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Top office rents to drop in 2010
By Cherry Cao |
January 7, 2010, Thursday
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Print Edition
Print Edition
RENTS for Shanghai's Grade A offices dropped the most in a decade last year and will continue its downward spiral in 2010 amid a record supply, according to latest research reports released by two major real estate service firms.
For the whole of 2009, rents for the city's top grade offices, including in Pudong and Puxi, plunged 16.3 percent to about 6.60 yuan (97 US cents) per square meter per day, the largest annual drop in about 10 years, Savills Property Services (Shanghai) Co said yesterday.
"This year will be another tough year for the city's office market as some 1 million square meters of new Grade A office space, nearly 70 percent in Pudong, are scheduled to be released," said Albert Lau, executive director of Savills China. "The record supply this year will drag down rents further, probably between 8 and 12 percent."
A separate research released by Colliers International found that Grade A office rents dived 18.5 percent in 2009 to 6.80 yuan per square meter per day and would further fall to 6.20 yuan per square meter per day by the end of 2010.
"The average vacancy rate in the city, which stood at 14.8 percent at the end of December, would climb to over 20 percent by the end of 2010 amid the surge in supply," said Hingyin Lee, director of research and advisory for Colliers' east China operations. "The city saw vacant areas soar to about 500,000 square meters by the end of 2009 from some 380,000 square meters at the end of 2008."
The city's Grade A office market, with a current stock of about 4 million square meters, won't likely see a major rebound at least in the coming 12 months as a result of oversupply, analysts said.
Over the past few years, the local supply of Grade A office space hovered about 400,000 square meters on average. The supply will peak this year and likely remain high at 600,000 to 700,000 square meters in 2011, Savills statistics showed.
For the whole of 2009, rents for the city's top grade offices, including in Pudong and Puxi, plunged 16.3 percent to about 6.60 yuan (97 US cents) per square meter per day, the largest annual drop in about 10 years, Savills Property Services (Shanghai) Co said yesterday.
"This year will be another tough year for the city's office market as some 1 million square meters of new Grade A office space, nearly 70 percent in Pudong, are scheduled to be released," said Albert Lau, executive director of Savills China. "The record supply this year will drag down rents further, probably between 8 and 12 percent."
A separate research released by Colliers International found that Grade A office rents dived 18.5 percent in 2009 to 6.80 yuan per square meter per day and would further fall to 6.20 yuan per square meter per day by the end of 2010.
"The average vacancy rate in the city, which stood at 14.8 percent at the end of December, would climb to over 20 percent by the end of 2010 amid the surge in supply," said Hingyin Lee, director of research and advisory for Colliers' east China operations. "The city saw vacant areas soar to about 500,000 square meters by the end of 2009 from some 380,000 square meters at the end of 2008."
The city's Grade A office market, with a current stock of about 4 million square meters, won't likely see a major rebound at least in the coming 12 months as a result of oversupply, analysts said.
Over the past few years, the local supply of Grade A office space hovered about 400,000 square meters on average. The supply will peak this year and likely remain high at 600,000 to 700,000 square meters in 2011, Savills statistics showed.
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