Scant supply spurs Guangzhou offices
Demand for grade-A offices in Guangzhou is picking up amid a gradual decline in supply, according to Phemey Pon Kai-choi, general manager for Guangzhou at DTZ Debenham Tie Leung.
Mr Pon said the demand and supply balance had improved in recent years, fostering a better prospect for the city's office sector. In the first half of the year, two buildings came on stream, adding 68,400 square metres of grade-A spaces.
The stock of grade-A offices has been raised to 1.23 million sq metres, mainly in the Tianhe business district and areas such as Dongfang Road and Zhongshan Road.
Mr Pon said Tianhe accounted for 40 per cent of grade-A office stock, Dongshan 32 per cent and Yuexiu 28 per cent.
The office vacancy rate was relatively low at 11 per cent in the second quarter, he said.
Demand for quality office buildings outstripped supply, especially for large floor spaces, Mr Pon said.
Rents registered a stable performance with slight upward movements, standing at US$12.5 per square metre a month in the second quarter, he said.
Mr Pon said the Guangzhou government's drive to develop Zhujian New City also reflected confidence in the market. With a better outlook, some developers were prepared to undertake new projects, he said.
The Guangzhou government has planned to complete the conversion of Zhujian New City into a central business centre within 15 years.
The new hub is expected to become an integrated centre of finance and commerce while providing the locals with room for leisure.
With the central part planned as a commercial district, there will be cultural facilities in the area neighbouring Hai Xin Sha Island. Developments along Huang Pu Road will be planned for financial purposes. The district will be surrounded by a green belt.
According to DTZ, Guangzhou's office rents and prices were in a downward cycle between 1997 and 2000 following a surge in supply. They began to recover slowly in 2000 as supply dwindled.