The fastest appreciating office space in mainland China sits just across the border from Hong Kong in Shenzhen, where average office rentals increased 17.4 percent in the first quarter, compared to the same period last year.
According to a recent report from property consultancy Cushman & Wakefield, average rental rates for grade A offices in the southern Chinese metropolis increased from RMB 305.45 per square metre per month in the first quarter of 2013 to RMB 358.60 per square metre per month in the first three months of this year. The only cities in Asia to outpace Shenzhen were Jakarta, which grew at 27.29 percent and Manila, which grew at 17.61 percent.
Source: Cushman & Wakefield
Among mainland cities, only Shenzhen’s neighbor, Guangzhou, placed in the top ten in rental growth regionally, with average rental rates growing 8.59 percent during the period to reach RMB 283.62 per square metre per month. Taipei placed ninth among the fastest growing office markets in Asia, with rentals increasing 4.29 percent during the period to NT$4,745 per ping per month.
Office demand in Shenzhen has been spurred by the opening of the Qianhai economic zone, and strong overall growth in the professional services, financial and high technology sectors. The increase in rental growth in Guangzhou were the first that the market had seen for five quarters, which Cushman & Wakefield attributed to robust demand from the banking, finance and pharmaceutical industries.
Kevin Tung, General Manager of Guangzhou & Shenzhen for Cushman & Wakefield China said, “Demand from occupiers in the financial and tech sectors remained robust, buoying rents in Guangzhou and Shenzhen. Despite the expected delivery of new supply in the latter half of 2014, rents are expected to remain on an uptrend, backstopped by robust demand.”
Beijing and Shanghai Rentals Falling
In contrast to the growth in southern China’s office market, the property consultancy saw rents falling in Beijing and Shanghai.
The Chinese capital’s rents fell by 2.19%, from RMB 565.4 per square metre per month in Q1 2013 to RMB 553.0 per square metre per month in Q1 2014. Grade A rents in Shanghai, the mainland’s financial center, were seen declining by 2.48 percent from RMB 454.53 per square metre per month to RMB 443.26 per square metre per month in the first three months of this year.
In western China, Chengdu saw a steeper drop of 3.79 percent from RMB 182.10 per square metre per month to RMB 175.20 per square metre per month, earning the capital of Sichuan province 27th place in Cushman & Wakefield’s regional ranking.
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