Real estate developer investment into office buildings in China 2013-2023

In 2023, real estate developers in China invested 457.1 billion yuan in office buildings, a drop of around 46 billion yuan compared to the previous year. A broader economic shift from a manufacturing-based economy to a service-based economy in recent years has increased the demand for office space in China. This trend was especially apparent in large cities. 

Cost saving through working from home

The outbreak and spread of COVID-19 in early 2020 impacted nearly every industry and significantly altered the way people live and work. During the strict lockdown in China many employees worked from home, prompting many employees and employers to question whether this work model would continue after the lockdown was lifted. Since expenditure for offices accounts for a significant share of a companies fixed costs, omitting or limiting the need for office space could be a viable method to improve a business’ bottom line.

V-shaped demand recovery

Looking at the office real estate deals completed in 2020, the demand for office space appeared to be robust. China, with its swift and strict lockdown policy in combination with heavy cross border travelling restrictions, was able to contain the national spread of the virus. As a result, the impact on the economy was relatively limited which protected the office real estate industry to some extent. Major transactions were completed, including, Singapore’s sovereign wealth fund’s acquisition of the LG Twin Towers in Beijing for 1.13 billion U.S. dollars and the purchase of the Gopher Center in Shanghai for 600 million U.S. dollars by the Chinese insurance giant Ping An. This observation led many experts to conclude that China’s real estate industry was in the process of a V-shaped recovery.