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Real estate prices rise steadily in major cities
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While major property sectors in Shanghai, Beijing and Guangzhou continued to grow steadily during the third quarter, real estate markets in other major cities across the country also proved to be sound as investors and developers remained optimistic about opportunities in those emerging cities, a recent industry analysis conducted by CB Richard Ellis has concluded.




The prime office market remained buoyant during the third quarter of 2007. The average price of quality office space rose 9.8 percent to 17,817 yuan (US$2,375) per square meter from a quarter earlier as occupiers continued to absorb office space.


Rentals rose two percent quarter on quarter in the Grade A office market and jumped 4.9 percent in Grade B buildings. About 213,835 square meters of office space was completed during the three months, including two Grade A premises: CapitaRetail SZITIC Plaza and The Landmark. The overall vacancy rate fell from 15.9 percent in June to 13.6 percent in September.


The retail market was relatively stable in the period, except for a significant rental surge in premium top-grade shopping centers in Luohu District. The average monthly rent for ground floor space of shopping malls dipped 0.8 percent to 23.8 yuan per square meter per day while first floor rents rose 2.3 percent to 12.8 yuan per square meter per day. In September, the 45,180-square-meter second phase of CapitaRetail SZITIC Plaza was completed in Xiangmihu area, which is fast emerging as a new retail hub in Shenzhen. The overall vacancy rate climbed to 8.2 percent by the end of the quarter.




Demand was stable in the prime office market during the third quarter with average rents increasing moderately and vacancy levels continuing to drop. Overall rents rose one percent from three months earlier to 63.6 yuan per square meter per month while the average vacancy rate dipped to 20.1 percent in September from 20.6 percent in June. Leasing activities were relatively muted and most transactions were concentrated in the Grade B office market.


No new completions were registered in Dalian's retail market during the quarter and the vacancy rate was down 0.5 percentage points to 2.2 percent at the end of September. Ground-floor rents edged up 1.1 percent to 25.4 yuan per square meter per day while first-floor rents increased by a moderate 0.2 percent to 16.9 yuan per square meter per day.




The prime office leasing market in Tianjin proved to be stable in the July-September period, with the average rent rising 0.2 percent to 98.7 yuan per square meter per month. As no new supply came on the market, the vacancy rate fell 1.4 percentage points to 17.7 percent at the end of the quarter. In the strata-title sales market, there were very few properties for sale and prices increased one percent to 12,500 yuan per square meter.


With major properties under renovation, the prime retail property vacancy rate rose to 14.4 percent. However, daily ground-floor and first-floor rents increased 0.4 percent and 1.8 percent to 16.7 yuan per square meter and 9.8 yuan per square meter, respectively.




With no new prime office space opening in Hangzhou, average office rents increased at an accelerated pace in the third quarter - rising 1.6 percent to 107.3 yuan per square meter per month. And the overall vacancy rate dropped 0.9 percentage points to 10.6 percent. Meanwhile, prime office strata-title sales prices enjoyed continuous growth, with the average price jumping 6.2 percent to 15,788 yuan per square meter.


More office buildings in Qianjiang New City are due to hit the market in the first half of 2008. In the office sales market, the Bank of Communications acquired the 43,229-square-meter Bluewhale International Building at about 15,000 yuan per square meter.


Strong demand and lack of new supply in the prime retail market kept vacancy levels low at 2.7 percent. During the period, rentals for ground-floor and first-floor space recorded quarter-on-quarter growth of 4.2 percent and 3.7 percent, respectively, to be secured at 19.8 yuan per square meter and 16.1 yuan per square meter per day.




Prime office rents in Chengdu rose 0.6 percent to 89.9 yuan per square meter per month. The average rental of Grade A office space increased two percent from a quarter earlier as some Grade A office buildings with high occupancy rates such as Huiri-Yangkuo Plaza and Times Plaza raised asking rents due to decreased available leasing space.


Moreover, the delayed release of some office buildings also led to a shortage of new supply. Vacancy rates for prime offices dropped 3.9 percentage points to 28.4 percent during the third quarter.


At the same time, Chengdu's prime retail market witnessed an increase in rents. The vacancy rate rose to 6.4 percent from six percent in the last quarter due to an increase in vacant areas in prime department stores in Luomashi District.




No new openings in the prime office market was recorded in Xiamen in the past quarter. The average price of prime office premises rose slightly, while rents remained almost unchanged during the period. Future supply in the coastal city will be concentrated in the Guanyinshan and Wuyuanwan business zones. Six office buildings in Guanyinshan have been completed and will be put into operation early next year. Ruijing Commercial Plaza, the first large-scale shopping center in east Xiamen, was completed in the past quarter.


The overall vacancy rate of the city's prime retail properties increased 2.4 percentage points to 25.5 percent at the end of the quarter.


(Shanghai Daily November 6, 2007)

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