Beijing, Oct. 13 (Xinhua) — Net absorption of office buildings in Beijing hit a record high in the third quarter of 2021, according to the Beijing Real estate Market Review and Outlook for the third quarter of 2021 released by INTERNATIONAL commercial real estate services and investment firm CBRE on Wednesday.
The report pointed out that the future development of Beijing’s commercial real estate market will further break new ground thanks to the implementation of the Beijing Stock Exchange, the development plan of high-end industries and the implementation of the international consumer center city construction policy.
In the office market, technology and financial tenants remain the main sources of demand for office space in Beijing. In the third quarter, the diversified operation of TMT’s leading enterprises injected new momentum into the market, making the industry’s new lease demand account for 43%, and completed a number of large-area lease transactions. Finance accounts for 23%, followed by funds, insurance and securities. Law firms in the professional services sector are still expanding and relocating, with demand concentrated in the CBD.
In the third quarter, net absorption of Beijing office buildings reached a record high of 353,000 square meters, up 18% from the previous quarter. CBD and Lize accounted for 83% of the total net absorption of the city. The office vacancy rate fell for the fourth consecutive quarter, falling 0.9 percentage points to 16.1 per cent, driven by strong demand. Except financial Street, where the vacancy rate continued to rise due to spillover demand, and Zhongguancun, where the leasable area increased slightly due to the double reduction policy, the vacancy rate of other major business districts declined to varying degrees.
From the rental point of view, the overall rental decline narrowed, the average office rent quotation also decreased by 0.3% to 395.9 yuan per square meter per month.
Zhang Jisu, head of office tenants at CBRE North China consulting and transaction services, said the window of opportunity has resulted in a concentrated release of new rental demand this year and record net absorption this quarter. The future launch of the Beijing Stock Exchange will also strengthen Beijing’s competitiveness in the two major industries of science and technology and finance, and drive innovative enterprises, investment institutions and relevant professional service institutions to gather in Beijing. As new supply and vacancy rates fall, Mr Zhang expects rents in more sub-markets to bottom out.
From the perspective of investment market, in the third quarter of 2021, Beijing property investment market reached a total of 11 large transactions. As all of them were small and medium volume transactions of less than 2 billion yuan, and eight of them were less than 1 billion yuan, the total volume of transactions fell from the previous quarter, but the total amount of the first three quarters still exceeded the same period of last year.
According to the report, after the intensive investment activities in the previous stage, commercial real estate transactions have entered a short rest period, and the complex and changeable market environment also makes the price game between buyers and sellers fall into anxiety in the short term. However, given that many sellers are still actively putting quality properties on the market, and that the recent strong recovery of property leasing fundamentals, especially office buildings, is expected to boost buyer confidence, these favorable factors constitute the window of opportunity for investors in Beijing and are expected to facilitate future deals.
In the third quarter, office products accounted for 51% of the total transaction value of Beijing’s property investment market, and still occupied the “top seat” of the transaction property. With the introduction of specific policies on the construction of Beijing international consumer Center, the retail property has gradually attracted the attention of investors. New infrastructure-themed property transactions rose to prominence, accounting for 21% of the total transaction value. The three new infrastructure head operators purchased a full-fledged logistics park in Tongzhou, a data center asset package in Fangshan, and a factory in Shunyi that can be converted into cold chain logistics.
Ji Gang, head of INVESTMENT and capital markets of CBRE North China, pointed out that with the implementation of Beijing’s new economy and new infrastructure development strategy and the strengthening of Beijing’s advantages, as well as the improvement of financing channels such as public REITs and Beijing Exchange, more diversified trading entities will be introduced on the demand side of bulk property in the future. On the supply side, logistics real estate, pharmaceutical real estate, digital real estate and other emerging sectors will provide investors with more high-quality and rich investable properties. (after)