Despite a nationwide drop in home prices, the cost to rent prime office space in Beijing is skyrocketing. Beijing has now claimed the title of highest growth in prime offices prices in the world. Throughout the city, the total occupancy price for prime office space has skyrocketed thirty-eight percent. Close behind, Shanghai has followed Beijing in terms of rental growth, while the region as a whole continued to grow in 2011, continuing eight percent over the year.
Just a dramatic increase has come with consequences as well. Because of the increase in demand for office space, vacancy rate in the capital has dripped. In Beijing, in 2012, the vacancy rate for grade A office space fell 4.2 percent. This has been lowest it has ever been in the past ten years. Even with the flux and changes domestic insurance companies and state-owned enterprises continue to dominate the market for office space, according to industry analysts, just like they have been doing all the previous years.
According to Savills, the demand for office space in Beijing will continue headstrong for the next three years. This has caused overall demand in Beijing and Shanghai office markets to keep growing in 2012, even with the reduced economic growth forecasts and outrageously high costs. Of course eventually the spike in rental prices will slow down as the supply of office spaces increases in the two cities, according to research from real estate consultancies.
I think that as more realtors in China build higher and higher skyscrapers with more office space hopefully for the citizens of Beijing the office space rental prices will go down significantly.
ReplyDeleteThe economy in China is growing super-fast. There's nothing they can do to stop prices from rising, but the other half of the problem is that so many citizens live in the cities. Imagine NYC times 10.
ReplyDeleteThis bubble that is building will pop eventually. Their economic growth is incredible when you think about it though.
ReplyDelete