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Bohai Bay Industrial Leader 2010

Economic growth in China is gaining momentum as domestic investment and consumption surge. Although some may have expected a higher growth rate for the year, there is no doubt that the ease in credit policy and huge government spending have paid off. The increase in domestic consumption is driving demand for warehouse space, although occupiers and developers generally remain cautious with expansion. Fast moving consumer goods (FMCG) companies are active in the market, planning new manufacturing facilities, and are a major force taking up warehouse space for domestic distribution. Vacancy rates of high-quality logistics space servicing domestic businesses are low across China,\ especially in Tier I cities. The revival of the industrial market will rely heavily on domestic demand, and double-digit growth in retail sales. Investment activity will increase as market sentiment improves and projects with high occupancy levels and stable tenants will be favored. 2009 has seen a lot of new capital flow into industrial developers, greatly improving their financial health compared to the early stages of the financial crisis. A number of projects have been delayed to 2010, and there is a strong possibility that they may be postponed further.

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