Covid-19 has had a serious and prolonged impact on global markets, and recovery from the pandemic is proving to be long and painful – not just for Beijing, but also elsewhere in the world.
Yet, despite new cases of Covid-19 in Beijing and other pockets of the country, the situation in mainland China is widely considered to be under control, especially compared to many other places across the globe. This has strengthened the idea that a recovery from the virus in the nation’s capital is more than just a faint hope on the horizon – and specifically, not far off for the city’s commerical real estate market. In fact, strong economic and market fundamentals suggest that downward pressure from falling rents, rising vacancies, and early terminations will be overcome within the near to mid-term future.
Although it will not be easy for most in the interim – no shortage of opportunities exist in the Beijing commerical real estate market. There is growing demand from rising sectors, such as the healthcare and insurance industries. In 2020, the healthcare sector grew quickly to account for around 15% of new Grade A office leasing demand, and this proportion is expected to continue growing in 2021. We also see the favourable investment environment – with more tradeable assets and greater room for neogiation on prices – leading to potentially rewarding possibilities. Then there is the emergence of new landscapes, all of which are supported by policy and further prospects from historic new trade agreements, particularly the Regional Comprehensive Economic Partnership, announced in late 2020 – shortly after that for Beijing’s new Free Trade Zone. Such milestone intiatives are predicted to drive new sources of demand. Likewise, as we enter the next decade, we are certain to see new areas of commercial real estate unfolding after years of planning. The first among these locations will be Lize, slated to be the city’s next financial business district in an urban area to compete with existing office precincts. Additionally, upcoming bright spots, namely the opening of Universal Studios Beijing in 2021 and the 2022 Winter Olympics, are set to help relieve the market of various stresspoints in the foreseeable future. As overall conditions continue to improve, we can expect to see a gradual recovery, with market growth in at least some areas returning towards the end of 2022 or starting up again in 2023.
Moreover, with Beijing serving as the capital of China — the leading engine for global recovery and future growth — the city’s commercial real estate market is well-placed to play a major role in turning the current situation around as it underpins forthcoming activity, making it more irreplaceable than ever. For all of this and more, download our latest report, as we share our key words and phrases for 2020, and the outlook for 2021.
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