Shanghai's office leasing market remains stagnant, with net rental of prime properties declining 13 per cent for the March-August period, according to Richard Ellis. In its Shanghai property report, the average net monthly rental in prime central business district office properties in Puxi fell from US$4.97 per square foot to $4.31 per sq ft. The company's research and development associate director Andrew Ness said 11 quality office developments came on stream, providing an additional 4.3 million sq ft of office space. These completions have raised Shanghai's cumulative office stock to 21.52 million sq ft. Newly completed office properties comprised five towers in Puxi and six buildings in Pudong, he said. Overall office building vacancies are 39 per cent in Puxi and 59 per cent in Pudong. Puxi remained Shanghai's main office area, but was being overtaken by Pudong which accounted for the remaining 42 per cent, he said. 'Given the surge in office supply, many large office occupiers are achieving substantial concessions from landlords in the context of overall leasing packages,' he said. He expected the higher end of the office market also would be forced to offer competitive leasing packages to prestige overseas office occupiers with large space requirements due to intensified competition. Apart from a substantial cut in asking rentals, landlords also might offer a longer rent-free period, granting naming or signage rights for purchasers acquiring in excess of 10 to 20 per cent of a given development, he said. OOCL has purchased three office floors, or 38,750 sq ft, of the Jin Jia Plaza, including naming rights. The building is now to be renamed OOCL Plaza. In the residential leasing sector, rentals had dropped 15 per cent from the peak in 1995 to US$2.97 per sq ft due to the supply glut, he said. According to Richard Ellis Residential Gross Price Index, the average quoted asking price for the surveyed properties in Puxi fell 3.3 per cent over the past six months. In Pudong, capital values declined 6 per cent in the 18-month period from the end of 1995 to July this year, he said. In the first half of this year, 1,400 high-rise units have been built, raising cumulative stock of high-rise units to about 24,250 and accounting for 70 per cent of total existing stock of residential property for sale to overseas buyers. Shanghai has 4,600 low-rise apartments or 16 per cent of the total stock in addition to 5,540 villas. The Shanghai government had put a freeze on granting land-use rights for villa development to ease the oversupply problem since January last year, he said. Psychologically, this had been good for the leasing and sales market and asking rentals for prime and quality properties had remained firm, about $4.08 per sq ft, he said. He said the residential sales market remained inactive during the period under review. The asking price for prime residential properties ranged from $278 to $325 per sq ft in Hengshan Road and Huai Hai Middle Road. The Regent Tower in Hongqiao, the most desirable location for expatriate residence, recorded the highest selling price of $306 per sq ft.