News release

Beijing’s retail market takes the lead in recovery

According to JLL Beijing’s 2023 Property Market Review and 2024 Outlook

January 04, 2024

Kyrah Cheng

Andrey Yang

+86 (10) 5922 1382

Beijing: 4 January 2024 – “Amid the mild recovery in consumption, the retail leasing market in Beijing was the first to see a rebound in 2023 ahead of other property types,” said Rayman Zhang, Managing Director for North China, JLL. “As the positive momentum of economic recovery continues to consolidate, Beijing’s commercial real estate market is expected to be led by a gradual improvement in demand in the overall recovery process.”

Rents in the Grade A office market continued on a downward trajectory. Though the decline widened in the fourth quarter, low prices drove a small increase in leasing activities. In the investment market, the fervour for C-REIT-related assets grew significantly, and the annual transaction volume of retail properties more than doubled compared to 2022. Leasing demand in the prime retail market stabilised along with the consumption recovery. Vacancy levels in the industrial market rose on the back of new supply, while rental levels decreased slightly due to cautious market sentiment in the fourth quarter. The hotel market maintains a relatively low level of new supply, and owners have an urgent demand for hotel value enhancement. Although Beijing's residential market entered a period of adjustment, the high-end residential market continued to grow against the trend, with the annual transaction volume rising by 2.9% y-o-y.

Grade A Office 

Office 4Q23
Vacancy 11.8%
New Supply 140,000 sqm
Rental Growth -4.2% q-o-q

Triggered by the continuously lowering rents, market enquiries and site visits slightly increased. The amount of market enquiries edged up in 4Q23. After several rounds of rent negotiations between tenants and landlords, landlords provided more powerful leasing terms to move forward the leasing progress. The cost-saving relocation of small-to-medium-sized tenants served as the main source of leasing demand. TMT sector made up of 30% of the Grade A leasing volume. One semiconductors company contributed to one of the notable transactions, upgrading to a Grade A project in the Olympic Area by leasing a 5,000 sqm area. Domestic tenants still dominated the leasing demand.

The overall vacancy rate increased by 0.7 percentage points to 11.8%, which was mainly pushed up by the sizable unabsorbed space from the new project. Vacancies from the existing projects were being destocked at a slow pace. Average rents in the overall market declined 4.2% on a q-o-q basis. After providing add-on services like customised decoration for several quarters, landlords found these flexible leasing strategies generated very limited utility. In this quarter, the majority of landlords realised that direct rent reduction was the only effective way to trigger the deals. The market had already tracked rents that broke the bottom line for highly-qualified tenants. “Landlords will continue providing significant rental reductions in the competitive leasing market. The low-rent environment is expected to accelerate tenants’ relocation decisions, and further stimulate those who do not have eager leasing demands to seek opportunities,” said Michael Zhang, Senior Director of Office Leasing Advisory for JLL Beijing. “Therefore, the net absorption figure of 2024 is expected to improve.”


Non-traditional investors led to multiple closings, as buyer personas continued to expand. In 2023, Beijing's annual transaction volume amounted to RMB 33.7 billion. Private buyers accounted for over 50% of the total volume in the fourth quarter. China Jinmao successfully sold The Westin Beijing Chaoyang, a five-star hotel in the Liangmaqiao area, to Bohai Runze for RMB 2.8 billion.

Asset types remained diversified throughout the year, with a significant increase in the heat of C-REIT-related assets. Influenced by the office leasing market, the transaction volume of office properties dropped by 5% y-o-y, while they still accounted for 56.8% of the total transaction volume. With the expansion of the C-REITs pilot programme to include consumption-related infrastructure, the transaction volume in retail properties increased by several times as against last year. In terms of buyer type, investment demand has picked up and the share of transactions by investment buyers rose to 71%. “Private buyers, state-owned enterprises and other non-traditional market investors entered the market, demonstrating a richer source of buyers than before, ” said Jessie Xu, Operations Director of China and Head of Capital Markets North China, JLL. “As market expectations towards pricing continue to adjust, investment opportunities in core locations are expected to receive higher attention.”

Prime Retail

Retail 4Q23
Vacancy 5.9%
New Supply 0 sqm
Rental Growth 0.6% q-o-q

Note: Prime Retail refers to the Urban market. *New Supply is inclusive of the Suburban market.

Upward trend in consumption stimulates demand recovery. Throughout the year, consumption experienced a shaky recovery with a narrowing trend in downward fluctuations. Starting in October, Beijing witnessed a new surge in consumption, significantly boosting market sentiment. Retail project leasing inquiries increased across the city, mainly due to retailers’ expansion plans for 2024. Existing vacant areas were efficiently destocked with no new supply introduced.

Demand absorbs by mature projects, and the vacancy rate hits a record low for the year. Delaying the market entry of five planned projects totaling 690,000 sqm until 2024 has resulted in no new supply being recorded in the fourth quarter. Postponement was primarily caused by the pre-leasing challenges, many retailers with expansion plans choosing to expand in mature shopping malls that have already been market-validated, thus avoiding the risks and uncertainties of newly opened projects. From an overall market perspective, the delayed introduction of new supply has eased pressure on existing projects. In this quarter, the market recorded a net absorption of 63,903 sqm. Both urban and suburban markets observed the lowest vacancy level since 2Q22, with the urban vacancy rate dropping by 0.4 ppts to 5.9%, and the suburban vacancy rate dropping by 0.8 ppts to 6.7%.

Absorption of existing vacancies drives rental increases. Projects with leading market performance achieved their annual rental increase expectations earlier compared to others. Most of top projects located in the urban market completed their major rental adjustments in the second and third quarters of 2023 and drove up the rental level in surrounding projects. Consequently, the overall rent in the urban market saw a 0.6% q-o-q increase. In the suburban market, the steady absorption of vacant space, coupled with postponed project openings, provided landlords with the opportunity to raise rents in the quarter, resulting in a rental growth of 1.2%, up by 0.9 ppts q-o-q. “The rebound in leasing demand in 2023 has enhanced confidence among landlords in performance-leading projects, with rents expected to climb back to pre-pandemic levels in the next two years. Led by top projects, the average rent in the urban market in 2024 is expected to increase by 2.3% y-o-y,” said Ji Ming, Research Director for JLL North China.


Industrial 4Q23
Vacancy 10.4%
New Supply 166,000 sqm
Rental Growth -0.6% q-o-q

Demand was solid, yet one new completion contributed to a vacancy increase. Leasing demand remained stable, with several new leases of more than 10,000 sqm each completed in 4Q23. New leasing demand was mainly from supply chain companies, 3PLs and healthcare companies. However, as tenants became more rent-sensitive, slower leasing activity was observed in the BALP sub-market, which has the highest rents in Beijing. For supply, two new projects with a total GFA of about 166,000 sqm entered the market in 4Q23. However, absorption levels at the new projects diverged. One of the new projects was fully committed before it officially entered the market. The other new project recorded few pre-leasing deals due to its poor location, leaving the project with a relatively higher vacancy rate. Due to the weak performance of this new project, the overall vacancy rate increased by 1.1 ppts to 10.4% in 4Q23.

While the modest rental growth in 1Q23 brought the annual figure up to 0.4% at year-end, overall rents fell slightly by 0.6% q-o-q in 4Q23. Pressure from more rent-sensitive tenants and continued rental decline in surrounding areas of Beijing has pushed some landlords to adjust leasing strategies to attract and retain tenants this quarter. Landlords from higher-rent areas have shown a greater willingness to adjust rents and provide incentives.

“Rents are expected to fall in 2024,” said Mi Yang, Head of Research for JLL North China. “Beijing will continue to see a large amount of new supply entering the market from 2024 to 2025, which is expected to reach 2.09 million sqm, an expansion of two-thirds of the current market size. The supply pressure and increasing rent sensitivity of tenants are expected to impact landlord sentiment in 2024. Some landlords will further adjust leasing strategies to boost occupancy. We expect rents to fall at a modest pace in 2024.”


Hotel* YTD NOV 2023
Occupancy 66.7%
ADR* CNY 1,116
RevPAR* CNY 745

Note: *Hotel refers to the upscale hotel market. *ADR stands for Average Daily Rate and is inclusive of service charge. *RevPAR stands for Revenue per Available Room

As of the third quarter, the number of domestic tourists in Beijing has exceeded the figures from the same period in 2019. However, the recovery of inbound tourists has been delayed significantly. According to the Beijing Municipal Bureau of Culture and Tourism, the number of domestic tourists in Beijing reached 250 million, an increase of 2.1% compared to the same period in 2019. Domestic tourism income amounted to CNY 430 billion, a decrease of 1.2% compared to the same period in 2019. In contrast to domestic tourist numbers, the recovery of inbound tourist numbers has been relatively slow. As of the third quarter, the number of inbound tourists in Beijing was 751,000, representing only 26.6% of the same period in 2019.

As of November, Beijing’s upscale hotel market has recovered 88.1% of its revenue per available room (RevPAR) compared to the same period in 2019. By November 2023, the occupancy rate (OCC%) in Beijing’s upscale hotel market reached 66.7%, with an average daily rate (ADR) of CNY 1,116 and a RevPAR of CNY 745. The ADR has reached the same level as the same period in 2019, while the OCC% and RevPAR are at 87.8% and 88.1%, respectively, compared to the same period in 2019.

The Beijing market maintains a relatively low level of new supply, emphasising the importance of effectively managing existing assets. Owners are urgently seeking to enhance the value of their hotels. In 2023, there will be no new supply of upscale hotels in Beijing for the entire year. It is projected that the Renaissance Beijing Haidian Hotel will open in the first quarter of 2024, making it the third Renaissance brand hotel established by Marriott International in Beijing. The stock era in the Chinese hotel market is gaining prominence, and in Beijing, the slow pace of new supply is particularly evident. The key concerns for hotel owners are revitalising their existing assets, upgrading and renovating their properties, and finding new ways to utilise them effectively.

The gradually relaxed visa policies are expected to boost the growth of the inbound tourism market, while some domestic high-net-worth travellers may turn to overseas markets. After implementing unilateral visa-free entry policies for six countries in December, including France, Germany and Italy, there has been a significant increase in the number of tourists from these countries. According to data from the National Immigration Administration, within three days of policy implementation, the number of inbound tourists from these countries increased by 18,000, and within ten days, it increased by 59,000. The number of incoming tourists per day has seen an increase of about 40% after the implementation of the visa-free policy. On December 7, Singapore announced a 30-day visa-free arrangement with China to strengthen personnel exchanges, based on increasing flights between the two countries. Russia also plans to establish a new visa-free group tourism agreement with China. The expectation of gradually relaxed visa policies will further boost China’s inbound tourism market.

Tony Liang, Senior Vice President of JLL Greater China’s Hotel and Hospitality Group, said, “Constrained by limited supply, the Beijing hotel market primarily consists of existing assets. In recent years, there has been a significant increase in demand from owners to transform inefficient spaces within their properties. Given the concerns about the macroeconomic trends, domestic travellers are still willing to travel but with more budget constraints. Meanwhile, there is a need to rebuild short-term spending confidence. The relaxed visa policies are favourable for the recovery of inbound tourism, although some high-net-worth domestic travellers may choose to go overseas. Based on the changing market environment, there has been a noticeable increase in owners’ demand for hotel asset management and initiatives to improve the quality and efficiency of their hotels.”

High-end Residential

Luxury Apartments 4Q23
New Supply 913 units
Capital Values Growth -1.3% q-o-q
Rental Growth -1.0% q-o-q

Sales increased amid overall market downturn. A total of 1,509 luxury apartment units were sold in the quarter, up 6.0% q-o-q. In 2023, Beijing’s residential market entered a period of adjustment, with sales declining. However, the situation in the high-end market was different due to core resources and stable demand. The high-end annual sales volume increased by 2.9% y-o-y in 2023. Towards the end of the year, the asking prices of some projects were lowered to increase sales. Luxury apartment prices dropped by 1.3% q-o-q in 4Q23. Leasing demand showed a seasonal decline at the end of the year. Rents fell 1.0% q-o-q, but were flat y-o-y. The long transaction period in the secondary market saw some properties originally intended for sale being converted to rentals. As supply increased, tenants gained more bargaining power.

Further easing of policies accelerated the release of upgrade demand; high-end sales will be stable. In December, Beijing introduced new housing policies, including reduced payment requirements, lower mortgage interest rates, and adjustments in the definition of ordinary housing. “New policies are expected to help improve market expectations and increase market activity. High-end residential sales are expected to remain stable,” said Mi Yang, Head of Research for JLL North China. “In 2024, supported by the release of upgrade demand, prices are expected to rebound and maintain a steady upward trend in the mid to long-term.”

About JLL

For over 200 years, JLL (NYSE: JLL), a leading global commercial real estate and investment management company, has helped clients buy, build, occupy, manage and invest in a variety of commercial, industrial, hotel, residential and retail properties. A Fortune 500® company with annual revenue of $20.8 billion and operations in over 80 countries around the world, our more than 106,000 employees bring the power of a global platform combined with local expertise. Driven by our purpose to shape the future of real estate for a better world, we help our clients, people and communities SEE A BRIGHTER WAYSM. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit