Strategic Choice of Commercial Real Estate in China's First-Tier Cities in The Oost-Epidemic Era

Abstract

In recent years, affected by the Covid-19 and the current policy regulation of China's residential real estate market, the commercial real estate market has shown repeated fluctuations. During a historical period (2005-2015), thanks to the government's vigorous development of real estate and the influx of many people into large cities, commercial real estate in first-tier cities have experienced long-term prosperity. Some leading companies have earned high profits and occupied a large market share through the cycle of "financing - investment and construction - selling or operating - refinancing...". However, this phenomenon began to change in 2015. As the country adjusted its macro policies, financing costs continue to increase, the total area of new commercial real estate projects is decreasing year by year, and the market size of traditional commercial real estate is also shrinking, making people soberly aware that the prosperity and success of commercial real estate are deeply dependent on national development strategies, while depends on social and economic development and people's consumption habits. The study's results found that since 2019, the expansion scale and profitability of China's commercial real estate have both shrunk. On the one hand, residents' consumption ability and willingness have weakened due to the impact of Covid-19 and the business cycle. On the other hand, young consumer groups are no longer satisfied with a single business model; the upgrade of the consumption content and the rise of e-commerce shopping have had an impact on traditional commercial real estate, which forces companies to make corresponding adjustments to changes in the external environment when deciding long-term strategies. Using the PEST analysis tool to create a comprehensive and objective analysis of the current political, economic, social, and technological environment will help enterprises better judge external factors. Therefore, when formulating development strategies, they can better align their development plans with the country's new development strategy, earning strategic initiative and maintaining competitive vitality in the recent historical period.