Commercial real estate is an important support and carrier for regional economic development. In the post epidemic era of Wuhan, how about the recovery of commercial real estate in 2021? According to CBRE statistics, the vacancy rate of Wuhan high-quality office market and retail property decreased in 2021. However, in the view of the industry, with the upcoming new supply peak, Wuhan commercial real estate in 2022 is still under pressure.
In 2021, 20 headquarters enterprises settled in Wuhan
According to the government work report of Wuhan, the total retail sales of social consumer goods will increase by about 10% in 2021. So, as an important position of offline consumption, how is the recovery of commercial real estate in Wuhan?
According to CBRE statistics, in the high-quality office market, the new supply of Wuhan in 2021 was only 240000 square meters, down 58% from 2020. With the decline of supply and the recovery of demand, the vacancy rate of high-quality office buildings in Wuhan decreased to 38.3%, down 4 percentage points from the same period in 2020.
"In 2018 and 2019, the overall demand for office buildings in Wuhan showed a downward trend; after experiencing the impact of the epidemic in 2020, the demand increased in 2021." According to the relevant person in charge of CBRE, (Wuhan Office demand) is currently in the process of bottom rebound.
"In recent years, the headquarters economy in Wuhan has gradually risen, and these enterprises have a demand for office buildings." Li Guozheng, director of central China Market Research Center of China Index Research Institute, analyzed it in an interview with the reporter of daily economic news. According to the work report of Wuhan municipal government, 20 headquarters enterprises including China Three Gorges group and Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) equipment group settled in Wuhan in 2021.
As another important sector of commercial real estate, the stock of Wuhan retail property market will continue to increase in 2021, reaching 7.18 million square meters. However, the vacancy rate of Wuhan retail property market did not increase, but decreased to 8.5%.
The first store economy may be one of the important reasons leading to the recovery of demand. In 2021, Alexander McQueen, golden goose, gene monster and other international retail brands opened their first store in Wuhan; In addition, after the comprehensive expansion of the new tea brand chayan Yuese in Wuhan, the Chinese pastry brand Hutou Bureau, Standard Chartered bakery and Mo Mo dim sum bureau have set up stores in major business districts.
"In 2021, many shopping centers in Wuhan opened." In Li Guozheng's view, the rise of emerging shopping centers is an important opportunity to drive the economic development of Wuhan's first store.
Wuhan Office buildings will usher in a new round of supply peak
Following the decline of vacancy rate in 2021, will Wuhan commercial real estate further improve in 2022? Li Guozheng believes that although the vacancy rate in Wuhan Office market and retail property has improved in 2021, it may only improve slightly. Overall, Wuhan commercial real estate is still under great pressure.
According to CBRE's analysis, from 2022 to 2024, Wuhan high-quality office market will usher in a new round of supply peak, and many landmark projects will be delivered in 2022. The delivery of high-quality projects will intensify the competition of stock projects. It is expected that the vacancy rate of Wuhan Office market will hover at a high level of 40%.
As for the retail property in Wuhan, CBRE expects that a number of projects will be opened again in 2022, with an estimated new supply of more than one million square meters.
Another institution, Jones Lang LaSalle, has a similar view. It predicts that the total new supply of Wuhan retail market will be about 1248000 square meters in 2022, and the overall volume of the city's high-quality retail property market will reach 9.058 million square meters. Most of the new projects are developed and operated by experienced retail property developers. At that time, its high standard service and professional ability will bring new innovative experience to the high-quality retail market in Wuhan and bring competitive pressure to the stock business.
In Li Guozheng's view, compared with the housing market, the pressure of Wuhan commercial real estate has been reflected earlier. Coupled with the epidemic factors, this pressure is further reflected. It is also in this case that industry enterprises have continued to propose to the competent government departments in recent years to adjust the proportion and conditions of commercial and residential land transfer, reduce the proportion of commercial properties as a whole, and control the supply rhythm. At the same time, they hope to introduce relevant relief and incentive measures for commercial destocking, but there is no obvious progress at present.
The reporter noted that the downturn of commercial real estate is not a special case of Wuhan, and some government departments have made great moves in this regard. For example, at the end of October 2021, the Department of housing and urban rural development of Hunan Province publicly issued several opinions on promoting the destocking of non residential commercial housing, which made every effort to resolve the pressure of non residential inventory such as apartments, office buildings and shops from 10 aspects, such as strictly controlling the increment of non residential land and accelerating the revitalization of the stock of non residential commercial housing land.
