According to the latest Greater China Property Market Report released by Knight Frank, Shanghai, Beijing and Guangzhou will have abundant new Grade-A office supply next year, which will impose downward pressure on rental.
Beijing
In the third quarter of 2014, Grade-A office rents in Beijing decreased a slight 0.1% quarter on quarter, while the vacancy rate dropped 0.3 percentage point. With relatively sluggish sales, due to a scarcity of offices available for sale as a large number of offices were owner-occupied, Grade-A office prices decreased a further 1.6% quarter on quarter.
Shanghai
Despite a huge amount of new supply, Shanghai’s office market remained stable in the third quarter. Grade-A office rents fell a mere 0.6% quarter on quarter, while the vacancy rate increased a slight 0.3 percentage point. With more offices due to be completed, office rents are expected to decrease another 1.5% in the fourth quarter.
Guangzhou
With abundant new supply in the coming 2-3 years, a number of new projects commenced pre-leasing activity earlier than planned. Rents are expected to decrease 3% in next 12 months.
Hong Kong
In the third quarter, Hong Kong’s Grade-A office leasing market was stable. Notable demand was witnessed from Mainland financial and banking enterprises looking for premium offices in the core business district, boosted by the proposed launch of the Hong Kong-Shanghai Stock Connect scheme. The office sales market continued to improve, with acquisitions being made by both investors and end-users.
Taipei
Taipei’s Grade-A office leasing market performed well and the vacancy rate slightly dropped, in the third quarter. However, in the fourth quarter, rents are set to stabilise, while the vacancy rate is expected to rise with new buildings being completed. En-bloc Grade-A office sales are expected in the fourth quarter. Their prices will set a new market benchmark.