2 May 2017
Beijing Prime Office Market Report Q1 2017
In the first quarter (Q1) of 2017, abundant supply lifted the vacancy rate in Beijing’s Grade-A office market by 0.2 percentage point quarter on quarter (Q-o-Q), while the average rent was dragged down by 0.8% Q-o-Q. In the quarter, enterprises from the finance, Internet and high-tech sectors remained the main drivers for leasing activities. The average sales price of Grade-A office properties decreased by 0.4% Q-o-Q. One major enbloc office investment transaction was concluded in Q1.
In Q1 2017, abundant supply drove up the vacancy rate in Beijing’s Grade-A office by 0.2 percentage point Q-o-Q to 6.9%, while the overall rent dropped by 0.8% Q-o-Q, averaging at RMB370 per sqm per month (see Table 1). Two Grade-A office buildings, namely Hatamen Plaza in East Second Ring Road and Zhongguancun Capital Building in the Zhongguancun submarket, were launched in Q1 and brought 85,800 sqm and 50,000 sqm of new office space respectively to the market (see Table 1). CWTC Phase III B in the CBD and Heng Yi Plaza in Asian-Olympic Area, which were estimated to be launched in Q1, delayed the openings to Q2 and Q3 respectively
In Q1, the average sales price of Grade-A offices slightly dipped by 0.4% Q-o-Q to RMB53,068 per sqm (see Table 1). Given sustainable supply and increasing inventory, landlords became more realistic on their expectation on rental growth and took the initiative to adjust their leasing strategies to accelerate absorption. The average vacancy rate in the Grade-A office market will continue edging up, especially in the CBD area where a large number of new buildings will come online in the coming five years, exerting intense pressure on vacancy rates in the market.
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