Embed Size (px)
Citation preview
Q4 2020
knig
htfra
nk.c
om.c
nShanghai Grade-A Off ice Market Report
Office leasing demand from a diversity of industries rebounds
2
S h a n g h a i g R a D E -a O F F i C E M a R K E T R E P O R T Q 4 2 0 2 0
in the fourth quarter (Q4), there were several new completions mainly located in emerging and secondary business districts, adding 434,547-sqm office space to the Shanghai grade-a office market. The new supply in 2020 totalled 1.14 million sqm , a YoY increase of 55%.
Leasing demand was weak in the first three quarters this year, but rebounded
O V E R V I E W A N D O U T L O O Kin Q4 with the overall vacancy rate decreasing by 0.3 percentage point from the previous quarter to 19.8%. Leasing demand from financial enterprises including asset management, securities and professional services, law firms, accounting firms and design companies performed strong.
On condition that the pandemic is under
control, there will be over 500,000-sqm office space to be added to the market in the first quarter of 2021 (Q1 2021). it is expected that the overall vacancy rate will pick up slightly due to high vacancy rates of new completions and the market rent will continue to drop given that the rental budget is strictly controlled by occupiers.
FIGURE 1: Shanghai Grade-A office market indicators[1]
2020 q4Vacancy rate
19.8%
2020 q4Rent
8.34RMB/sqm/day
2020 q4 New supply
qoq change:
Outlook (q1 2021) :
1.0%qoq change:
Outlook (q1 2021) :
0.3pps30.1% qoq change:
Outlook (q1 2021) :
S ource: Knight Frank Research
[1] Rent refers to average effect ive rent
434,547sqm
FIGURE 2: Shanghai office development pipeline, 2020-2023
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
2020 2021 2022 2023
South Jing’an (Nanjing West Road)Pudong (Lujiazui, Zhuyuan, Huamu, Century Avenue,Qiantan, Post-expo)Xuhui (Xujiahui, Xuhui Binjiang, Huaihai Middle Road)Huangpu (People’s Square, Huaihai Middle Road, The Bund)Changning (Zhongshan Park, New Hongqiao, Linkong)Putuo (Changfeng)Hongkou (North Bund, Sichuan North Road)North Jing’an (Daning, Railway Station)Minhang (Hongqiao CBD,Xinzhuang)Yangpu (Wujiaochang, Dalian Road, Yangpu Binjiang)
S ource: Knight Frank Research
sqm
Located in Railway Station area of Jing’an District and jointly developed by Financial Street holdings and Phoenix Property, the 1FS was completed in Q4, adding 70,000 sqm office space to the market. Sunshine Riverside Building in Xuhui Binjiang was completed in Q4, bringing approximately 115,000-sqm office space to the market. Located adjacent to hongqiao Road Metro Station and developed by anar group, iM Shanghai was completed with a total gFa of 140,000 sqm in Q4.
in Q4, the overal vacancy rate in Shanghai’s grade-a office market decreased by 0.3 percentage point from the previous quarter to 19.8%. The total net absorption in 2020 increased significantly to 704,000 sqm due to a full recovery in demand.
Of new leases transactions in Q4, over 60% of the leasing demand came from domestic companies. Domestic companies were still the major players in the market. however, office requirements tended to become more diversified in terms of sectors. Besides financial, biopharmaceutical and on-line
S U P P LY A N D D E M A N D
FIGURE 3: Grade-A office supply, net absorption and vacancy rate
education sectors, leasing demand from other sectors such as iT, manufacture, real estate, culture & enterntainment and trade picked up but in different degrees. in the financial and professional services sectors, domestic occupiers had a high market share whilst multinational
3
S h a n g h a i g R a D E -a O F F i C E M a R K E T R E P O R T Q 4 2 0 2 0
S ource: Knight Frank Research
'000 sqm Supply (left) Net absorption (left) Vacancy Rate (right)
0%
5%
10%
15%
20%
25%
30%
0
500
1,000
1,500
2,000
2,500
3,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
in Q4, the average grade-a office rent of Shanghai continued to drop by 1.0% QoQ to RMB8.34 per sqm per day or a YoY decrease of 9.2%. although the market rent continued to decrease in Q4, the QoQ decline narrowed by approximately 1.6 percentage points.
The average rent in Core CBDs decreased slightly by 0.2% QoQ to RMB10.83 per sqm per day. The rent in Little Lujiazui stayed at the same level of Q3, and in nanjing West Road and huaihai Middle Road areas, their rents edged down slightly. given the frequent leasing activity of financial institutions and professional service enterprises in the core area, the landlords had a high level of confidence. Except for offering rent-free period, they were unwilling to lower the asking rents, which constituted an important reason why the market rents in Core CBDs did not see a sharp decline.
R E N T S
FIGURE 4: Grade-A office rental trend
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Q1 Q3Q2 Q4 Q1 Q3Q2 Q4Q1 Q3Q2 Q4 Q1 Q3Q2 Q4Q1 Q3Q2 Q4Q1 Q3Q2 Q4 Q1 Q3Q2 Q4Q1 Q3Q2 Q4Q1 Q3Q2 Q4Q1 Q3Q2 Q4Q1 Q3Q2 Q42010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
RMB/sqm/day
companies’ demand in real estate, culture and enterntainment, retail and education sectors was strong in Q4. Co-working brands played an active role in the market. Distrii rented 4,200-sqm office space in One East in Q4.
S ource: Knight Frank Research
Area Building Tenant Area(sqm) Type
North Bund Raffles City the Bund
China Renaissance Securities 4,200 New Lease
Huangpu Riverside One East Distrii 4,200 New LeaseQiantan New Bund Centre Rosefinch Investment 2,900 New Lease
Huaihai Middle Road ICC One Valentino 1,000 New Lease
Qiantan Crystal Plaza Shanghai Fengjing Technology 700 New Lease
Little Lujiazui Jinmao Tower Probquant 664 New Lease
TABLE 1: Major Grade-A office leasing transactions, Q4 2020
S ource: Knight Frank ResearchNote: a l l t ransact ions are subject to conf i rmat ion
4
S h a n g h a i g R a D E -a O F F i C E M a R K E T R E P O R T Q 4 2 0 2 0
I N V E S T M E N T M A R K E Tin Q4 2020, there were four en-bloc office transactions recorded in the investment market, for a total consideration of over RMB8 billion. The total amount of en-bloc office sales reached over RMB32 billion in 2020 with a slight increase compared with the previous year. The COViD-19 pandemic in 2020 did not curb investors’ enthusiasm for office assets and owner-occupiers were the major players in the market. Of all en-bloc transactions in 2020, the number of traditional financial insititutions including local banks, insurance and security companies accounted for over
65% of buyers. it is also a trend for some technology enterprises and pharmaceutical enterprises with abundant funds to purchase R&D buildings for their own use.
Of all the en-bloc transactions in Q4, CCB Life, a subsidiary of China Construction Bank acquired greenland Bund Tower 4 with 58,800-sqm grade-a office and ancillary spaces for RMB5.55 billion. This was another large-scaled financial institution settled down in greenland Bund after Bank of Shanghai and Sealand Securites. The 7th to 23rd floors of
Shanghai’s Tomorrow Square was finally sold through auction for RMB1.9907 billion with a total gFa of 36,500 sqm. Shanghai Zhangjiang hi-tech Park Development Company Limited sold the partial asset owned by its wholly subsidiary to hansen (Shanghai) health Technology Company Limited for approximately RMB900 million. The sold asset includes the commercial properties located at no.287 on Xiangke Road and no.1158 on haike Road in Pudong of Shanghai with a total gFa of 21,900 sqm.
Shanghai office inventory, rents and vacancy rates of major business districts
S ource: Knight Frank ResearchNote: uni t for market inventory – 1 ,000 sqm; rents using average effect ive rent at RMB/sqm/day ; VR refers to average vacancy rate.
ShANGhAI GRADE-A OFFIcE MARKET DAShBOARD
The BundPeople’s SquareRailway StationHongqiao CBDInventory: 1,348 Rent: 5.3 VR: 29.4%
Inventory: 1,355Rent: 7.5VR: 21.0%
Inventory: 494Rent: 7.9VR: 4.4%
Inventory: 497Rent: 6.4VR: 54.7%
Inventory: 762Rent: 6.4VR: 21.5%
Inventory: 409Rent: 7.4VR: 9.0%
Inventory: 1,339Rent: 10.7VR: 7.4%
Inventory: 570Rent: 6.8VR: 27.2%
Zhongshan Park North BundNanjing West RoadInventory: 887Rent: 8.4VR: 11.5%
Inventory: 48.5Rent: 8.8VR: 14.0%
Inventory: 67.9Rent: 8.1VR: 41.3%
Little LujiazuiQiantanXuhui BinjiangNew Honqiao Xujiahui Century Avenue
Inventory: 953Rent: 9.7VR: 9.2%
Inventory: 2,787Rent: 11.5VR: 8.9%
Inventory: 943Rent: 8.3VR: 14.5%
Huaihai Middle Road
Core CBDCBDSecondary business districtEmerging business district
21.54million sqm
Total Inventory
Knight Frank Research provides strategic advice, consultancy services and forecasting to a wide range of clients worldwide including developers, investors, funding organisations, corporate institutions and the public sector. All our clients recognise the need for expert independent advice customised to their specific needs. Important Notice: ©Knight Frank 2021: This document and the material contained in it is general information only and is subject to change without notice. All images are for illustration only. No representations or warranties of any nature whatsoever are given, intended or implied. Knight Frank will not be liable for negligence, or for any direct or indirect consequential losses or damages arising from the use of this information. You should satisfy yourself about the completeness or accuracy of any information or materials and seek professional advice in regard to all the information contained herein. This document and the material contained in it is the property of Knight Frank and is given to you on the understanding that such material and the ideas, concepts and proposals expressed in it are the intellectual property of Knight Frank and protected by copyright. It is understood that you may not use this material or any part of it for any reason other than the evaluation of the document unless we have entered into a further agreement for its use. This document is provided to you in confidence on the understanding it is not disclosed to anyone other than to your employees who need to evaluate it.
Knight Frank Research Reports are available at knightfrank.com.cn
R E C E N T M A R K E T - L E A D I N G R E S E A R C H P U B L I C AT I O N S
We like questions, if you’ve got one about our research, or would like some property advice,we would love to hear from you.
Regina Yang
Director, head of Research & Consultancy,
Shanghai & Beijing
+86 21 6032 1728
Martin Wong
associate Director,
Research & Consultancy, greater China
+852 2846 7184
Timothy Chen
Senior Director, Strategic advisory,
China
+86 21 6032 1769
Mars Yin
Senior Manager
Research & Consultancy
+86 21 6032 1730
Jonathan Rideout
head of Office Services,
Shanghai
+86 21 6032 1713
R e s e a r c h & C o n s u l t a n c y S h a n g h a i O f f i c e S e r v i c e s
China CommercialReal EstateInvestmentMarket
Shanghai LogisticsWarehouse MarketReportq3 2020
Shanghai OfficeMarket Reportq3 2020
Beijing OfficeMarket Reportq4 2020
Shenzhen OfficeMarket Reportq4 2020
Guangzhou OfficeMarket Reportq4 2020
