In a recent report by property consultancy JLL, it was highlighted that rents in prime retail locations in Beijing have been on the rise, reflecting a 1.3% increase in the first quarter of this year compared to the previous quarter. The demand for these spaces has been primarily driven by new food and beverage brands, niche foreign fashion offerings, and electric car companies. Despite the overall slump in the real estate market, the increase in demand is expected to persist throughout the year, boosting rents that still remain below pre-pandemic levels.
Commercial real estate, including office buildings and shopping malls, only makes up a fraction of China’s overall property market. However, sales of offices and commercial-use properties have shown a positive trend, with a 15% and 17% increase in floor area sales in January and February compared to the previous year. In contrast, residential property sales have dropped by nearly 25% during the same period, indicating a shift in demand dynamics. This trend suggests a potential opportunity for buyers looking to invest in China’s commercial real estate market.
According to Joe Kwan, a managing partner at Raffles Family Office, China’s commercial real estate prices are approaching an attractive buying point. Kwan expressed optimism about the market’s long-term prospects, citing factors such as population size, demographics, and consumption numbers as drivers for future growth. The firm is eyeing opportunities to invest in commercial properties in Shanghai and Beijing, expecting to start making deals in the second half of this year and continue through the next.
Swire Properties, a Hong Kong-based company, has announced plans to double its gross floor area in mainland China by 2032. The company, known for its high-end shopping complexes under the “Taikoo Li” brand, has seen improvements in foot traffic and retail sales in mainland China since pandemic-related restrictions were lifted. Looking ahead, Swire Properties anticipates 2024 to be a “year of stabilization” in retail demand, indicating a positive outlook for further expansion and growth in the commercial property sector.
While China’s overall real estate market may be experiencing a slump, the commercial property sector is showing signs of recovery and increased demand. With rents in prime retail locations on the rise and positive trends in sales of commercial properties, there are opportunities for investors to capitalize on the market dynamics. As companies like Swire Properties look to expand their presence in mainland China and investors like Joe Kwan anticipate favorable buying opportunities, the future of China’s commercial property sector appears promising despite current challenges.