Asian Cities Report, 1H 2012
Report Authors: Savills Research, China
Report Summary:
Beijing’s Grade A office market experienced a shift from a tenant-led market to a landlord-led market in 2011 due to limited new supply amid strong demand for office space. Leasable supply for 2010 and the first three quarters of 2011 stood at only 347,000 sq m and 165,400 sq m respectively. Net take-up, on the other hand, reached 1 million sq m in 2010 and 557,300 sq m in the first three quarters of 2011. As a result, the city-wide vacancy rate dropped from 19.6% at the end of 2009 to 6.3% by the end of Q3/2011.
In Q4/2011, only one project is expected to be handed over onto the leasing market, adding 44,700 sq m of new supply. Total supply in the Beijing Grade A office market will remain at approximately 1 million sq m over the next three years from 2012 to 2014. The current shortage of supply is expected to ease following the completion of a number of projects located within the CBD extension area after 2014.
Lack of investment opportunity has been a major feature since the start of 2011 and will continue to characterise the en-bloc sales market in the next year. Insurance companies, a strong source of underlying investment demand, will keep a prudent attitude on prime commercial property investment in Beijing. The tightening of credit and the introduction of residential cooling policies in 2011 also limited credit availability for developers, while a slowdown in the residential market curbed revenue generation putting developers under great financial pressure. This is expected to lead to greater deal availability for opportunistic investors.
About the Author:
The Savills Research team has gained a reputation for an innovative and proactive approach, which comes from a clear philosophy of market dynamics and an understanding of our clients needs.
The team is unique in providing advice and analysis to clients across all sectors of the property market: from rural property to offices; residential to retail and leisure; in both the UK and globally.
Our established research team, with some 20 years experience, has a strong reputation for producing accurate, well informed and above all else, independent analysis and commentary.
