As we recently featured here on Mingtiandi there is major disagreement between two of the world’s largest real estate consultancies over what happened in Beijing’s grade A office market during the fourth quarter. Cushman and Wakefield says prices jumped 73 percent while Jones Lang LaSalle reports a 41 percent increase.
A subsequent discussion on our China Commercial Real Estate Group on LinkedIn brought forth a number of opinions as to how there could be such a disparity of results, and a whole lot of skepticism regarding research done by international real estate consultancies here in China.
To help shed a bit of light on the situation, or perhaps confuse it even further, we compared side-by-side the research data from CBRE, Colliers International, Cushman and Wakefield, DTZ, Jones Lang LaSalle and Knight Frank to see what they had to say about the Beijing and Shanghai office markets during the fourth quarter of 2011.
In Beijing the agencies’ findings vary widely both in current rental and vacancy figures, and for rates of change. For example, estimates of annual change in grade A office rental rates ranged from the 12.9 percent increase reported by Colliers (or 40.3 percent depending on which numbers you choose), to Cushman’s 73.2 percent bound.
In Shanghai, results tended to be more even, with Colliers again quoting the lowest annual rate of increase at 15.5 percent and Cushman repeating its preference for the high end of the scale by citing rental growth of 19.7 percent for grade A and 24.1 percent for prime space.
In the coming days, we will follow up with a summary of the agencies’ projections of what to expect in the coming months. At least we are cautiously optimistic that this will happen.
The Beijing Office Market in 2011 4Q
The Shanghai Office Market in 2011 4Q
Expect the Unexpected
Also, one note regarding JLL’s Asia Pacific Property Digest Fourth Quarter 2011. In describing 2011 fourth quarter rental rates in Shanghai on page 6 of the report it stated, “Rental uplift in Shanghai moderated to 2.5%,” whereas on page 22 of the same report the analysts seem to have changed their minds while writing such a lengthy report and declared regarding the same rentals in the same city over that same period that, “Overall average rents grew to RMB 8.8 per sqm per day, up by 2.7% q-o-q and 17.4% for 2011.” Shoot the proofreader.
Also a bit puzzling was the assertion by Colliers Beijing that average rents in the city increased by 40.3% from 2010 to 2011, when a comparison of the average Beijing rental cited in the agency’s 2010 4Q Asia Pacific Office Report of RMB 192/sqm/mo and the 2011 number of RMB 217/sqm/mo quoted in their The Knowledge Report: Beijing Office Property Market – 4Q 2011 would seem to indicate a 12.9 percent increase. One can guess that there may be differences in the way that the company reports their numbers regionally from the way they are reported in Beijing, but one can also assume that institutional investors prefer not to guess.
Reports Used in this Study
In case you are wondering where I pulled this data from, or if you would like to read the reports yourself, most of them have been uploaded to RightSite, and the others can be found wandering loose around the web.
Cushman and Wakefield
Jones Lang LaSalle
No 2011 fourth quarter 2011 reports
Predictions and Projections
The forecasts from the five agencies are now available in our post on what to expect from China’s office real estate market in 2012.
Notes and Caveats
This article was prepared based on the most recently updated reports on the websites of each consultancy. Where reports do not exist for particular agencies or cities, it is because these reports were not available at the time this article was published.
If you are searching for reports from Savills, the company’s website had no 2011 4Q reports for Shanghai or Beijing, although they did have some 2012 1H reports, which were apparently based on 2011 3Q data.
Jones Lang LaSalle’s APAC report did not provide an overall Shanghai vacancy rate number — only separate numbers for Puxi and Pudong. So the number that you see in the table is the average of their Puxi and Pudong numbers. (Yeah, sloppy math, I know. But this is a blog).
Also, for whatever reason, JLL’s Beijing rentals were based on net leasable area in 2010, and switched to gross floor area in 2011, which makes them hard to compare. For this reason, the JLL 2010 numbers were not included when figuring averages for Beijing.
Some of the agencies report their Shanghai rentals in RMB/sqm/month. For the sake of convenience, these were converted to RMB/sqm/day by dividing the monthly figures by 30.
CBRE’s reports provided only charts, and not tables of figures for rents, so information was taken from nearest eyeball estimates of actual numerical values based on what was available in the charts.