Zhang Yu

JeniZhang13@163.com

SHENZHEN’S commercial real estate showed mixed performance in the first half (H1) of this year — the grade-A office sector grappled with headwinds while the retail market demonstrated notable resilience.

Disruptions stemming from the relocation of big companies have introduced volatility into the leasing market, prompting landlords to adopt flexible rental strategies to accelerate deals, global real estate service provider Savills said yesterday.

Conversely, the retail sector has seen its stock expand significantly due to a concentrated, new supply hitting the market.

A total of 352,000 sqm of new supply entered the prime office market during H1. By the end of the period, the city’s total stock of grade-A office space had expanded by 4.5% year on year, with a net absorption of only 71,000 sqm in H1, according to Savills.

Transactions during this period predominantly involved moves between different properties within various districts. Furthermore, the volume of large-scale deals exceeding 3,000 sqm saw a decrease compared to the same period last year, with the proportion of such transactions dropping by 4 percentage points.

Coupled with new supply, the city’s vacancy rate of premier office space remains at historically high levels. Landlords have responded by adjusting rents flexibly to expedite leasing, Savills said.

Despite these pressures, the information technology sector continues to lead demand, ranking first in both the number and area of transactions. Leasing activities by companies in AI, semiconductors, and software services have been relatively active, while demand from the financial and trade sectors has remained stable.

In contrast, Shenzhen’s retail market has shown positive momentum. Concentrated new supply has driven a stock expansion exceeding 5%.

“New malls introduced in the second quarter, such as K11 ECOAST, along with successful renovations and business operation adjustments at existing centers like PA MALL and iN City Park, have enhanced market appeal,” said Carlby Xie, head of Southern China Research at Savills.