OFFICE rents in Beijing and Shanghai are likely to become even more expensive this year due to the shortage of quality space, according to a Colliers Jardine report. The report said average office rentals in Beijing were $55 per square foot per month, an increase of more than 10 per cent over the past six months. Rentals were expected to rise a further five to 10 per cent before peaking at an average of $58 to $61.50 per square foot during the first half of this year. The report also expected further rental growth of five to 10 per cent for office properties in Shanghai for the next 12 months. 'Due to the shortage of quality space, all grade A office buildings remain fully let with long waiting lists,' it said. 'However, the large volume of completions expected between 1996 and 1998 will cause rents to level off towards the end of this year before falling in 1996.' It estimated office rentals for grade A space in Shanghai at an average of $54 a square foot per month, an increase of more than five per cent since the middle of last year. In Guangzhou, office rents were expected to remain steady at $39 to $50 a square foot but rents for poorer quality space would drop. On the sales front, the report said prime office prices in Beijing had increased more than 20 per cent since December 1993 and were in the region of $3,188 to $3,550 per square foot of net lettable area. Yields were fairly stable at 18 to 20 per cent but would soften over the coming 12 months as rents reached a plateau and sale prices came under pressure from new developments in 1996 and 1997, it said. In Shanghai, sale prices ranged from $2,608 to $3,550 per square foot for prime space in Puxi and $1,956 to $2,898 for offices in Pudong. Office prices in Guangzhou were stable at $2,028 to $2,173. For the residential sector, the report expected prices and rentals for flats in Beijing to grow a further 15 per cent this year before levelling off next year. The shortage of prime residential units would not ease until next year when new projects were completed. But the secondary sales market for villas in the capital's fringe locations was softening because mortgage finance was virtually impossible to find locally, it said. Luxury flat rentals in Beijing rose nearly 50 per cent last year and ranged from $36 to $58 per square foot per month in Chaoyang district - about $5,434 to $8,695 for a 1,614 sq ft unit, it said. In Shanghai, the supply of residential accommodation for expatriates remained far short of demand and consequently, residential rents were as high as those of grade A offices, according to Colliers Jardine. Small flats had achieved up to $43 per square foot per month, and the purchase price of quality residential accommodation was also as high, it said. Units in Hongqiao had sold for up to $1,376 per square foot and in Jingan for $2,028 per square foot. The report also said an increase in the supply of new residential units in Guangzhou had resulted in price falls of about 10 per cent from their peak in late 1993. Prices were now about $1,376 a square foot for luxury units in the city centre and $869 a square foot for suburban units.