OFFICE rentals in Beijing have climbed 12 per cent in the past six months, to average US$56.60 per square metre, and will rise to US$80 per sq m by the end of 1995, according to a research report released this week. Ivan Ko, marketing director of Realty Pacific Holdings, said the rises would represent the continuation of the existing pattern of tight supply with persistent high demand. Beijing presently stands seventh in the league table of office rents but, with rental demand predicted to grow by 20 per cent in 1994, and by a further 15 per cent in 1995, it would climb to fifth place in the rankings, according to Mr Ko. The report focused exclusively on Grade A and Grade B office space of the type normally sought by overseas companies and investors. It found that supply had grown slowly from 1985 to 1992, with just one or two new properties coming on stream each year. The additional office space that came to the market in 1993 has totalled only 5,500 sq m. The report calculated that the total of Grade A and Grade B office space available amounted to 256,520 sq m in 1993, while occupation rates for office space and long lease hotel accommodation were both around 99 per cent. Waiting times of six to 12 months were not uncommon, said Mr Ko. At the same time, the document noted that there were 5,300 foreign firms registered in Beijing, and a further 2,400 representative offices were listed. Assuming, for ease of calculation, that each required 50 sq m of office space, this produced a total current demand of 385,000 sq m, exceeding supply by a third. The report traced the 30 per cent to 50 per cent rise in rental costs in the past two years, and highlighted the US$90 sq m presently being charged in the China World Trade Centre, Beijing's most costly office space. Realty Pacific is also the sole agent for the first office development released for sale to foreign companies by strata title. The Jin Cheng Zhong Xin development has 18 storeys and two basement levels and is located six kilometres southeast of Tiananmen Square. It went on sale only in May this year, at US$2,300 per sq m. Almost 100 per cent sold out, the few remaining areas are on offer at US$2,500 per sq m, a 12 per cent premium over the launch price. Mr Ko said this price, as compared with the rental return possible, amounted to a yield of 15 per cent, substantially higher than returns currently available in Hong Kong. Japanese, Canadian, US and European multi-national companies have bought 4,000 sq m, representing 25 per cent of the development, according to Mr Ko. The remainder has been taken by Hong Kong investors and companies. The report concluded that, given the continuing high demand, rising rents and long waiting times for rented office space, multinational companies would increasingly turn to the option of purchasing office accommodation. This would remain a slow process, however, since the number of Licences for Sale Abroad that have been issued by the Beijing authorities totals only eight.