Beijing Real Estate Market in 2021 & 2022 Outlook
In 2021, the Beijing commercial real estate market continued to recover from the pandemic, with the Grade A office leading the trend.
In the Beijing commercial real estate market, recovery momentum in 2021 continued to strengthen from 2020. The city kept fostering new industries and sources of demand to build a more resilient economy.
Here are the answers to some of the commonly asked questions from our clients about Beijing in 2021 and the outlook for 2022.
How has Beijing's commercial real estate market fared with recovery from Covid-19?
Since the start of 2021, demand for commercial real estate in Beijing has continued to pick up, with the Grade A office market leading the recovery trend. The annual net absorption figure exceeded a remarkable 1 million sqm, marking its highest value since 2011 and significantly boosting market confidence.
Nonetheless, prime office and retail rents continued to decline as the weight of the pandemic remained. The pace of falling rents, however, increasingly slowed throughout the year. With a growing number of landlords gradually raising their expectations on rent, there will be fewer openings in the market for tenants to expand and relocate at lower rates.
How significant is the Beijing Stock Exchange to SMEs and the commercial real estate market?
The newly opened Beijing Stock Exchange is positioned to help small and medium-sized enterprises (SMEs), broadening their finance options. Since opening in November 2021, the Beijing Stock Exchange has already seen 81 SMEs listed.
Beijing boasts 264 of the current 4,762 state-level technologically advanced ‘little giant’ SMEs, the largest number among cities nationwide, according to the Ministry of Industry and Information Technology. Thus, in terms of potential for future listings on the Beijing Stock Exchange, as well as further development of a multi-level capital market with more diversified sources of office demand, these companies present the city with abundant opportunities.
How has the new China (Beijing) Free Trade Zone stimulated economic activity?
The China (Beijing) Free Trade Zone was established to advance technological innovations and further open the Chinese market to investment from multinational corporations. Since set up in September 2020, the zone has proven most attractive to foreign firms, drawing nearly 500 offshore institutions to adopt a new set-up in Beijing.
As more institutions look to expand their businesses, we expect the FTZ to continue to provide positive pull factors in the market, further enhancing Beijing’s importance as an international financial centre.
Beyond recovery – innovation targeted, rising from pandemic
During the 14th Five-Year Plan, Beijing aims to allocate more resources to primary research areas to strengthen the development of China’s ‘stuck neck’ technologies. These are technologies for which the country has to rely on others, including high-end chips, essential electronic components, and key manufacturing equipment.
We believe that strong efforts in 2022 will focus more on the theme of ‘innovation’. High-technology and innovation momentum is likely to be prioritised as Beijing forges on, particularly as the city explores new opportunities and breaks new ground amid crises and change.