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Beijing prime retail market is seeing landlords frequently adjust their tenant mix, as customers are seeking out more experience based and high-quality retailers.

With no new supply in Q1 2019, the overall vacancy rate edged up…

Beijing prime retail market is seeing landlords frequently adjust their tenant mix, as customers are seeking out more experience based and high-quality retailers.

With no new supply in Q1 2019, the overall vacancy rate edged up 0.2 pps QOQ to 2.3%, while the average ground floor fixed rent in Beijing’s mid to high-end shopping centres remained steady at RMB828.1 per sq metre per month, and we predict the stable trend will persist in 2019.

In addition to a revised tenant mix, we recommend landlords consider reconfiguring internal spaces, such as creating more rental spaces, or relocating tenants, to improve rental performance.

Robust consumption demand and flourishing online-to-offline (O2O) retailing, together with data-driven technologies, are reshaping the landscape of China’s logistics industry. The emerging front distribution centres (FDCs) and mini-FDCs, including cold chains, are placed much closer to customers by retailers seeking to boost efficient fulfilment of orders.

Sentiment continues to signal soft landing despite heightened uncertainty

• Respondents highlighting economic uncertainty as a catalyst for more cautious outlook, but still broadly see an expansion in rents and capital values over the next twelve months.
• Trade concerns weigh on markets in East Asia, though some Southeast Asian markets such as Vietnam seen as beneficiaries.

Data from the Asia Pacific Commercial Property Monitor suggests that several regional markets are entering a period of slower growth. The pickup…

Sentiment continues to signal soft landing despite heightened uncertainty

• Respondents highlighting economic uncertainty as a catalyst for more cautious outlook, but still broadly see an expansion in rents and capital values over the next twelve months.
• Trade concerns weigh on markets in East Asia, though some Southeast Asian markets such as Vietnam seen as beneficiaries.

Data from the Asia Pacific Commercial Property Monitor suggests that several regional markets are entering a period of slower growth. The pickup in momentum experienced during Q1 appears to have been short-lived, as sentiment is generally subdued in Q2 amid mounting downside economic risks. However, markets continue to be positioned for a soft landing, as rents and capital values are still expected to increase over the coming year (Chart 2).

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In Q1 2019, we saw net absorption pick up slightly QOQ, although it still declined 82% YOY due to a subdued economy.

During Q1 2019, market demand dropped 40% QOQ in West China. Both Chengdu and Chongqing will probably face the challenge of growing vacancy rates in 2019.