Zhang Yu

JeniZhang13@163.com

RENTAL demand for retail space in Shenzhen continued to record growth in the first quarter (Q1) of 2024, with the average retail vacancy rate in the city down for three consecutive quarters, international real estate consultancy firm Savills said yesterday.

The growth was underscored by a significant rebound in in-person consumption and retailers’ growing willingness to expand their stores in the quarter, said the company.

The average retail vacancy rate in the city decreased by 0.5 percentage points month on month and 0.9 percentage points year on year, to 8.6%, statistics from the company showed.

Overall, the catering industry remained the mainstay of rental demand, with nearly half of rental transactions during the quarter coming from the industry. At the same time, the rental demand for fashion, accessories, and cosmetics industries remained active.

Savills forecasts that the asset performance of mature commercial real estate projects will continue to improve as local consumer demand steadily recovers and cross-border consumption by Hong Kong people grows rapidly.

The fact that multiple shopping centers are going to open within the year is also expected to provide more location choices for retailers and heat up the retail market, said the company.

Shenzhen’s high-end office market showed a grim picture in Q1, with the vacancy rate of grade-A office space in the city exceeding 30% for the first time, according to statistics from Savills.

In Q1, the average vacancy rate in the city reached 30.6%, an increase of 6.2 percentage points compared to the same period last year. In districts such as Bao’an and Luohu, the vacancy rate continued to decline as property owners offered proactive rent reductions to woo tenants.

In terms of the residential real estate market, Carlby Xie, director of Savills’s market research department in South China, commented that “the market is still waiting for its springtime.”

In the first quarter, Shenzhen recorded a supply of 740,000 square meters of new homes, a month-on-month decrease of over 40% and a year-on-year decrease of over 20%, statistics showed.

“Although the residential real estate market is still in a bottoming period, multiple substantive and favorable policies issued in Q1 will help stabilize transactions on the demand side,” said Xie.