Beijing, 15 October 2020 – “There was definitely a much stronger sense that things were finally getting back to normal in Beijing, especially after the city weathered a resurgence of Covid-19 cases in the previous quarter – but recovery from the virus in the slow economy continued to be challenging,” said Julien Zhang, Managing Director for JLL North China. In the office market, rents dropped further, although the pace of deceleration slowed following several straight quarters of declines. Investors remained active, with the popularity of data centres highlighted by a number of deals in the quarter. Local authorities encouraged offline retail spending, in a bid to help drive a rebound in the hard-hit market. The industrial market saw slight growth resume, after rents held flat for half a year. High-end residential sales soared, supported by the huge influx of new supply, after many buyers held off from making purchases in the first six months of the year. 

Investment momentum was stable, with foreign investors continuing to show strong confidence in the market in spite of these challenging times. SDP formed a joint venture to lead the purchase of U-Show Plaza by the Second Ring Road. The deal demonstrated that a high level of interest in the market continues to come from foreign investors despite the current downturn.

The rising popularity of data centres as an alternative investment to office buildings was also highlighted in the quarter, after several of such assets were purchased in Beijing. Among at least seven data centres transacted in the quarter was the site of a future data centre project in Tongzhou, purchased through a joint venture between GDS and CITIC; also in the quarter, GDS closed a portfolio deal for another three data centres in Shunyi. “As we entered the second half of the year, investors continued to chase opportunities and pursue long-term strategies in Beijing, remaining confident in the future of the market,” said Michael Wang, Head of Capital Markets for JLL North China. “This should see more deals closed in the final months of the year, but of course, given all of the disruptions from Covid-19, the 2020 sales volume is unlikely to match the high from 2019. Still, considering the year that we have had, the year-end level for Beijing is expected to hold up well, especially relative to other competing markets.”