OVERVIEW

China’s logistics value experienced robust growth of 3.4% in 2022, reaching RMB347.6 trillion, while the total revenue of the logistics industry amounted to RMB12.7 trillion, exhibiting a year-on-year (YoY) increase of 4.7%. Notably, sectors such as railway transport, the cold chain sector, and express delivery maintained strong growth rates, showcasing their resilience and importance.

Foreign direct investment (FDI) played a vital role in 2022, with a total utilization of US$189.1 billion (equivalent to RMB1.23 trillion). Despite the persistent disruptions and lockdowns throughout the year, investments managed to grow by 8% YoY and achieved an impressive 6.8% compound annual growth rate over the past five years. Among the various regions, the Yangtze River Delta continues to retain its allure as the most attractive destination for foreign capital.

MARKET CONDITIONS

The Shanghai logistics market experienced notable developments in Q1/2023, with the addition of two new non-bonded Grade A warehouses in Songjiang and Jinshan. The new  supply added a significant 268,000 sq m to the market, pushing the total stock to 6.92 million sq m. As the three largest submarkets, Fengxian, Jinshan, and Songjiang account for almost half of the citywide stock and are anticipated to be major submarkets for new pipelines in the coming years. The increase in supply has contributed to a rise in the citywide vacancy rate, which saw a 3.7 percentage point increase to reach 10.9% compared to the previous quarter.

Despite the increase in supply, the demand for non-bonded Grade A warehouses remained resilient, leading to a quarteron-quarter (QoQ) rental increase of 0.8 in Q1/2023.  The average rent for the nonbonded Grade A market reached RMB50.2 psm pmth, with Minhang and Northwest leading the city with rents of about RMB57 per sq m per month.