Worldview International

Worldview: China

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The Chinese economy continues to grow — but that expansion is simply not enough when compared to historical trends. China’s GDP grew 9.8 percent year over year through the first three quarters of 2021, but that figure dropped to just 4.9 percent when examining 3Q2021 on its own, according to a recent report by CBRE. This sluggish figure is partly a result of a booming 3Q2020 along with regional COVID-19 difficulties, environmental disasters, and ongoing power supply problems.

Still, while the Chinese economy looks to recapture its skyrocketing growth of the mid-2010s, commercial real estate appears to be bouncing back. Foreign investment rebounded to pre-pandemic levels in 3Q2021 — with international volume topping $2.3 billion, representing nearly a third of the total deal volume.

Unsurprisingly, China’s major metro areas remain the preferred destinations for all investment, with 74 percent of dollars reaching Shanghai, Beijing, Guangzhou, and Shenzhen. Shanghai alone attracted $3.45 billion in 3Q2021.

Looking toward 2022, the pipeline for new commercial real estate appears to be healthy. Industrial new supply should top 4.3 msf through 2021, with retail expecting 4 msf and office expecting 2.5 msf. Cap rates should be relatively stable, while the industrial sector could weather a slight contraction in cap rates thanks to growing demand and strong leasing volume, while rent remains relatively stable, growing 0.7 percent year-over-year in 3Q2021.

Infographic data courtesy of CBRE.

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