Implications of the Second Shanghai Expo on the Commercial Property Market

The second China International Import Expo was held in Shanghai from November 5th to 10th. To continue to promote higher levels of opportunities opening up in China, President Xi Jinping proposed five measures for the country in the opening ceremony of the conference. First, continue to expand market opening; second, continue to optimise its opening-up structure; third, continue to improve the business environment; fourth, continue to deepen multilateral and bilateral cooperation; and fifth, continue to promote the joint construction of the "Belt and Road" initiative. With the Lingang New Area in the Shanghai Free Trade Pilot Zone officially established and the Shanghai Stock Exchange having set up a science and technology board and implemented a pilot registration system, the city is expected to be full of business opportunities in the future.

This expo not only brought high traffic to the pavilion, but also boosted retail property sales. For example, in the first ten months of 2019, the cumulative year-on-year growth rate of rental and sale of shops in the Dahongqiao area is better than the city's overall level. Since the 2019 expo, the implication on significant transactions of commercial properties has become more apparent. In the first three quarters of 2019, transaction of commercial properties in Shanghai alone exceeded RMB 82.3 billion, of which foreign investment accounted for 45%. For 2020, the market's concern over the Sino-us trade war and the slowdown of the mainland economy will lead to continued weakness in commercial property prices. Nonetheless, Mainland China has long-term growth returns, while first-tier cities are still able to maintain stable investment prospects and the current shopping mall leasing market is diversified. For example, more foreign retail brands are trying to test the market sentiment using pop-up store's operation model. In the long run, it will certainly continue to stimulate the demand for retail properties overall and help reverse the current oversupply observed in the commercial property market.