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SCMP Reporter

MORE than 3,500 foreign companies will have established offices in Beijing by 1997 - almost double the 1,800 that were there last year, according to a report by a leading property consultancy.

  The rush by foreign companies to establish a presence in Beijing, combined with limited office supply, has made it the world's sixth most expensive city in which to rent, says the report by Richard Ellis.

  The firm's China Property Market Bulletin puts Beijing two places behind Shanghai, but well ahead of New York, Singapore and even Frankfurt.

   Topping the bill for the most sought-after location is the China World Trade Centre and SCITE Tower, which are both averaging about US$60 (HK$463) per square metre per month.

  Other prime site space is commanding about US$45 to US$53 per square metre, it said.

  According to the report, the out-of-town San Li Tun Embassy area is becoming popular with foreign companies.

  Although far from the metropolitan centre, its easy access to the airport and modern office space puts it near the top of the shopping list of most companies for a Beijing headquarters.

   Along with most analysts, Richard Ellis is offering only one forecast for office rents, and that is up.

  Pamela Tam, business development and research manager for Richard Ellis, said demand was strong and supply tight for prime site offices.

    For example, Ms Tam said inquires were outstripping the available space in the the Jin Qiao building, a six-storey 15,000-square-metre property in the heart of Beijing's micro market, by two to one.

     Richard Ellis described the present shortage of office space as ''acute''.

  Despite a decade of building, many companies are still operating out of hotel rooms.

  Elizabeth Cheng, head of China research at brokerage Wardley James Capel, said the situation would continue at least until 1996, when space from the large number of buildings now being built became available.

  Around the country, the Richard Ellis report identifies Shanghai as the other truly great growth market.

  It says: ''Occupancy rates have been on an upward trend since 1990 and offices are operating at close to, or at, full occupancy rates.''   Ms Cheng said the Shanghai office market would experience the greatest growth due to the city's status as the dominant industrial and financial centre in China.

  She said the presence of the international banks was the primary reason for foreign multinationals wanting to set up.

  Rentals have reached above US$70 per square metre per month for prime site properties, and Richard Ellis sees no room for any slowing given the continued influx of foreign companies.

  Jones Lang Wootton, in an August report, identified the expanding banking sector in the city as a principal reason for the growth in rents.

  Buttressed by strong economic growth during the first six months, it said that 35,700 square metres had been absorbed by the market, compared with 25,200 square metres in the whole of 1992.

  However, it warned that the high levels of land release over 1992 could easily foster a situation of over-building during the next four years.

  In China's other developed office markets - Guangzhou and Shenzhen - the picture is more mixed.

  Intense office development in Shenzhen has led to a slight softening in rents, while Guangzhou remains grossly under-provided for in this sector.

      Richard Ellis identifies GITIC Plaza and the Guangzhou World Trade Centre as having the highest rentals.

  It sees no softening of rents, since the next batch of high quality office space is not scheduled to hit the market until early 1995.

  Despite the dip in Shenzhen rentals, the report said demand would remain strong for those buildings designed and managed to internationally accepted standards.



Companies rushing to lease space in Beijing