APPD Market Report Article

Beijing

May 31, 2022

3.4%

RMB 1.72

Growth
Slowing

Higher value-added demand dominates market leasing activities

  • Short-term leasing activities decreased temporarily due to the Lunar New Year, a fall in demand for productive and online sales and a decline in demand from enterprises replenishing inventories. Meanwhile, long-term leasing activities remained active, mainly supported by logistics players coupled with cold-chain demand from e-commerce companies.
  • Landlords reported well-branded tenants likely to add value to projects dominated market transactions. For example, the upgrading of warehouse units into cold-chain facilities funded by the tenants themselves.

New projects postponed and vacancy rate remains low at 4.3%

  • No new supply entered the market in the quarter, primarily due to tight policy restrictions across Beijing. Individual projects adjusted their market positioning to align with policy guides after construction completion.
  • The vacancy rate has remained low, recording 4.3% in the quarter, a decrease of 0.3 ppts from the previous quarter, and, coupled with the postponement of new projects, large-area tenants are finding it difficult to source available space.

Gradual rent growth continues, supported by low vacancy

  • Overall, market rents remained stable at 0.7% q-o-q growth in 1Q22, and annual growth of 3.4% y-o-y. The postponement of new supply has helped keep moderate pressure on for gradual but slight rent increases.
  • The majority of projects continued to show stable rent growth, and nearly all fully occupied projects contributed to the conditions for rental increase across the market.

Outlook: Growth in market demand improving market steadiness

  • Some projects affected by the strict acceptance and tax contribution standards of the Beijing government may continue to be postponed. A potential supply peak this year is unlikely to put significant pressure on the vacancy rate, which is expected to rise slightly to 6% with the support of strong demand from logistics and e-commerce industries.
  • With more cold-chain storage construction and the further refinement of subsidy policies in the future, the city’s cold-chain facilities are being encouraged to upgrade.

Note: Beijing Logistics & Industrial refers to Beijing's prime non-bonded logistics market.

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