New supply in the 18 major China cities tracked by CBRE fell by 52% y-o-y to 1.1 million sq. m. in Q1 2020. Net absorption fell into negative territory at -43,000 sq. m. as business activity came to a near standstill and occupiers postponed leasing decisions. Overall vacancy rose to 23.4%. However, leasing activity picked up in March as the pandemic was gradually contained and people returned to work.



New supply in the 18 major cities tracked by CBRE fell to 160,000 sq. m due to the suspension of construction and fit-out activity. However, sales revenue has improved since March, and by the end of the month 90% of shopping malls had reopened and footfall had recovered to 50% of pre-outbreak levels. With several shopping malls opting to conduct renovation works during the shutdown period, nationwide vacancy increased 0.6 pps to 6.6%.



Short-term volatility increases as leasing activities were disrupted in the second half of Q1 due to national lockdown. National net absorption turned negative at 129K sq. m in Q1 2020. However, with China ahead of the global pandemic curve, logistics activities have begun to normalize and warehouse demand poised to rebound in Q2 2020.


Capital Market

Commercial real estate investment volume stood at RMB 49.8 billion in Q1 2020, a decline of 33% y-o-y. The year began on a solid footing but activity faded due to the nationwide shutdown. Ample liquidity and lower interest rates are likely to drive a strong rebound.