the release of pent-up demand. Net absorption in H1 2020 reached 900,000 sq. m, an increase of 31% y-o-y, underpinned by a gain of 110% y-o-y in Q2 2020. However, vacancy rate edged up marginally to 15.9% due to a large supply of 1.6 million sq. m. recorded in Q2 2020.

 

Capital Market

Commercial real estate investment recorded RMB 39.6 billion in Q2 2020, a decline of 41% y-o-y. Apart from offices, investors retain a strong appetite for assets benefitting from structural change like logistics, business parks and data center.