BUILDING LANDMARKS, CHARTING GROWTH
53
Annual Report 2015
Beijing
In 2015, Beijing’s office sector remained strong, with
its average rent for Grade ‘A’ offices remaining the
highest across China
12
. By end-2015, average rent rose
by 2.3% and higher occupancy rates were achieved.
Demand in Beijing’s retail market remained strong with
the entrance of new international and domestic retailers,
coupled with existing retailers expanding their footprints.
With the average vacancy rate edging up in 2015, the
overall rent decreased on a YOY basis. However, rent in
mature properties continued to grow steadily, especially
for professionally-managed assets located in prime
locations. The residential market also continued to warm
up as several stimulus policies came into effect, causing
an increase in purchaser demand.
The property market in the Tongzhou District experienced a
significant boom after the announcement of the relocation
of Beijing Municipal Government to Tongzhou and the
planned opening of Universal Studios in the district in 2019.
By November 2015, the average price of newly released
residential units in Tongzhou had increased 13% on a
YOY basis
13
. The prices for residential units and commercial
properties in Tongzhou are expected to increase steadily,
given the supportive policies and the improvements in
infrastructure and amenities in the district.
Xi’an
14
In 2015, the vacancy rate for Grade ‘A’ offices in Xi’an
registered a historic low as no new supply was released
into the market. The rent for Grade ‘A’ offices in mature
areas increased steadily.
For the retail market, tenant sentiment remained positive
with the fast fashion, F&B, maternal, and entertainment
sectors continuing their expansion in the prime retail
areas of the city, despite increasing competition from
online retailers. In prime locations, retail rent is expected
to register a slight increase in the coming year.
Xi’an’s residential market has been facing challenges due
to oversupply in recent years. However, with the Chinese
government announcing several supportive policies
in 2015, such as a reduction in loan interest rates, the
residential market is expected to warm up in 2016.
Shenyang
15
Shenyang remains the city of choice for companieswishing
to establish corporate headquarters in Northeast China,
contributing to the continued growth of Shenyang’s office
market. Shenyang’s Grade ‘A’ office supply is expected
to increase over the next two years. Such increase in
supply is expected to be taken up by higher demand
from companies in the finance and high-tech industries,
as well as companies relocating from Dalian in search of
lower rentals.
Shenyang’s retail market continues to be challenging
due to physical over-supply. Decreasing demand for
luxury goods and heightened competition from online
retailers have also created additional pressures on the
retail market. In spite of the difficult market conditions,
retail destinations which offer an attractive tenant mix,
especially in the F&B and kids’ sectors, are still expected
to perform well.
Foshan
16
In 2015, Foshan continued to experience rapid growth
in the retail property market with almost 3 million sq ft of
new retail space released into the market. As such, overall
vacancy rates are expected to increase in the short term.
However, the outlook for the retail property market remains
positive in the medium term. Average rent is expected
to grow due to improvements in Foshan’s transport
infrastructure, especially with the construction of new
subway lines which will facilitate customer flow and link
emerging retail catchment areas with the city centre.
12 Source: Colliers International: North China Property Market 2015 Review and 2016 Outlook.
13 Source: NetEase Finance article dated November 2015. (
)
14 Source: JLL: Xi’an Property Market Review 2015.
15 Source: JLL: Shenyang City Profile (January 2016).
16 Source: Colliers International: Valuation Report of Perennial Jihua Mall (January 2016).
