GBA housing market stable in H1, but Q2 sentiment dented by trade tensions

On The Agenda

Cushman & Wakefield’s latest Greater Bay Area Residential and Commercial Real Estate Investment Market 1H 2025 Review and 2H Outlook, published this week, shows that the region’s residential market remained broadly stable, despite weakening sentiment in the second quarter due to escalating geopolitical risks and ongoing trade tensions.

Government support continued across Greater Bay Area (GBA) cities, with both central and local authorities maintaining demand-side easing and supply-side financing relief measures. These included the extension of the “four cancellations” and “four reductions” initiatives, as well as special-purpose bonds to acquire idle land and unsold homes. Guangzhou notably became the first Tier-1 city to fully lift its “three restrictions” on housing.

From January to March, traditionally a slower season, the primary residential market recorded moderate growth. By midyear, the GBA logged approximately 137,000 new home transactions, up 3% year-on-year. First-tier cities like Guangzhou and Shenzhen saw stronger momentum, though total transactions fell 26% compared to the second half of 2024. Market sentiment softened in April as China–U.S. tariff uncertainties resurfaced, prompting buyers to adopt a cautious wait-and-see stance. April sales dropped 16% from March, while May and June held steady.

Home prices in the primary market were driven largely by the quality of new launches, while developers used more pragmatic pricing to offload inventory. Secondary home prices, especially in Shenzhen, rose 4.0% in Q1 but then dipped 4.4% in Q2 as caution set in, resulting in a slight year-to-date decline of 0.5%.

Cushman & Wakefield’s Alva To noted that high-quality units in prime locations remain in demand despite market volatility. He expects continued support from first-time buyers and upgraders, forecasting monthly new home sales of 27,000–28,000 units in the second half. Still, he warned that full-year home prices may correct by up to 5%, especially if uncertainty lingers into Q3.

The commercial real estate (CRE) sector in the GBA saw a strong first half, with investment volume reaching RMB24.7 billion – a 108% increase year-on-year and about 31% of the mainland total. Most transactions were under RMB1 billion, signaling ongoing caution among investors.

Industrial and logistics properties dominated, accounting for over half the total volume, with 14 major deals. Tier-2 cities like Dongguan, Foshan, and Zhuhai were particularly active. Dongguan stood out as a logistics hub thanks to its strategic location.

Retail assets also drew increasing interest, especially community malls with stable rental yields. Nine transactions were recorded in H1. Charli Chan, Deputy Managing Director at Cushman & Wakefield, expects logistics and retail to remain hot sectors in H2. However, a surge in warehouse supply may raise vacancy rates and pressure rents. Still, pragmatic pricing is narrowing the buyer–seller gap, creating opportunities for long-term investors. Retail projects in mature Tier-2 communities are becoming prime targets for institutional capital. By Times reporter