Real estate consultancies sell market information, and perhaps the most public way that they have of promoting how much they know about a market is through their published research reports.
To find out how much China’s international real estate agencies understand about what’s going on in the office market in 2012, we compared the 2011 fourth quarter research reports of CBRE, Colliers International, Cushman and Wakefield, DTZ, Jones Lang LaSalle and Knight Frank.
For those of you reading last week, we already published a review of each agency’s data on China’s 2011 fourth quarter office market. This week, we cover what these firms say we should expect in Beijing and Shanghai during 2012.
While it’s too early to say who is correct about what to expect in 2012, it’s good to see the consultants who have confidence in their research put clear numbers on what they expect the trends to be, and we will be revisiting these predictions on a regular basis throughout the year to see which predictions are coming closest to the mark.
Projections for Beijing’s Office Market in 2012
For the Beijing market, CBRE puts rental growth at 5-8% over the next six months, while Colliers’ figures predict 10-15% growth in rentals for the year, and Jones Lang LaSalle sees a more dynamic situation with Beijing rents potentially jumping as much as 25% during 2012. The following are summaries and paraphrasings about what the agencies expect for 2012 in Beijing.
Expect rental growth over the next 6 months of 5-8%. Vacancy rate is expected to decrease over the same period.
Expect annual growth rate ranging from 10 to 15%. No prediction on vacancies (unless you count a little arrow as a prediction).
Cushman and Wakefield
Rentals will continue to increase, but the growth rate will slow down gradually. (Indicated that the 12 month outlook for rents is flat).
Vacancy rate will remain at a low level and rental will be moderately increasing.
Jones Lang LaSalle
Expect annual rental growth of 20-25%. No prediction on vacancies
“The lower vacancy rate is likely to further push up rental levels.” “The vacancy rate… is expected to decline further.”
Projections for Shanghai’s Office Market in 2012
In Shanghai, CBRE projects that rents will rise 3-5% by mid-year, while Colliers expects that rental rates may slow to single-digit rates for the year. Perhaps in line with their 2011 data showing the highest growth rates of any of the agencies, Cushman predicts the highest growth rate in Shanghai of 10-15% during 2012. The information below is the most direct paraphrasing or direct quoting from the reports that could be achieved.
Expect rental growth in the next 6 months of 3-5%. Vacancy rate expected to be flat in next six months.
Rental rates and capital values should be stabilized or rise slightly, and the annual growth rate of rental levels may slow to a single-digit rate. The average vacancy rate of Grade A office space is not expected to exceed 12 percent in the next six months.
Cushman and Wakefield
Anticipate rents to appreciate another 10% to 15% annually. Expect vacancy levels to be flat over the next 12 months.
“We expect a mild rental growth and possibly a slight increase in availability ratio into next year.”
Jones Lang LaSalle
Expect rents to increase over next 12 months as new supply will remain limited in Shanghai’s core CBD areas. No indication on vacancy rates
No projection on rents or vacancies
Predictions without Numbers
A TV sports prognosticator who neglected to specify the expected score for an upcoming match would have a very short career, if they ever did make it onto a broadcast. However, it seems we don’t expect such specifics from our paid real estate observers and analysts.
In the Shanghai reports, DTZ, Jones Lang and Knight Frank all managed to make projections without specifying any figures. In Beijing, Cushman, DTZ and Knight Frank seem to expect potential clients to believe that they have a keen grasp of the market, despite their refusal to put a clear number on what they think the market will do.
Isn’t a research report without predictions a bit like going to Morton’s steak house and ordering jell0?
Sources and Caveats
A complete list of sources used in this article, along with some important caveats regarding the research presented, is included in our earlier post on China’s office real estate market reports 2012.