The Chinese economy gathered speed again in 2017 after dipping to a 26-year low in GDP growth of 6.7 percent. Growing industrial production, exports and a resilient property market spurred the economy.
The government is targeting slightly slower growth for 2018, 6.5 percent, as it seeks to deleverage, contain debt and control financial risks. Critically, the outlook for the economy and construction remains bright in both Beijing and Shanghai.
Beijing should remain attractive to investors and end-users, keeping demand for office leasing positive. Retail and warehouse demand is increasing moderately. Meanwhile, a shortage of logistics facilities is fuelling demand and infrastructure construction is set to surge in 2018. To accommodate continued expansion, Beijing plans to allocate 1,200ha of land for housing in 2018, with more added to expand the city’s rental market.
In and around Shanghai similar efforts are being made. Satellite cities along the Yangtze River are experiencing rapid development in housing, commercial and infrastructure.
Increasing demand and restricted land supply is driving infrastructure construction and triggered several major investments in 2017.
|Cost escalation 2017–18:||8.0%|
|Cost escalation 2018–19:||5.0%|
|Location factor (USD):||31.4|
Economic growth and low real interest rates will continue to drive occupier and investment real estate. The big growth sectors over the next ten years appear to be finance and high-tech. Meanwhile, urban development will be significant due to migration from rural to urban areas.
This content is part of the International construction market survey 2018