News release

Beijing's Grade A office market records highest quarterly leasable net absorption figure for past decade; office, retail, and industrial vacancy rates recover to pre-Covid levels

According to JLL Beijing’s 4Q21 Property Market Review

January 06, 2022

Kyrah Cheng

Head of Marketing, North China
+86 10 5922 1385

Andrey Yang

+86 (10) 5922 1382

Beijing: 6 January 2022 – “In 4Q21, as both quarterly and annual leasable net absorption figures for Beijing’s Grade A office market hit record highs for the past decade, market confidence saw a significant boost,” said Julien Zhang, Managing Director for JLL North China. “After demand recovery showed strong momentum throughout the year, investors looked increasingly favourably at Beijing’s commercial real estate market, encouraged by its positive fundamentals, particularly its high-quality assets and prospects for long-term growth.”

In the office market, strong market demand – dominated by the domestic TMT industry – drove a faster destocking pace, helping the overall market vacancy rate return to its pre-pandemic level at end-2019. Beijing’s investment market grew notably, with the total investment transaction volume for 2021 exceeding RMB 60 billion. Lerong Building and two data centres from Dr Peng Group were sold in 4Q21. In the retail market, F&B tenants continued to be the main driver of demand. Four new retail projects opened, including CP Centre in the CBD Core Area. The industrial market took the lead in positive rent growth. Meanwhile, both demand and supply in the luxury apartment market showed a strong upward trend, with the total sales volume reaching its highest quarterly level since 2014.

Grade A Office

Office 4Q21
Vacancy 11.7%
New Supply 263,000 sqm
Rental Growth -0.1% q-o-q

In 4Q21, one of the largest-single leasing transactions in a decade helped push the quarterly leasable net absorption figure to its highest level since 2011. Leasable net absorption reached a remarkable 337,000 sqm in the quarter, as the domestic TMT sector continued to show great expansion momentum in the final months of 2021. The highest quarterly figure observed in a decade was driven up considerably by an industry giant, after it took 107,000 sqm of space at Beijing Asia Finance Building in Olympic Area – serving as one of the most sizeable leasing deals on record in years. Outside of the TMT sector, meanwhile, domestic companies were also the main drivers of leasing activity in the quarter, accounting for more than 90% of the total leasing transaction volume. The majority of this demand came from the finance and professional services industries.

Strength in demand led the overall vacancy rate to decrease by 1.0 percentage point to 11.7% – sliding back to the pre-pandemic level observed in 4Q19. In particular, the Lize and Olympic Area submarkets saw notable declines in vacancy rates due to strong take-up in new and recent completions. Meanwhile, rental growth remained largely flat for a second consecutive quarter, recording -0.1% q-o-q growth in 4Q21. Four out of nine submarkets – with decreasing vacancy rates – led the trend, as these areas reported positive rental growth rates in the quarter. “Moreover, as recovery in the Grade A office market reaches a crucial turning point in 2022, we can expect the current tenant-favourable market to move towards a more neutral one,” said Michael Zhang, Director of Office Leasing for JLL Beijing. “This may see overall rents hit bottom, before gradually rising in the following quarters. Nevertheless, it remains to be seen whether such strength in demand recovery, as witnessed with the unprecedented net absorption at end-2021, can continue throughout 2022.”


With the recovery of Beijing’s commercial real estate investment market continuing through to year-end, the 2021 total sales volume exceeded RMB 60 billion with nearly 60 transactions recorded. The sales figure represented the second-highest total in the past five years, rising by a notable 35% from 2020, despite coming in under the peak volume recorded in 2019. Office properties remained hot in 2021, accounting for a majority 56% of the total transaction volume. In the first half of 2021, SK Tower sold for RMB 9.06 billion, making it the highest-priced single-asset deal to close since 2019. The total transaction volume for retail properties rose 34% y-o-y, with Brookfield's acquisition of Yuehui Vanke Plaza drawing great interest in the market.

Office properties and data centres served as key transactions in 4Q21, as investors banked on further prospects for future growth of the city. Xisanqi Jinyu Science and Technology Park was purchased by a self-use buyer for RMB 430 million. Lerong Building in Yaojiayuan was successfully sold in the quarter via a judicial sale for RMB 570 million. Another key transaction was the acquisition of Project Z6 in the CBD Core Area by Sino-Ocean Prime Office Partners I, a fund formed by Sino-Ocean Capital. Meanwhile, as Dr. Peng Group shifted to an asset-light strategy, it sold two data centres in Chaoyang District to Baoneng Real Estate in the quarter for RMB 750 million and RMB 650 million, respectively. “Both market activity and liquidity within Beijing’s commercial real estate market increased notably throughout the year. Even at the end of 2021, following a steady stream of transactions, multiple deals still remained under negotiation,” said Eric Pang, Head of Capital Markets for JLL China. “This combined with our expectation that more tradable high-quality assets will surface in the coming months suggests no shortage of opportunities in the year ahead as market entities are likely to be further energised in 2022.”

Prime Retail

Office 4Q21
Vacancy 5.3%
New Supply 167,500 sqm
Rental Growth -0.1% q-o-q
Note: Prime Retail refers to the Urban market. *New Supply is inclusive of the Suburban market.

F&B accounted for more than 40% of newly opened retail space in the quarter, remaining the largest contributor to leasing demand. Themed restaurants actively expanded, taking up large units. Among them, Hollywood-themed restaurant Kitty & Daniel opened two new stores. Meanwhile, driven by investment funding, Chinese pastry brands expanded quickly as they grew in popularity among young customers. Domestic fashion brands such as Li-Ning also expanded, releasing new brands such as Li-Ning 1990, after reporting strong sales growth.

With the Urban vacancy rate comfortably returning to the pre-pandemic level, many landlords no longer offered rental concessions. The Core market outperformed expectations with an increasing number of landlords at top-performing projects further raising rents following strong sales. In the quarter, Urban rent growth remained flat (-0.1% q-o-q), while Core rent growth continued to inch up, by 0.4% q-o-q. Meanwhile, in the suburbs, where vacancy pressure was largely alleviated as the rate fell 3.0 ppts y-o-y to 6.2% at end-2021, rent declines further slowing to -0.5% q-o-q growth in 4Q21.

Four new projects opened in the quarter, including the CBD Core Area’s first retail property. CP Center entered the market, expecting to tap into demand from a huge number of working professionals nearby. Offering many affordable F&B brands, the mall is predicted to fill a gap in consumers’ needs, as the area is considered to be lacking sufficient retail offerings for white-collar workers. Other openings included the high-profile Taikoo Li West, an urban renewal project serving as an extension to the popular Taikoo Li complex in Sanlitun. “Not only has the new Taikoo Li West project brought new lifestyle and entertainment brands to complement to the existing property, it has allowed multiple brands from other sections to relocate, providing space for more niche and fashionable brands to further differentiate and upgrade the positioning of the entire complex,” said Ji Ming, Research Director for JLL Beijing. “Furthermore, this property serves as an important source of new retail supply. Looking ahead to 2022 and beyond, we expect to see more urban renewal projects entering the market, further driving the retail consumption potential of commercial precincts around the city.”


Industrial 4Q21
Vacancy 4.6%
New Supply 0 sqm
Rental Growth 0.6% q-o-q

Continuing to support the market as key sources of demand, e-commerce and logistics tenants helped drive the overall vacancy rate back to its pre-pandemic level. E-commerce giants remained active with expansion, preferring to acquire additional space at warehouses surrounding those in which they already have a presence. The busy online sales season in the quarter also created a boost in short-term demand from e-commerce and logistics companies. All of the leasing activity contributed to a steady fourth quarter of positive net absorption, with the overall vacancy rate retreating to the pre-Covid level of 4.6% at end-2021. Meanwhile, cold-chain storage demand continued to grow, with some tenants interested in longer-term opportunities for larger spaces.

In 2021, industrial rent growth roughly doubled that of 2020, following a fourth consecutive quarter of steady recovery. In 4Q21, overall market rents rose 0.6% q-o-q and grew 3.6% y-o-y, nearly twice the figure of that recorded for 2020. Stable demand coupled with limited supply throughout the year enabled modest rent recovery throughout 2021. High-quality projects in major submarkets as well as competitively priced warehouses in remote areas saw the biggest rents gains in 2021. “The market is predicted to remain stable ahead, despite more than 170,000 sqm of new supply scheduled to enter the market in the first half of 2022,” said Mi Yang, Head of Research for JLL North China. “As market recovery continues and steady demand supports market stability, this will all help to further mitigate vacancy pressures. Moreover, quality projects are expected to remain most in-demand, allowing modest rent growth momentum to continue over the following quarters.”


Hotel* YTD Nov 2021
Occupancy 50.4%
ADR* 972 RMB
RevPAR* 489 RMB
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

Despite the pandemic having caused fluctuations in hotel performance repeatedly during the second half of 2021, the opening of Universal Beijing Resort boosts performance recovery. In July, RevPAR for Beijing’s upscale hotel market, benefitting from the summer vacation, reached 86.9% of the same period in 2019.

However, in August, RevPAR fell by 56.2% from the previous month after the COVID-19 outbreak at Nanjing Lukou International Airport spread to other cities. In September and October, the Universal Resort opened, with conference and exhibition activities returning to normal. During these two months, Beijing held 42 large-scale conferences and exhibitions, driving the RevPAR recovery to 73% and 65% compared to the same period in 2019.

Since October, new cases of COVID-19 have appeared in Beijing and several other cities across the country, forcing the government to tighten the control policies again. As a result, in November, the hotel occupancy fell by 28.3% and the RevPAR by 55% to 277 yuan. Besides, compared to other major cities, the impact of the pandemic has been more severe for Beijing hotels.

Yanqing district led Beijing's new supply of upscale hotels in 2021. Four upscale hotels opened in 2021, adding 1,169 rooms to the Beijing market, accounting for 1.5% of the existing supply. Three of these new hotels are located in Yanqing District – The Unbound Commune by the Great Wall (renovated and rebranded, now in the Unbound Collection by Hyatt), Marriott Beijing Yanqing, and DoubleTree by Hilton Beijing Badaling.

Strengthened control measures in the early stage of the Winter Olympics are expected to benefit the hotel performance to a limited extent. Due to the resurgence of COVID-19 cases in Beijing at the end of October, the government tightened the entry policy in November, ensuring the hosting of the Winter Olympics. The gradual tightening of the control policy may continue until April 2022.

“Following Winter Olympics and the 2022 two sessions (the National People's Congress and the Chinese People's Political Consultative Conference), Beijing’s entry policy is expected to relax gradually,” says Tony Liang, Vice President of Hotels & Hospitality Group of JLL Greater China. “The overall performance of Beijing upscale hotels is expected to maintain a good recovery trend with increasing vaccination and the Universal Beijing Resort." 

High-end Residential

Residential 4Q21
Luxury Apartments
New Supply 2,720 units
Capital Values Growth -0.2% q-o-q
Rental Growth 0.1% q-o-q
High-end Villas
New Supply 51 units
Capital Values Growth -2.4% q-o-q
Rental Growth 0.1% q-o-q

Luxury apartment sales reached a new quarterly high at end-2021, after both high-end residential demand and supply showed continuous strength throughout the year. A total of 1,529 luxury apartment units were sold in the quarter, up 76.4% q-o-q, hitting a quarterly high unachieved since 2014. Two new projects, Old Summer Palace One and One College, coveted for their quality builds and prime locations, were completely sold out after entering the market in 4Q21. Supply levels also remained strong in the quarter as developers accelerated new project launches to meet full-year sales targets. This pushed new luxury apartment supply to surge by a considerable 138% y-o-y at end-2021.

Demand for luxury apartments is expected to remain strong, supporting a positive trajectory for primary prices in 2022, especially as high-end residential land continues to be limited. As buyers continue to be enthusiastic about new high-end projects in favourable locations, primary sales levels are predicted to remain healthy. “Future high-end residential supply may even become more limited as strict rules imposed for centralised auctions could see land becoming increasingly scarce; this would further encourage moderate primary price growth in 2022,” said Mi Yang, Head of Research for JLL North China. “Meanwhile, sizeable demand could also transfer to the secondary market, supporting a similar trend for secondary prices.”

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