The average price of prime office space in Guangzhou rose to a record high of 32,070 yuan (HK$39,300) per square metre in the second quarter, despite growing caution among investors about the outlook for the commercial property market.
The record-high figure, tracked by property consultancy Colliers International, was up 2.5 per cent on the average price in the first quarter.
'The increase was due to limited supply of available grade-A office buildings in Guangzhou. And there were also some landmark buildings on offer during the quarter, ' said Bryan Chen Houqiao, of Colliers' South China office. One of the notable transactions in the second quarter was an en-bloc sale of Poly D Plaza in the Tianhe district.
Guangzhou Automobile Group bought the 45,600 square metre property for 1.4 billion yuan, Colliers said. Another was the sale Fuliyingkai Square, which was the first grade-A office building in Guangzhou to sell for over 40,000 per square metre, property agency Knight Frank said.
'Indeed, some buyers are becoming more prudent because they are unsure if rents of commercial properties will continue to climb; while some investors expect a slight relaxation of housing policies, so they are watching to see when they should return to the home market,' Chen said.
'Therefore, with fewer buyers in the market, more landlords are putting their commercial properties on the rental market, and a series of new projects will also be launched in Guangzhou's Pearl River New City.'
Rents in the second quarter remained steady at 161.3 yuan per square metre a month.
Chen said he expected selling prices to continue to jump this quarter, as some landmark properties such as The Pinnacle are now asking for 35,000 to 40,000 yuan per square metre.
That is still lower than many mainland cities such as Shenzhen, where prime rents can reach 60,000 yuan per square metre.
Rents may come under downward pressure because of abundant supply.