Urban renewal of offices in Beijing: an answer to high space demand and rising prices?
Beijing policymakers have recently restricted the development of new private and commercial properties in key districts, as part of their efforts to implement the decentralization outlined in the city’s 7th Urban Master Plan. These restrictions on real estate may drive prices up – yet, real estate developer CBRE identifies them as sources of opportunity for the city, and for investors.
Indeed, as the supply of real estate and especially offices become scarce, existing properties can be upgraded to answer demand. Investors are therefore likely to invest in urban renewal, by renovating existing office spaces or converting retail spaces into offices. CBRE expects that converted office spaces will represent a significant addition of leasable space in the city and could mitigate price increases.
In addition, increased investments in urban renewal will transform the way investors operate. CBRE believes that urban renewal will lead to increased cooperation between investors and occupants in the transformation and financing processes. It also believes that investors will prioritize long-term leases over sales, contributing to changes in the ownership structure of commercial spaces in the city. This urban renewal trend in Beijing is not new for residential and cultural buildings but has only recently extended to offices.