Retail rent dynamics in two Chinese cities

Abstract

This paper examines the retail rent dynamics of two Chinese cities, Beijing and Shanghai. We use an error correction modelling (ECM) framework to estimate long-run equilibrium relationships and short-term dynamic corrections. The study period covers 1999-2012. We also run tests to examine the presence of structural breaks. The empirical results suggest that both supply and demand significantly affect retail rents for both cities in the long run. However, in the short term, the change of rent responds to change in income for Shanghai market. Both markets have a rapid speed of adjustment, especially Shanghai market that is more price and income elastic. The results shed some light on the behaviour of retail rent adjustment processes in one of the largest and fast growing emerging markets.

The Impacts of Shopping Tourism on Retail Sales and Rents: Lessons from the COVID-19 Quasi-Experiment of Hong Kong

“…Other studies examined supply and demand factors in the context of retail space. For instance, Ke and White (2015) highlighted the importance of supply and demand dynamics in retail space. Tsolacos (1995) andD'Arcy et al (1997) considered demand factors such as consumer spending and economic growth.…”