High-quality development in China”s real estate sector requires not only price stability and better residential housing, but also a strategic reassessment of commercial real estate.
As the sector shifts from construction-led expansion to the management of existing assets, buildings are becoming an important link between urban renewal and asset management. Advanced manufacturing and modern services are emerging as new pillars of economic growth, raising demands for the quality, functions and operating capacity of urban space. Policies to expand domestic demand, upgrade industry and renew cities are creating new opportunities for the building economy — a development model where commercial properties cluster high-value businesses, generate stable tax revenues and spur regional growth.
For decades, China’s property sector mainly relied on new construction, stimulating extensive industrial chains across steel, cement, home appliances and furniture. Between 2018 and 2020, real estate value-added accounted for roughly 8.3 percent of China’s GDP. However, amid deep market adjustments, that share fell below 6 percent in 2025.
The traditional model is no longer sustainable because the supply-demand dynamics of housing have fundamentally shifted. Rapid urbanization previously added over 20 million people to cities annually, prompting massive residential construction. But as urban population growth slowed after 2018, incremental demand weakened, leaving the market in aggregate oversupply.
Real estate must therefore return to its core purpose: supporting people’s aspirations for a better life and providing high-grade physical space for industrial upgrading. China’s latest round of property-market regulation, launched in 2020, reflected a broader economic transition centered on technological innovation, industrial upgrading, high-quality development and stronger domestic demand, particularly consumer demand. The property sector should therefore support economic transformation and urban development as new sources of growth.
Over the past five years, China’s economic structure has continued to optimize. The five sectors recording the largest gains in their share of GDP — information technology services; leasing and business services; wholesale and retail; transport and warehousing; and accommodation and catering — all rely heavily on commercial real estate as operational hubs.
However, the commercial segment faces severe inventory pressures. Traditionally, commercial property relied on the rental spread, with developers acting merely as landlords collecting rent. Today, this passive model is obsolete. In first-tier cities, the average commercial inventory absorption period…
Read More: Better realty asset operations key to unlocking real estate value
