China’s 2026 Government Work Report Accelerates Quality Enhancement in Commercial Real Estate
HONG KONG SAR – Global real estate services firm Cushman & Wakefield has released an analysis of the 2026 Government Work Report, which outlines significant shifts in China’s economic and real estate landscape. The report emphasizes a transition from incremental growth to a focus on revitalizing existing assets, driven by evolving macroeconomic conditions and the integration of advanced technologies.
Macroeconomic Stability as a Pillar for Real Estate Recovery
China’s economic targets for 2026 are set with a GDP growth forecast of 4.5% to 5%. This approach aims to stabilize growth while adjusting economic structures, providing a solid foundation for the commercial real estate sector’s recovery. The fiscal deficit ratio is projected at 4.0%, with local special-purpose bonds amounting to RMB4.4 trillion. Additionally, the quota for ultra-long-term treasury bonds has expanded to RMB1.3 trillion. These coordinated fiscal and monetary policies are expected to enhance leasing demand and improve business sentiment in the commercial property market.
Quality Enhancement of Existing Assets
The report advocates for a three-pronged strategy focusing on city-specific policies to manage new supply, reduce inventory, and enhance quality. This shift indicates a move away from merely expanding the market to improving the quality of existing assets. In 2024, real estate’s contribution to GDP was only 6.3%, significantly lower than the 12.56% average in developed economies. This disparity highlights a structural imbalance, with excessive investment in development overshadowing the need for services and leasing. The ongoing transition will increasingly prioritize asset management and property services in determining asset value.
Retail Properties Benefit from Consumption-Driven Policies
Policies aimed at boosting consumption are revitalizing the retail property sector. The government has allocated RMB250 billion in ultra-long-term treasury bonds for product upgrades, alongside RMB100 billion in fiscal-financial funds, creating a total consumption stimulus package of RMB350 billion. In 2025, China’s retail sales of consumer goods surpassed RMB50 trillion, with per capita GDP reaching USD13,953. This marks a pivotal moment for service-oriented consumption, which currently constitutes only 46.1% of total consumption. Initiatives to promote high-quality service consumption and new shopping experiences are expected to create opportunities for innovative retail formats.
AI-Driven Demand Reshapes Office Market
The emergence of an intelligent economy is transforming office market demand. The work report emphasizes the expansion of AI technologies and the development of large-scale computing clusters, indicating a shift towards commercialized AI applications. By 2025, digital economy sectors contributed over 10.5% to GDP, with a target of 12.5% set for the 15th Five-Year Plan. AI-focused companies are anticipated to become key drivers of leasing activity in 2026, stimulating investments in data centers and industrial parks, particularly in major urban hubs like the Beijing-Tianjin-Hebei region and the Greater Bay Area.
Capital Market Reforms Facilitate Investment Cycles
Ongoing capital market reforms are enhancing investment opportunities in commercial real estate. The report outlines the need for deeper reforms in investment and financing mechanisms, expanded exit strategies for private equity, and the growth of the public REITs market. By 2025, public REITs issuance in China exceeded RMB210 billion, positioning it as Asia’s largest REITs market. The introduction of commercial public REITs in 2026 will further establish a comprehensive investment-financing-management-exit cycle.
Opening Up to Foreign Investment and Logistics
China’s 2026 opening-up strategy focuses on enhancing the services sector to attract foreign investment and promoting high-quality cross-border e-commerce. In 2025, cross-border e-commerce imports and exports reached RMB2.75 trillion, outpacing overall trade growth for the fourth consecutive year. The demand for high-specification warehouses is increasing, with Cushman & Wakefield reporting growth in the warehouse market despite price adjustments. As regulations tighten around cross-border e-commerce, the need for green-certified, intelligent warehouses is expected to rise.
Urbanization Policies Foster Development Opportunities
The 2026 urbanization policies introduce the concept of “innovation-driven industrial and business communities,” which aims to integrate industrial parks with business districts. This approach supports the development of world-class city clusters in regions such as Beijing-Tianjin-Hebei and the Yangtze River Delta. Urban renewal and the revitalization of existing assets are central to this strategy, with policies encouraging the reuse of land and buildings. For stakeholders in prime urban assets, these regeneration projects present opportunities for repositioning and value enhancement.
Green Transition and Sustainability as Competitive Advantages
The work report highlights the importance of green transformation, introducing measures to control carbon emissions and promote sustainability. In 2025, China’s carbon market traded 235 million tons of allowances, with a transaction value of RMB14.63 billion, reflecting a 24% year-on-year increase. The significance of carbon costs in corporate leasing decisions is growing, with 97.9% of newly constructed urban buildings in 2024 meeting green standards. Properties certified under sustainability frameworks like LEED and WELL are expected to command higher rental premiums and attract tenants more effectively.
Sabrina Wei, Chief Policy Analyst and Head of Research at Cushman & Wakefield, noted that the 2026 Government Work Report presents a clear vision for commercial real estate, emphasizing macroeconomic stability and targeted policies. The anticipated GDP growth rate of 4.5% to 5% is expected to stabilize the market, while the RMB350 billion consumption stimulus will invigorate retail demand. The integration of AI will reshape the office market, and capital market reforms will facilitate a comprehensive investment cycle. Urban renewal initiatives will unlock asset values, and green certifications will enhance competitiveness in the sector.
According to publicly available www.zawya.com reporting, these developments indicate a transformative phase for China’s real estate market, shifting from a construction-centric model to one focused on operational excellence and service delivery.
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