Beijing's office market registered a record-breaking performance this year, as shown from the high net absorption and low vacancy rate, which may offer more expectations for 2022, experts have said.
Net absorption reached about 1.14 million sqm in 2021, marking the best record in the Chinese capital’s history, according to a recent report of Colliers International, a global real estate agency.
Most demand came from the Central Business District (CBD), Lize Financial Business District and Ya’ao area, where communities and facilities related to the Olympics are located, it said. Many new property projects have entered those three areas in recent years.
The surge of demand has mainly been driven by expansions of internet technology companies.
Lu Ming, director of the research department for North China at Colliers International, said this year new bulk lease transactions – in which the rental area is larger than 5,000sqm – have reached 1.4 million sqm, including 450,000 sqm in Grade A office and 700,000 sqm in industrial parks.
New economy companies have become the most important factor influencing Beijing’s office market, Lu added.
Meanwhile, vacancy rates fell to 15.1 per cent, down 4.4 percentage points year-on-year. As a result of the growing demand from top internet companies, four of the Grade A office markets recorded a vacancy rate lower than 10 per cent. Lize’s vacancy rate dropped from 76.6 per cent to 48.9 per cent over the year.
The drop in rental rates stabilised in the second half of 2021.
The average rate reached about 340.4 yuan ($53) per sqm per month in the fourth quarter, down 2.9 per cent year-on-year, after an eight per cent drop over the same quarter in 2019. Some sub-markets showed growth in rental rates, such as Wangjing, Jiuxianqiao and CBD areas, according to the report.
Industrial parks also recorded a good performance this year, with the vacancy rate falling 7.6 percentage points year-on-year to 14.1 per cent, and the average rent growing 3.5 per cent annually, it said.
Though Beijing has seen several Covid-19 outbreaks this year, its impact has largely weakened, resulting in a surge in the demand for office spaces, said Chen Nan, deputy director general of North China at Colliers International.
As the Xiong’an New Area and Beijing’s sub-centre become more mature and handle more non-capital functions, the city pattern and industrial distribution will see a drastic change in the next five years, Chen added.
CHINA DAILY/ASIA NEWS NETWORK