News release

The office and retail market continue to face downward pressure in 4Q22; the easing of Covid restrictions at the end-2022 is expected to further energize market entities

According to JLL Beijing’s 2022 Property Market Review and 2023 Outlook

January 05, 2023

Kyrah Cheng

Andrey Yang

+86 (10) 5922 1382

Beijing: 5 January 2023 – “Beijing’s commercial real estate market experienced a series of twists and turns in 2022. Although the market did not see an upswing at the end of the year, the recovery of the economy and market activity is expected to accelerate with recent major adjustments to the Covid-19 control policies,” said Julien Zhang, China Chief Strategy Officer and Managing Director for North China, JLL. “It takes time for the market to set a solid foundation for recovery. The year 2023 is expected to demonstrate an increasingly clear sign of stabilisation.” 

The Grade A office market saw an expansion of its rent decline. Covid outbreaks have led to further contraction of leasing demand in 4Q22, and the annual net absorption figure dropped by 81% year-on-year. In the investment market, the total transaction volume decreased by 57% compared to 2021. The types of properties transacted became more diversified while business parks and logistics received increasing interest from investors. Demand in the retail market was further affected by the Covid-19 situation. Several retail projects postponed their opening date due to delays in construction schedules and pre-leasing progress. The industrial market recorded a slight increase in rents amid the downtrodden economy and three new projects entered the market. The hotel market remained sluggish in the second half of 2022, August being an exception, while the supply of upscale hotels increased slightly in the second half of 2022. Although the sales activity in the high-end residential market was hindered in 4Q22, the annual sales volume hit a five-year high.

Grade A Office 
Office 4Q22
Vacancy 10.0%
New Supply 0 sqm
Rental Growth -1.1% q-o-q

Downward pressure on Beijing’s office market persists while the decline of rental rates widens further.
Overall leasing demand further contracted as another outbreak started in early November and economic activities decreased significantly. The lease negotiation period was notably lengthened under the current market condition. Meanwhile, the main demand driver in 4Q22 was relocation demand for cost-control purposes and to upgrade at lower prices. In the fourth quarter, domestic financial companies continued to contribute nearly half of all the leasing demand. With the expansion of investment banking and asset management firms, CBD was the most active area for these tenants.

Negative net absorption was recorded in 4Q22, resulting in 82% of the total net absorption for 2022 being from the first quarter. Decreasing leasing activities and some early terminations have led to a surge in the vacant area in submarkets where the technology industry gathered. The decline in the overall rents extended, registering -1.1% q-o-q growth and -0.4 y-o-y growth. During the downward phase in the city, rents fell in all submarkets except Lize at end-2022. Most of the projects in Lize had secured anchor tenants and demand in the area stayed relatively active. “As a set of measures aiming at supporting businesses and stabilizing China’s economy were released and strict Covid control was finally eased at the end-2022, the market activity is expected to see steady recovery in 2023,” said Michael Zhang, Senior Director of Office Leasing Advisory for JLL Beijing. “However, demand and rent need time to pick up since the positive impact of policies is not expected to be immediately realised for the office market.”


A cooling Beijing investment market saw a significant decline in the total transaction volume compared to 2021. Economic uncertainty and the distraction of Covid-19 made 2022 a tough year. The total transaction volume reached RMB 27 billion in 2022, down 57% year-on-year. In the fourth quarter, market activity was further limited, with limited deals recorded. CapitaLand acquired Borui Plaza on the East Third Ring Road for a total purchase price of RMB 2 billion in an online auction. StorHub acquired a part of the Leroy Merlin home furnishing mall located in Fengtai and is expected to reposition the space to a self-storage facility.

Diversification characterised asset types and buyers throughout the year. Office properties remained one of the most popular asset types for investors, accounting for two-thirds of the annual total transaction volume. Meanwhile, business parks accounted for nearly 20% of the total transaction volume, an increase from previous years. In addition, benefiting from the limited supply and robust leasing demand, logistics properties remained a firm choice for investors. As for buyers, self-use buyers were more active and accounted for 44% of total transactions. 

“Facing an uncertain economic environment in 2022, investors tended to allocate capital across diversified asset types to manage market risk”, said Jessie Xu, Operations Director of China and Head of Capital Markets North China, JLL. “The easing of Covid control restrictions announced at end-2022 is expected to boost investor confidence, and market activity is expected to accelerate with the adjustment of price expectations.”

Prime Retail
Office 4Q22
Vacancy 7.9%
New Supply 0 sqm
Rental Growth -2.6% q-o-q

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

Retail market recovery remains sluggish as consumption growth declines. In the fourth quarter, the local retail market was affected by the Covid outbreak in November as demand weakened. For example, F&B and fashion sectors continued to report shrinking profits, further delays on expansion plans, or even surrendering of leased spaces. Those two sectors accounted for more than 50% of the total space surrendered in Urban shopping malls in 4Q22. However, several sectors continued to expand under downward pressure in the fourth quarter as sportswear and NEV retailers were actively seeking leasing opportunities. At the end of 2022, the loosening of Covid restrictions is expected to boost market activities over the short-to-mid-term.

Several projects announce to postpone of their opening. There was no new supply in the fourth quarter – several malls were previously set to enter the market in 4Q22 but failed to open on schedule due to the distraction of Covid. Many future projects were also reported to postpone in the quarter, due to delayed construction schedules or pre-leasing progress.

As a number of tenants surrendered space to landlords, overall market vacancy levels climbed, with Urban vacancy rate further rising by 0.8-ppt to 7.9% and Suburban vacancy rate further increasing by 1.0 ppts to 10.1%. 

Rents decline continues in the downward market trend. As leasing demand further weakened, overall market rents continued to decline. An increasing number of landlords are willing to offer lower rents and more flexible terms to attract retailers and stabilize project performance. Urban rents recorded the largest quarterly decline in 2022, registering at -2.6% q-o-q (-4.4% y-o-y), while Suburban rents dropped by 2.9% q-o-q (-6.2% y-o-y). 

“Despite the short-term disruption of the exit wave of cases, the city already started to witness several positive signals in the last week of December, such as the increase of customer foot flow at restaurants. This is likely to boost market confidence and elevate expectations in 1H23. Rents are forecast to rebound in 2H23,” said Ji Ming, Research Director for JLL North China

Industrial 4Q22
Vacancy 5.8%
New Supply 244,434sqm
Rental Growth 1.1% q-o-q

The demand structure remains stable, with a slight increase in health care demand.
Despite downward pressure from the economy, overall market demand remained solid in the fourth quarter. Demand growth was moderate in the BALP and TLP sub-markets, which outperformed other sub-markets. Several large-area new leases were completed in these two sub-markets. In terms of sources of demand, e-commerce, supply chain and manufacturing industries continued to account for about 70% of market demand. The Double Eleven shopping festival and other large-scale e-commerce events in the fourth quarter also drove demand for short-term leases in related industries. Additionally, Sino Pharm, the dominant healthcare company, signed a new lease for 12,300 sqm in the fourth quarter, leading to a significant increase in healthcare sector demand. For supply, three new projects, with a total GFA of about 240,000 sqm, entered the market in 4Q22. The three new projects were quickly absorbed, with 90% of the total area pre-leased before they officially entered the market, thus adding limited supply pressure on surrounding projects. The vacancy rate increased slightly for only 0.4 ppt to 5.8% in 4Q22.

Market rent increases 4.3% y-o-y in 2022. Overall rent growth maintained a modest growth trend in the quarter, rising 1.1% q-o-q in 4Q22. Solid demand has offset new supply pressure, keeping rents rising steadily throughout 2022. High-quality projects in major sub-markets led rental growth. At the same time, low-priced areas, such as Pinggu district, also saw the rents gains in 2022. “In 2023, New supply will reach a historical peak,” said Mi Yang, Head of Research for JLL North China. “In 2023, 550,000 sqm of new supply is expected to enter the market. Of the new supply, 60% will be in the Daxing International Airport sub-market.” The large-scale supply will bring a major change to the structure of Beijing’s logistics market, a new submarket — Daxing International Airport will be established in 2023. The vacancy rate will be pushed up to around 9.7% in 2023 due to the large supply, an increase of 3.9 ppts from 2022.

Hotel* YTD November 2022
Occupancy 33.7%
ADR* 996 RMB
RevPAR* 336 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

The Beijing hotel market remained sluggish in the second half of 2022, August being an exception. Summer vacation is the traditionally high-demand season for the Beijing hotel market. Benefiting from the summer vacation, ADR in August was CNY 991, and the occupancy was 64.3%, leading to a RevPAR of CNY 637, making August the best-performing month of the year. Since September, Beijing had tightened travel restrictions due to the COVID-19 pandemic, decreasing interprovincial demand. Consequently, as of November 2022, the Beijing hotel market’s ADR was 996, and occupancy was 33.7%, leading to a RevPAR of 336.

The supply of upscale hotels increased slightly in the second half of 2022. However, the new supplies will be limited in 2023. Two luxury hotels, namely Xitan Beijing and Beijing Wild Goose & Pine Hotel and Resort, entered the soft opening stage in the second half of 2022. The properties will add 38 and 67 rooms each to the market after their grand opening. It is noteworthy that Xitan Beijing is under the renowned Relais & Chateaux and will provide a series of wellness facilities and activities. No new upscale supplies are expected to enter the market in 2023. Originally planned to open in March 2023, Hyatt Regency Beijing Daxing is now delayed till 2025.

China’s recent relaxation of domestic travel restrictions and border control represents opportunities for hotel performance recovery. Since December, the central government has removed domestic travel restrictions by majorly adjusting the epidemic prevention and control strategies. Furthermore, starting from January 8, 2023, the country will no longer conduct centralised quarantine for all inbound travellers, and measures to control the number of international flights will be lifted. All the policy adjustments will stimulate demand recovery and represent opportunities for the tourism and hotel industries. 

Tony Liang, Senior Vice President of JLL Hotels & Hospitality Group, Greater China, said, “With adjustments to epidemic prevention measures and border control, the hotel market is expected to enter a period of rapid recovery in 2023. It is expected to be followed by the recovery of hotel asset value. Currently, hotel owners should sort out the hotel assets, identify their market positioning, and fully use the market recovery period, improving operational efficiency and asset management.”

High-end Residential
Luxury Apartments 4Q22
New Supply 2,178 units
Capital Values Growth -0.3% q-o-q
Rental Growth -0.2% q-o-q

Beijing’s high-end residential market cools in the fourth quarter.
As transaction activity stalled temporarily, luxury apartment sales fell sharply in 4Q22, down 32.7% q-o-q. However, with the support of high sales in the first three quarters, the annual sales volume in 2022 increased by 66.9% y-o-y. Developers were hindered from launching new projects in the fourth quarter by a new wave of Covid-19. Luxury apartment supply declined, with a total of 2,178 new units launched, down 14.5% q-o-q. However, cumulative new supply for the year reached 9,610 units, up 5.2% y-o-y. Due to the lack of new projects launches, transactions in 4Q22 were mainly destocking of existing projects.

Positive policies may help to further release demand. In 4Q22, as developers introduced preferential policies to boost sales near the end of the year, sale prices dropped by 0.3% q-o-q. “Continued favourable policies sent more positive signals to the market and are expected to boost buyers’ expectations. The recovery of market activity will attract those buyers with a ‘wait-and-see’ attitude. The suppressed demand during the pandemic will gradually be released, supporting sales volume in the following quarters,” said Mi Yang, Head of Research for JLL North China.

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $19.4 billion, operations in over 80 countries and a global workforce of more than 102,000 as of September 30, 2022. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit