STRONG MACRO FUNDAMENTALS SUPPORTED THE CONSUMPTION MARKET RECOVERY

Shenzhen’s GDP grew rapidly during the past decade with a CAGR of 9.3%. The economic resilience continued into 2023, with the GDP growth rate reaching 5.4% as of Q3/2023, which ranked second among China’s fi rst-tier cities. This, along with the city’s growing TMT industry, attracted an infl ux of highly educated young migrants, especially high-net-worth IT specialists to the city, pushing up Shenzhen’s permanent population to 17.7 million by end-2022, up 47.7% from 2012. Due mainly to this, Shenzhen managed to maintain the youngest demographic structure among all Chinese cities, with over 70% of its population falling into the age group of 20 to 35, reinforcing the city’s consumption capacity and supporting the rebound of local consumptions during the postCovid period.

VACANCY RATE EDGED DOWN WITH F&B TAKING THE LION’S SHARE IN LEASING DEMAND

Strong demographic fundamentals and a faster-than-expected recovery of the local consumption market uplifted retailers’ confi dence in Shenzhen’s retail property market, which supported the resumption of new leasing activities from a series of retail brands covering the F&B, fashion, accessories and cosmetics sectors during the first three quarters in 2023. Echoing this, the citywide average vacancy rate edged down 0.6 ppts QoQ to 9.5% by end-Q3/2023 after increasing for six consecutive quarters since Q2/2022 due to COVID disruptions.