Data from the commercial property group CB Richard Ellis (CBRE) on major cities across the world’s most populous country show rental rates rising in each, with demand on the increase and vacancy rates dropping.
The Chinese capital Beijing in the north of the country saw its office space rents rise by 8.8 per cent on a quarterly basis in the three months to the end of September and growth rates are tipped to remain strong.
“With insufficient supply expected in the next two to three years, the bullish market should continue,” said CBRE’s report with regard to offices in Beijing.
Meanwhile, in eastern China, all major cities experienced rent increases, including Shanghai, one of the world’s leading financial centres and one of the fastest-growing cities on earth.
“The external economic volatility did not reduce market demand, as evidenced by a new high of net absorption in Shanghai for this year, which has supported continuous rental growth,” CBRE’s report said.
Net absorption of office space in Guangzhou and Shenzhen, two of the largest cities in southern China, also reached unprecedented levels in the third quarter of the year, with demand coming primarily from rapidly expanding domestic enterprises, CBRE said.
Discover Guangzhou Offices for Rent
See Examples of Flexible Office Spaces in Shenzhen
Activity rates in the office space markets across central and western China reportedly remained strong with rents rising in Q3. The largest city in the region Chongqing was singled out as having the most active commercial real estate sectors in the period being assessed.
Chongqing is relatively isolated as an inland urban centre but its massive population and rapid growth make it one of the most important cities for direct foreign investment in China. Companies including Ford, Standard Chartered Bank and Wal-Mart are now well established in the city.
Editor’s notes: In 2022, JLL’s Premium Office Rent Tracker ranked Beijing’s Finance Street district as the 4th most expensive place in the world to rent office space.
Hong Kong’s Central district was the most expensive followed by New York’s Midtown district and London’s West End district.
In the same year, the supply of new Grade A office space in Beijing dropped by 32 per cent compared to 2021 to 423,858 square metres.
As with most locations throughout the world, office leasing activity decreased during the year and the annual net absorption in the Beijing Grade A office market was 173,000 square metres representing a 79.4 per cent decrease compared to 2021.
As lockdowns lifted it was expected, in 2023, that the Beijing office space market would begin to recover, however, with the delivery of approximately 2.1 million square feet of new space between 2023 and 2025, it is expected that there would be increased downward pressure on office rental values.
Shanghai was also expected to receive approximately 2 million square feet of new high-quality office space in 2023/24.
In Guangzhou in 2022, net absorption of office space was negative no doubt in part to the delivery of 416,953 square metres of new space through the completion of 6 developments. The new space expanded the city’s office space inventory to just over 6 million square metres.
A further 3.7 million square metres of new supply was due to complete from 2023 to 2027.
In 2022, Shenzhen saw 597,950 square metres of prime new office supply added to its stock in Futian CBD, Houhai and Qianhai.
Grade A office net absorption totalled 221,608 square metres in 2022 representing a decrease of 66.3 per cent year-on-year. This meant that the citywide vacancy rate climbed 3.6 per cent over the year to 22.8 per cent.
1.3 million square metres of space was due to be delivered in 2023, however, the reopening of borders was expected to generate demand.
Chongqing’s GDP reached RMB2,083 billion in the first three quarters of 2022 representing a 3.1 per cent increase year-on-year.
Mainly located in Jiangbeizui, Jiefangbei and Dashihua districts, 14 Grade A office buildings were launched between 2017 and the 3rd quarter of 2022.
This brought the total office stock to over 2.54 million square metres. Several Grade A office buildings were also expected to enter the market between 2023 and 2025, with most of them located in Jiangbeizui, Dashihua and Central Park.