 The average rental rates for Shanghai's Grade A offices continued to rise in the first quarter with downtown Jing'an District remaining the highest, according to Colliers International, a real estate services company. Asking rents rose to US$1.15 per square meter per day across the city, up 2.9 percent from a quarter earlier, while transaction rents reached US$1.05 per square meter per day, up 8.2 percent from the same period last year. Among Shanghai's major business areas, Jing'an and Pudong secured the highest average asking rents - US$1.34 and US$1.21 per square meter per day respectively - due to a comparatively higher quality of buildings, Colliers said. In addition, Pudong also recorded the highest growth rate in asking rents in the period - up 18.1 percent from a year earlier - fuelled by strong demand for office space by expanding overseas financial institutions in and around the Lujiazui Finance & Trade Zone. In contrast, Jing'an witnessed the lowest rental growth in the period, up 0.8 percent year on year. Colliers said this was because rents in Jing'an were already at a very high level and limited office space was added. Only two new Grade A office buildings - Plaza 66 Tower II and Hongyi Plaza - with combined space of 112,400 square meters, were introduced to the market in the first quarter, Colliers' survey showed.Asking rents for Plaza 66 Tower II, a 51-floor office property on Nanjing Road West, are US$1.3 to US$1.5 per square meter per day while those for Hongyi, an office and retail complex in Huangpu District, range from 80 US cents to US$1.1 per square meter per day. Limited supply and robust demand helped push the vacancy rate of Grade A offices in Shanghai down to 3.5 percent in the first three months.Of the six major business areas, Xuhui and Luwan districts had the lowest vacancy rates at 1.2 percent and 1.4 percent respectively. Huangpu and Jing'an had the highest at 7.6 percent and 5.9 percent respectively. The occupancy level reached 90 percent for Plaza 66 Tower II and 80 percent for Hongyi Plaza.Meanwhile, gross yield of Grade A offices in Shanghai slipped 0.16 percentage point to 7.79 percent in the first quarter. The capital value for Grade A offices rose 4.8 percent to US$4,920 per square meter, the survey showed. En-bloc acquisition was also recorded in the office market during the period.Hong Kong-listed Agile Property Holdings Ltd said last month that it acquired the former Jinchang Plaza project. The mixed-use development at the intersection of Nanjing Road West and Xizang Road Middle in Huangpu District is still under construction. It will boast premium office and retail space, as well as a luxury hotel with a combined gross floor area of more than 114,000 square meters.This year, a total of 458,000 square meters of new Grade A office space - two thirds will be in Puxi - is expected to reach the market. Major projects include Park Place near Jing'an Temple, which started pre-leasing last week with a starting price of US$1.3 per square meter per day. Colliers also anticipated that the average vacancy rate of Grade A offices in Shanghai will be between three and four percent this year, with both rent and capital value remaining near present levels. More News:
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