Assuming that if there is no further outbreak of the epidemic, although the economic prospects are yet to be realised, and the lagging unemployment rate has not be stabilised, tracking resumption in work, production and markets in various industries, the overall office rental market activity is expected to improve. In order to avoid the office being vacated for a long period of time, some large office owners may lower their cost for rent. Coupled with the gradual entry of new office supply into the market, the rent slashes could become a major trend during the year, leading a solid support for the expansion of high-demand growth industries, for example, the financial industry, online technology companies, pharmaceutical and medical companies, and cloud computing, big data and other industries. Additionally, more and more developers and operators with high-quality office buildings have begun to implement their 5G allocation strategy for office buildings determined a year ago, convinced that they will help improve the quality of subsequent property assets.
Beijing: The project delayed due to the epidemic situation in the first quarter will start to enter the market one after and another, leading to supply pressure to reappear. However, the overall vacancy rate will continue to rise with subsiding rents. Since the epidemic has not yet ended, benefiting from the new business needs of online technology and medical companies, the business park projects will still be seen as the top line in the third quarter.
Shanghai: If the new office buildings are successfully launched in full, they will bring new office space that doubles year-on-year and will be the peak supply period for the next few years. Therefore, the vacancy rate of the overall office market in the third quarter will inevitably continue to rise, while market rents will continue to be in the downward channel.
Guangzhou: During the year, more than 650,000 square meters of new office space are expected to enter the market, an increase of more than 10% year-on-year, which will virtually increase the pressure on the overall office vacancy rate. Technology, media and telecommunications, as well as financial industry are expected to continue to support the demand of the office rental market. Given the gradual supply and demand stability, the rents of Grade A and Grade B office buildings in the next quarter are expected to decline slightly from the first half of the year.
Shenzhen: Affected by the government’s quantitative easing and epidemic relief loans measures, financial pressure of some small and medium-sized enterprises has been alleviated, resulting in a gradual recovery of the company’s expansion needs and temporarily offsetting some negative impacts towards the office market due to the uncertain economic outlook. Although the current epidemic situation is still waited to be an end, through the gradual transformation of the policies in the Greater Bay Area and Shenzhen’s pilot demonstration areas, strategic breakthroughs have gradually been affirmed, which can add value to office buildings in the long run.