2024 China Real Estate Market Outlook Mid-year Review
Welcome to CBRE’s 2024 China Real Estate Market Outlook Mid-Year Review; a report in which we look back at the predictions we made at the beginning of the year and evaluate what we got right, and what we got wrong.
- On the economic front, GDP grew by 5.0% y-o-y in H1 2024, underpinned by resilient exports and the rebound in manufacturing investment. However, domestic consumption remains weak, with retail sales edging up by 3.7% y-o-y in H1 2024 and growing by just 2.0% in June. CBRE has revised up its full-year 2024 China GDP forecast to 4.9%, insufficient domestic demand will pose a considerable headwind to growth momentum in the short term.
- Cost remains the overriding consideration for office occupier strategy in the short-term. CBRE has revised down its full-year nationwide office net absorption forecast by 25% from its January 2024 prediction as demand continues to rebound at a slower-than-expected pace. With the office market still favouring occupiers, landlords are expected to retain their flexible stance towards lease terms.
- CBRE’s logistics market forecast has proven largely accurate, with leasing activity continuing to be underpinned by cross-border e-commerce platforms. Except for Shenzhen, Dongguan and Huizhou, which are experiencing severe undersupply, CBRE has revised down its rental forecast for all major markets. However, the lower rents on offer should ensure these cities capture upgrading demand from 3PLs, manufacturing firms and retailers.
- In the retail space, CBRE has revised down its full-year 2024 net absorption forecast to a level similar to that achieved in 2023. The downward revision is due to the recent slowdown in sales growth for major brands; the cooling of F&B expansion; and growing competition from specialty properties.
- Considering the weakness of the leasing market and investors' cautious approach towards ongoing asset revaluation, CBRE has revised down its full-year 2024 investment volume forecast from low y-o-y growth of 0-5% to a decrease of 5-10%. Seeking a wider safety margin to cushion risk will remain a popular strategy among investors.
