China’s retail property markets to benefit from consumption recovery as Beijing tops fourth quarter performance

Retail property markets in China’s first-tier cities showed signs of improvement in the last quarter of 2023, and experts are projecting sustained momentum in 2024, underpinned by a gradual increase in retail sales as sentiment begins to turn.

Beijing’s retail property market outperformed as commercial real estate markets steadied across the country. China’s capital saw a drop in the average vacancy rate in the last quarter of 2023 to its lowest level since the second quarter of 2022, while rental rates increased, according to a report released on January 4 by Jones Lang LaSalle (JLL), a real estate investment management firm.

This was fuelled in part by improved consumption, the report said, and the growth momentum is likely to continue this year. “As the positive momentum of economic recovery continues to consolidate, Beijing’s commercial real estate market is expected to be led by a gradual improvement in demand in the overall recovery process,” said Rayman Zhang, managing director at JLL.

Retail commercial real estate refers to properties occupied by retailers, branded item stores, grocery stores and shopping malls.

In Shanghai, China’s biggest and most populous city, demand for leasing also grew as retailers, both domestic and overseas, rushed to expand their stores in the hope of tapping pent-up consumption demand.

However, the supply of retail projects also increased. The fourth quarter of 2023 saw eight new projects covering 587,000 square metres enter the Shanghai market, bringing the total stock in the city to around 23 million square metres.