WTO entry bodes well for prime office market
The mainland's imminent entry to the World Trade Organisation (WTO) is boosting demand for prime offices in Guangzhou, according to the Construction Commission of the People's Government of Guangzhou Municipality.
The commission's vice-director Deng Hanying said Guangzhou should be well-prepared to compete with Hong Kong and other economic regions, including Shenzhen, after the mainland joined the WTO.
He said strong demand for prime offices had come from many foreign and local hi-techcompanies and that average rentals were expected to rise.
Pre-sale commercial area approved by the commission during the first five months of this year amounted to 1.41 million square metres, Mr Deng said.
Pearl River Hang Cheong Real Estate Consultants managing director Liu Sing-cheong said demand for prime offices in Guangzhou had risen in recent months.
Average rentals are HK$140 to HK$160 per sq metre at present.
Mr Liu said inquiries for prime offices from foreign hi-tech companies had increased significantly, but most of the clients were still local IT companies. He said demand from local Web-site companies was huge.
According to the Guangzhou government, about 4.5 million sq metres of office space was completed last year and transactions for more than two million sq metres had taken place.
Mr Liu said the rise in demand for prime offices in Guangzhou meant the outlook for the market was promising.
According to a recent report by DTZ Debenham Tie Leung, the vacancy rate for some high-quality grade-A office buildings in Guangzhou was below 10 per cent at the end of last year.
The average vacancy rate in the sector was under 20 per cent, it said. The leasing market witnessed greater activity as a result of the inflow of more multinational companies and those based in other provinces.
Some tenants took advantage of the consolidation in rents to relocate to larger or prime-position grade-A offices, it said. Companies that specialised in technology, consumer products and advertising were relatively active tenants, which tended to choose Tianhe district, an emerging commercial area, rather than traditional business locations.
Mr Deng said more foreign firms were investing in Guangzhou infrastructure projects, and that this would contribute significantly to the city's competitiveness.
Foreign investments in Guangzhou reached HK$823 million in the first five months of this year, a rise of nearly 90 per cent from the same period last year, according to statistics compiled by the commission.
'Financing in Guangzhou would be relatively easier,' Mr Deng said, adding this should be a great advantage for foreign investors.
Construction Commission of Guangzhou Cotonize Administration Division director Lei Fengying said demand in residential and commercial markets in Guangzhou had increased.
According to the commission's statistics, the average price of residential units in Guangzhou in the first five months was HK$4,886 per sq metre, a 20 per cent rise from the same period last year.
Ms Lei said developers had been active in releasing new projects in the first five months.
The pre-sale area of residential units approved by the commission was 1.29 million sq metres, Ms Lei said.
'Nearly 90 per cent of the buyers are local residents,' she said.
