More than 2.0 million sq. m. of new office space was completed in Q1, an increase of 68% q-o-q. Slower economic growth continued to exert downward pressure on office leasing demand. Although net absorption increased by 7.5% q-o-q to 830,000 sq. m, this nevertheless marked a decline of 43.8% y-o-y.
Around 212,000 sq. m. of new retail space was completed in Q1 in the 17 major cities tracked by CBRE, a decline of 92% q-o-q, and marking the lowest quarterly total since 2005. However, annual new supply projected for this year remains considerable, at 7.8 million sq. m..
The demand from e-commerce is still stable but the growth is slowing down, while new e-commerce platforms are active. Surrender of large e-commerce in some cities have put pressure on the vacancy rate. Rents in first-tier and surrounding cities recorded steady growth.
Purchasing activity was led by foreign-funded institutions, a trend expected to gain further momentum. Foreign investors retained more than half the overall total acquisitions. Most investors are utilising opportunistic and value-add strategies.