Beijing office rent market slowing down
Rents likely to continue rising moderately in the next four years, though, given continued demand and limited supply, analysts say
Beijing's market for premium office space, which has seen an acceleration in prices and rents over the past three years, is slowing down, but sustained demand and limited supply is expected to raise the overall rental level in the city over the next couple of years.
Sun Xiaodong, a managing director of an immigration company in Beijing, has been looking for a new office in the city's central business district (CBD) for months. He is not happy with the property management service in the office building he currently works in and wishes to move after his lease ends next month.
"I started to look at offices from November. The rent level has since been stable. But it's hard to find a place that offers good value for money," said Sun.
After the Lunar New Year holidays last month it had become even more difficult to find an attractively located office at a reasonable price, as many more firms had entered the market for office space. "If we cannot find any good places we will have to stay here for another year," he said.
Demand for prime offices in Beijing shot up between 2010 and last year as domestic and multinational enterprises expanded aggressively following the global financial crisis. The average rental level for Beijing's grade-A office buildings doubled within three years before softening in the second half of last year due to the slowing economy.
Some industry researchers now expect office demand will pick up again this year as the global and domestic economies begin to stabilise, and rents may grow mildly for the year after some adjustments.
"The prime-office-building market is very sensitive to the macroeconomic environment," said Wei Dong, research director for north China with global property consulting firm DTZ. "We believe China's economy will do better this year and the upward trend in the office building sector will not change."