Commercial rents bounce back

09:01, October 15, 2010      

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Commercial property rents increased slightly in first-tier cities in the third quarter as demand continued to fuel a rebound in the sector, data compiled by real estate consultancies showed Thursday.

Office space demand grew and leasing activity was high in the third quarter in Beijing, with China World Trade Center Tower III now open. The building is the tallest in Beijing at over 80 stories. The overall rental growth increased 8.5 percent quarter to quarter from 249.77 yuan ($37.54)to 271 yuan ($40.73) per square meter per month based on net floor area, Jones Lang LaSalle said in a press release Thursday.

"We expect rental growth to slow as more expensive buildings enter the market in the fourth quarter in Beijing," said Zhang Ying, managing director of Jones Lang LaSalle. "Approximately 400,000 square meters of new office space is expected to come online, with 60 percent of the new space located in the CBD, so the new supply will help temper rent growth."

In Shanghai, office rents rose across all business districts in the third quarter with the average rent rising 2.9 percent, , real estate firm Savills (Shanghai) said in a report Wednesday.

Meanwhile, demand for retail space in Beijing remained strong in the third quarter, and rental prices went up by 4.2 percent quarter-on-quarter from 573 to 597 yuan ($85-89) per square meter per month.

In Shanghai first-floor prime shopping mall rents increased 0.3 percent in the third quarter to an average of 34.6 yuan ($5.20) per square meter per day, according to Savills (Shanghai).

"The thriving economy and strengthening consumer confidence have fueled the rebound," Qin Xiaomei, head of research with Jones Lang LaSalle, said Thursday.

Industry watchers said more investors will enter second- and third-tier commercial market.

"Some investors already plan to invest in second- and third-tier cities, where ... there's a lot of room for growth," said Pang Shudong, head of Jones Lang LaSalle's Beijing Investment Team said Thursday.

"But a lack of transparent rules will prove to be major obstacles to investing in smaller cities," Pang said.

Source: Global Times


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