Growth in Chinese new office supply of some forty million square meters in the country’s 14 major cities will likely to be seen in the next two years, up nearly twice when compared with the 2012 level, according to market information.
To capture higher market share amid a concern of office oversupply in the commercial real estate market, office developers have been focusing on their business model innovation, alongside building quality. Taking the Victory Plaza in Tianhe District as an example, the twin tower skyscraper complex has current occupancy of 85%. Office tenants are likely to be benefited from the mall enhancement works, including a higher number of shops with fashion brands, as well as shops for food and beverage, of which approximately 5,000 meters of floor spaces are still under negotiations. Most of the shops will start their operations to help tap the market in the coming National Holidays.
Meanwhile, occupancy in Guangzhou IFC is likely to improve further from 85% in 2013, since most of the existing tenants are still at their initial stage of investments, who should have a greater chance to renew their leases. And given most of them are above mid-level floor, the current vacant office spaces could be rented at RMB200-300 per square meter.
Looking ahead, many high quality new office spaces are going to be launched in Zhujiang New Town, which are mostly favored by large domestic enterprises. As of last quarter-end the monthly rent of the district rose 1% Q-o-Q to close to RMB170 per square meter, and the vacancy was at 25.8% level, down 0.4 percentage point. By this year end, overall rent should remain stable since most of the new offices to be launched will be for self-occupied. Altogether, five new projects will be put onto the market from now till the end of this year.