In Q2 2006, overall demand in the office market was 28,100 sq m, mainly from banking, insurance, and securities firms, as well as increased investment from high-tech companies. Effective rentals in Shanghai rose from US$0.98/sq m/day in Q1 2006 to reach US$1.01/sq m/day, representing a jump of 17.44 percent year-on-year (y-o-y).
“In 1999, Shanghai’s office market bottomed out, and since then, average rentals have hovered around US$0.60/sq m/day to US$0.80/sq m/day for the past few years. So, this is a very significant development for the Shanghai office market, as it indicates that the office market is growing at a very rapid pace, with strong demand from foreign and local companies alike,” explained Ms Lina Wong, Managing Director, East China, Colliers International.
In particular, the effective rental growth for Grade A office space in Pudong shot up by 26.64 percent year-on-year, outpacing that of Puxi, which increased by 16.38%. This shows that Pudong, with the Lujiazui financial district, is benefiting from robust demand from international financial institutions setting up offices or expanding operations in Shanghai ahead of China’s liberalization of its financial sector at year end.
Meanwhile, the capital values of Grade A Office space edged up slightly by 0.73 percent from the first quarter to reach US$4,018 per sq m, while the rental yield reached 8.64 percent.
Looking ahead, the optimistic outlook for the Shanghai office market is expected to lead to a further rise in rental and capital values, albeit at a slower rental growth rate.
“With Shanghai being the financial epicenter of China, we expect more MNCs to continue to establish regional headquarters here in the second half of 2006, and international financial institutions to further expand their presence, leading to a further increase in average Grade A office rentals to between US$1.04/sq m/day and US$1.06/sq m/day by year end,” concluded Ms Wong.
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About Colliers International
Colliers International is a global partnership of independently owned commercial real estate firms. In Asia Pacific, Colliers International is wholly owned by the Colliers Macaulay Nicolls (CMN) Group of Companies, which is the largest member of Colliers International. By instilling in all its employees a culture of Knowledge, Colliers International is one of the leaders in providing property knowledge solutions and services to its clients. The organization’s more than 9,300 employees span the world in 241 offices in 54 countries across 6 continents.
Contact Information
This information is distributed for Colliers International (Shanghai) by:
Ms Kim Ang
Manager, Marketing & Communications
Colliers International
Tel 86 21 6141 3603
Fax 86 21 6141 3699
Mobile 86 21 136 8197 9319
Email Kim.Ang@colliers.com
www.colliers.com
