China's real-estate vs. construction in historic context

A new range of data added to the CEIC platform takes a deeper dive into China's construction and real-estate industries.

We charted the rate of change for real-estate investment against the equivalent figure for construction output (which also includes non-residential construction and other engineering projects).

Going back two decades, we can demarcate four distinct eras:

1. Rapid growth (2000-2013). Amid urbanization and rising household incomes, the demand for real estate soared. (Shanghai, for instance, added more than 6 million people during the 2000s.) This drove construction output, which posted an average annual growth rate of about 20%. Real-estate investment data was more volatile year-on-year, but showed a similar trend over the longer term.
2. Slower growth (2014-2019). Chinese cities were still booming, but the construction output growth rate slowed to about 10% per year. Government regulation and tighter financing were factors in the real-estate slowdown. This period also shows the closest correlation between real-estate investment and construction output of any era in our chart.
3. Pandemic volatility (2020-21). Unsurprisingly, construction and investment plunged, and then snapped back. New regulations also weighed on the real-estate sector.
4. Adjustment (2022-). Real-estate investment and construction output decouple. Real-estate investment continues to shrink year-on-year amid demographic change, financial crises at development companies and macroeconomic pressures. However, construction output growth remains in positive territory – albeit at a much slower pace than previous decades.

Our second and third charts also illustrate these trends by tracking the residential sector as a share of completed construction projects. Residential has stabilized at just below 60% of total construction after a pre-pandemic peak at about 68%.

The share of industrial construction, meanwhile, has been steadily rising since 2020. This is driven by advanced manufacturing facilities (including low-carbon technologies), an infrastructure push and changes to global supply chains.

Offices were always a smaller share of construction than residential or industrial, but they tended to account for about 5% of completed projects pre-pandemic; recently, that has fallen to a 4% share or less amid the rise of remote work. This category is also on a long-term downward trend in relative terms: 20 years ago, offices accounted for 10%.

Our pie chart goes into greater detail for 2024, tracking other categories such as government and cultural institutions and warehouses.

Turning to the development sector, we chart how large real-estate companies are buying far less land than they used to before the pandemic. Since September, China has introduced a series of economic stimulus measures aimed in part at revitalizing this sector; a recent uptick can be seen in our chart.

Our final chart gives even more examples of granular detail in this dataset – comparing commercial starts, completions and sales in terms of floor space to the broader construction market.

If you are a CEIC user, access the story here.