Shanghai's real estate market has grown strongly in all sectors
last year amid robust demographic and economic growth, and the
sector can look forward to another generally promising year in 2008
on an optimistic outlook, Colliers International said yesterday in
its latest market research.
Rents and capital values are expected to grow across all key
property sectors in the coming 12 months though possibly at a
slower pace, while increasing monetary control and tightening
measures by the government might continue to bring uncertainties
especially in the investment market, the firm predicted.
Office
The city's Grade A office market remained vibrant in 2007 amid
buoyant business activities, with a notable expansion in demand by
tenants in the financial and professional services sectors.
In particular, in-house expansion and newly set-up businesses
have led to additional requirements for office space, bringing an
overall net absorption to around 263,000 square meters.
In terms of supply, a total of 227,100 square meters of new
Grade A office space were completed during the year. The overall
Grade A office vacancy rate fell to a record low of 2.5 percent
while the average rent rose 11.3 percent year on year to 9.12 yuan
(US$1.24) per square meter per day by the end of fourth quarter as
demand surpassed new supplies.
Meanwhile, there was keen interest in acquisition for investment
purposes, with en bloc or bulk area transactions hitting 560,000
square meters during the year. Citywide, capital value rose by an
average 26.6 percent year on year.
For 2008, Colliers predicts increasing corporate demand will
continue to underpin the market.
In contrast to 2007, the city's Grade A office supply will
increase notably to 843,300 square meters, with the bulk - 608,900
square meters, or 72 percent - coming from Pudong New Area,
followed by Jing'an and Putuo districts in Puxi which each
contributes 163,400 and 75,000 square meters.
As a result, a small rebound in the vacancy rate is expected in
2008, particularly for that in Pudong. Overall, rents will grow
around two percent while some new Grade A office buildings in
popular districts such as Jing'an and Lujiazui still able fetch
very good rent.
In the sales market, investors especially those from overseas
will continue to look for investment opportunities in Shanghai, and
they will likely spread their search to emerging districts such as
Putuo. The capital value of Grade A offices will likely increase by
around five percent in 2008.
Residential
Buying interest for residential properties was strong over the
past 12 months, driven by rising demand from both end-users and
investors.
In the high-end segment, supply was limited in the leasing
market, with only 2,060 units completed across the city in
2007.
Transactions among the high-end residential properties -
including villas, luxury apartments and serviced apartments -
stayed active on the back of abundant market liquidity, a growing
influx of expatriates, rising affluence of residents and also the
wealth effect of the stock market.
The average rent of high-end residential properties rose 1.5
percent from a year earlier to 171.2 yuan per square meter per
month. The overall vacancy rate, however, stood at a relatively
high level of 17.5 percent as some acquisition were more for
capital gains rather than rental income.
For 2008, the overall residential property market is expected to
hold firm, probably fueled by local residents' income growth and
upgrading demand while improving transport infrastructure will also
lead to housing demand in emerging districts.
In the high-end residential leasing market, supply will increase
to a total of 3,659 units in 2008. In particular, there will be
abundant supply of high-end apartments and serviced apartments,
reaching 1,381 and 2,006 units respectively in 2008, while supply
of villas remains rather limited, at 272 units.
Retail
Demand for retail space continued to remain robust last year in
both traditional and emerging areas amid strong consumer
confidence, rising purchasing power on the back of expanding
household income, as well as affluent tourists from the country and
abroad.
There was abundant supply in 2007 with 225,730 square meters of
retail space completed, most in downtown areas. Meanwhile, several
shopping malls were massively renovated and they repositioned their
tenant mix.
On the leasing front, international luxury brands and high-end
fashion retailers expanded their portfolio in Shanghai and have
been eager to secure large-area retail spaces in prime areas
especially on ground floor and in shopping centers.
For 2008, the strong momentum will continue.
The local supply will likely reach 656,008 square meters with
the majority - 439,000 square meters, or 73 percent - located in
emerging areas.
Industrial
A stellar external trade performance and robust manufacturing
activities translated into rising demand for industrial parks,
particularly in the Zhangjiang and Songjiang submarkets where a
nearly zero vacancy rate was recorded by the end of last year. In
2007, 699,200 square meters of new supply were completed, and the
average vacancy rate for Shanghai's major industrial parks hit a
record low of 2.4 percent. Average rent rose 12.1 percent year on
year to 0.87 yuan per square meter per day.
For 2008, the overall vacancy rate is expected to be lower for
industrial properties amid stronger market demand while the rental
value will likely maintain a steady growth, similar to the trend in
2007
(Shanghai Daily January 8, 2008)
