JLL Beijing’s 2025 H1 Property Market Review

Beijing: 10 July, 2025 – In the first half of 2025, positive policies worked together to gradually release the potential demand of Beijing’s commercial real estate market. “In the office market, TMT companies’ leasing performance was comparatively strong, which helped to enhance market liquidity,” said Rayman Zhang, Managing Director for North China, JLL. “The Beijing commercial real estate market is in a downturn period, with overall rental performance still facing challenges. However, the improvement in liquidity will play a pivotal role in boosting market confidence and solidifying the foundation for recovery.”

The Grade A office market was relatively stable in the second quarter of 2025, with a slight decline in overall demand and a narrowing of rental reductions. In the investment market, domestic buyers remained enthusiastic about retail and office assets in the Beijing market. The prime retail market reached a two-year quarterly supply peak, with niche brands focusing on emotional value driving new consumption trends. In the industrial market, along with extensive cost-efficient projects entering the Pinggu submarket, it entered a period of active tenant relocation, and tenants’ relocation and upgrade activities appeared to be on an upward trend during the quarter. The upscale hotel market came under sustained pressure in the first half of 2025, with overall performance declining compared to the same period last year. Both supply and transaction volume in the high-end residential market increased significantly, and recently loosened credit policy is expected to see this trend continue.

The number of site visits declines compared to the beginning of the year. As incremental leasing demand remained limited in the current market, landlords focused on retaining high-quality tenants within their buildings. Many landlords offered more flexible rental discounts and extended rent-free periods for renewal leases. In addition, some landlords encouraged tenants to stay by including incentives such as complimentary parking spaces in renewal agreements. Technology enterprises showed notable performance in 2025 Q2, which was mainly reflected in the consolidation and expansion of TMT giants in Zhongguancun. Meanwhile, small and medium-sized domestic law firms continued to be a stable source of leasing demand in the eastern submarkets, though leasing momentum slowed compared with previous periods.

Overall vacancy rate remains stable. Expansion demand from large TMT companies contributed to 70% of net absorption this quarter, while other incremental demand from the rest of the market remained limited. The overall Grade A vacancy rate decreased by 0.4 percentage points q-o-q to 12.0% in 2025 Q2, primarily driven by large-scale leasing transactions in the Olympics Area and Lize. However, it is noteworthy that the majority of non-renewal leasing deals across the city originated from relocations within buildings, which had minimal impact on reducing overall vacant space.

Rent decline narrows. Overall rents continued to follow a downward path from the preceding quarters, falling by 4.0% q-o-q and 16.8% y-o-y. In an environment of considerable rent declines in most submarkets of the city, the Zhongguancun leasing market was supported by tenants from the technology sector, with the rents of some high-occupancy projects arresting their falls and stabilising. “The forecast for an annual rental decline of 14.8% in 2025 remains unchanged,” said Michael Zhang, Senior Director of Office Leasing Advisory for JLL Beijing. “This projected low-rent phase is likely to encourage tenants to upgrade and relocate to superior office spaces at more favourable rates. Additionally, with increasingly flexible renewal terms, competition among landlords to attract relocating tenants is expected to heat up.”

In response to cyclical market adjustments, some investors optimise their asset structures. In 2025 Q2, Sino-Ocean Group sold a 23% stake in its Sino-Ocean International Centre Phase II commercial complex to Rizhao Steel for RMB 322 million. The funding arrangement was detailed for this transaction as RMB 235 million being transferred to the project company, and the remaining funds paid by Rizhao Steel to Sino-Ocean Group to alleviate funding pressure. After the completion of this transaction, Rizhao Steel’s ownership of Sino-Ocean International Centre Phase II increased from 65% to 88%, further strengthening its control over the project.

In 2025 Q2, Beijing investment transaction volume was mainly contributed by retail and office assets, with domestic buyers being the main participants. It was noteworthy that PAG, together with Tencent, JD.com, and other enterprises established a RMB 50 billion fund to acquire an asset package of 48 Wanda Plaza shopping malls sold by Wanda Group, with Wanda retaining the operating rights. Involved projects in Beijing included Beijing Tongzhou and Shijingshan Wanda Plazas. In terms of office asset transactions, Shanghai New Huangpu Industrial Group acquired Silicon Valley SOHO Building 2 in Changping District —with a GFA of ​​21,759 sqm — for RMB 215 million. Another transaction recorded was domestic game company Feiyu Technology’s acquisition of 1,770 sqm of office space in Jianwai SOHO for RMB 50.3 million. According to Jessie Xu, Operations Director of China and Head of Capital Markets North China, JLL, “the value depression effect of high-quality assets in core areas and the continued release of corporate self-use demand drove the prices of core assets into a rational value investment range, which is expected to optimise the market supply and demand structure in the long run.”

^{Note: Prime Retail refers to the Urban market.}

Emerging brands targeting niche segments break through with focused strategies and defy market headwinds. Although Beijing’s total retail sales growth continued to taper, impacting the broader retail property market, pioneering brands are revitalizing the market. By creating specialized products and catering personalized services that satisfy consumers’ emotional needs, retailers have found ways to address market challenges. In the first half of the year, against the backdrop of a general slowdown in the luxury market, Super Zhuanzhuan unveiled its 3,000 sqm secondhand luxury warehouse. Meanwhile, fashion brands like Giorgio Armani and Longchamp broadened their reach into the coffee sector, and cycling brands leveraged community engagement to drive high foot traffic and spending propensity. Similarly, Laopu Gold became trendy among younger customers and viral blind-box toy brands maintained their popularity, all signaling emerging consumption trends.

Over half of this year’s new supply debuts this quarter. Approximately 360,000 sqm of new retail space entered the urban market in Q2, accounting for roughly 60% of expected annual new supply. China Overseas’ Daji Xiang entered the market at near-full occupancy, introducing a courtyard layout within the Second Ring Road retail landscape. Zhongguancun Art Park West Zone achieved 100% occupancy at launch with an F&B-orientated tenant mix, while two JD Mall projects specializing in home goods and consumer electronics opened at 90% occupancy. Despite the successful premiere of these projects, the concentrated new supply witnessed this quarter exerted upward pressure on vacancy rates, contributing to urban vacancy rates rising q-o-q to 6.5%.

Performance divergence widens across projects as rental levels stagnate. As of May, data from the Beijing Municipal Bureau of Statistics showed the total retail sales of consumer goods reached 560.72 billion yuan, down by 3.1% year on year. The challenging consumption environment contributed to a 1.9% q-o-q drop in effective rents in the urban market this quarter, with the y-o-y decline widening to 4.4%. “Prime projects in core markets actively optimized tenant mixes to enhance competitiveness, leading to cautious expectations for rental growth. Performance gaps among suburban projects will further widen due to homogeneous competition,” said Ji Ming, Research Director for JLL North China. “We anticipate overall rents will remain on a downward trajectory for the remainder of the year.”

The industrial market enters a high supply cycle. In the second quarter, an industrial project located in the Pinggu submarket entered the market, marking the third new project in the first half of the year located in Pinggu, and bringing the 1H total to 531,000 sqm of industrial space. Given that several large-scale projects are still scheduled to commence operations in the second half of the year, 2025 is expected to mark the beginning of a high-supply cycle for Beijing’s industrial market.

Relocations for cost savings drive leasing demand, and Pinggu becomes more attractive. In the first half of the year, sluggish retail consumption and the rising cost-cutting demands of enterprises have greatly restrained demand for new and expanded leasing in the industrial market, with relocations being the primary source of leasing activity. Affected by competition from Beijing’s Pinggu submarket and many new, highly cost-effective projects in Langfang, several E-commerce, F&B, and daily grocery products companies, and their logistics service providers previously located in the mature market near Beijing gradually relocated themselves to Pinggu and Langfang where rental costs were lower, resulting in no significant growth in Beijing’s net absorption. Surplus supply and low net absorption increased the q-o-q vacancy rate by 4.4% to 29.6%. The vacancy rate of traditional mature industrial submarkets like Shunyi, Daxing, and Tongzhou also appeared to be on the increase, forcing owners to decrease rents to enhance leasing competitiveness. The combination of strong competition, and high market supply resulted in downward rental pressure, causing average net efficient rents of industrial market to drop 5.9%.

In the long-term, logistics demand in Beijing is expected to see a recovery. It is expected that in the second half of 2025, as rents fall, the cost-effectiveness of Beijing’s industrial projects will continue to improve, which is expected to stimulate the release of warehousing upgrade needs. Ji Ming said, “Beijing’s high-spec warehouse projects, led by the Pinggu submarket, can compete directly with projects in Langfang and Tianjin which previously undertook a large portion of the warehousing needs of commercial and retail enterprises targeting the Beijing consumer market at low rents. In the future, rent reductions in Beijing industrial projects are expected to drive some tenants to return to Beijing. In the long-term, logistics demand in Beijing is expected to see a recovery.”

In the first half of 2025, Beijing’s upscale hotel market came under sustained pressure, with overall performance declining compared to the same period last year. A combination of macroeconomic challenges and industry-specific factors placed strain on key operating metrics, including room revenue and Average Daily Rate (ADR). By the end of May, the ADR across the Beijing’s upscale hotels was broadly in line with the previous year, despite a year-on-year decrease of over 5%, and Revenue per Available Room (RevPAR) dropped by more than 4%. That said, a number of properties succeeded in countering the trend, achieving growth in RevPAR through differentiated pricing strategies and diversified sales channels.

On the demand side, consumer spending among travellers has become increasingly rational, while corporate travel budgets continue to tighten, adding complexity to the hotel’s channel management and demand forecasting. Within this context, intense price competition in the two traditional segments — business and group travel — has placed further downward pressure on ADR. Sectors such as defence and diplomatic delegations, driven by policy initiatives and specific projects, have showed an upward trend in their ADR contributions. Leisure travellers remain the key pillar supporting hotel pricing. The proportion of international travellers has continued to rise, with notable demand from source markets such as the United States and Russia. In particular, the remarkable surge in the number of Southeast Asian tourists, coupled with their relatively robust spending capacity, has significantly contributed to the elevation of ADR, exceeding initial expectations. Additionally, some hotels have achieved notable success in enhancing room revenue through effective OTA reputation management and precision-targeted digital advertising.

No new upscale or luxury hotel projects were launched in Beijing during the first half of 2025, resulting in a temporary pause in new supply. Looking ahead, three new properties are expected to open in the second half of the year, adding a total of 667 rooms to the market, a moderate increase in supply compared to 2024. Among them, the Crowne Plaza Beijing Tongzhou and the Four Points by Sheraton Beijing Sanlitun Gongti are both scheduled to open by the end of August, collectively bringing over 500 new rooms and further diversifying the city’s upscale hotel landscape. Over the next three years, the overall market is set to see a gradual increase in new supply. If planned projects progress as scheduled, Beijing’s hotel market is likely to experience sustained growth momentum.

Tony Liang, Senior Vice President of JLL Greater China’s Hotel and Hospitality Group, said, “While the overall market remains in a phase of performance adjustment, some hotel operators have successfully improved occupancy rates and achieved revenue growth against the broader trend by moderately adjusting pricing strategies and shifting their focus to alternative source markets in pursuit of greater market share. Targeted online advertising and precise OTA placement have enabled hotels to attract specific guest segments, stabilising ADR and rapidly increasing occupancy, thereby securing a competitive position in the market. Looking ahead, attention could be paid to high-value customer groups from sectors such as defence, diplomacy, semiconductors, and pharmaceuticals, as well as the steadily recovering inbound travel segment. Additionally, through differentiated dining concepts and other initiatives, hotels can continue to expand non-room revenue streams and enhance overall profitability.”

Luxury apartment sales hit a record high. This quarter, supply in Beijing’s luxury apartment market reached approximately 3,300 units, with first-half overall supply exceeding the full-year figure seen in 2024. The supply surge has also led to a significant increase in transaction volume. This quarter, a two-year quarterly sales peak of 2,100 units were sold in Beijing’s luxury apartment market, three quarters of which came from projects newly launched in the first half of the year.

The luxury apartment market has witnessed high supply and strong demand, yet prices continue to fall. This quarter, excluding the impact of newly launched projects, the price of luxury apartment projects fell by 2.3% q-o-q. “The monetary policy of lowering the reserve requirement ratio and interest rates in May has provided a loosened credit environment for the residential market,” said Celia Chen, Research Director for JLL North China. “Monetary policy is expected to remain moderately loose in the short term. In addition, the current high supply and price advantages have provided buyers with more options. It is expected that the annual transaction volume in the primary market will increase significantly compared to last year.”