Global Times - Office property demand rising in big cities

Office property demand rising in big cities

Source: Global Times
[05:19 February 09 2010]
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By Li Qiaoyi

The country's first-tier cities saw demand for office property rise in the fourth quarter, a research report released Monday said.

Beijing office property market demand is rising, with total net absorption approaching its pre-crisis level, while the office market in Shanghai continues to see signs of recovery, with average rents reaching their mildest troughs since the crisis, CB Richard Ellis Group (CBRE), a global commercial real estate services firm, said in a research report.

Rents of premium offices in Guangzhou also saw a slowdown in declines in rents compared with the previous quarter, the report said.

The CBRE report was generally in line with a report released in January by Centaline Property Research Center.

Both supply and sales of office property in four cities including Beijing, Shanghai, Guangzhou and Shenzhen saw strong recovery late last year, the Centaline report said. Rentals of offices in Shenzhen particularly surged over the last two months in 2009 due to government policies that stimulated investment from outside the city, according to the report.

The rebound in the office property market is mainly thanks to boosted business confidence based on the overall global economic recovery, said Liu Yuan, a senior manager with Centaline Property Research Center.

Foreign enterprises have become more active in expanding business in large cities, while domestic enterprises are the main drivers of the rising demand, CBRE said in the report.

Though a short-term oversupply of office property exists in some places in large cities, the country's office property market is expected to continue its recovery this year, Liu said. That's because the economy is likely to sustain strong economic growth and the government has begun to restrain the building materials market, pushing developers and investors to turn more attention toward office properties, he said.

Some second-tier cities including Chengdu and Tianjin have seen their office property markets grow rapidly, though most second- and third-tier cities have only first-stage market growth, Liu said.

Not only China, but the Asian market as a whole "displayed definite signs of recovery in the second half of 2009," said Andrew Ness, executive director of CBRE Research Asia.

However CBRE pointed out the market still needs time to fully stabilize. The overall Asian market saw vacancy rates increase slightly in the fourth quarter to reach 12.8 percent, CBRE said in its report.