DEMAND for prime office space in Guangzhou is expected to exceed supply for the remainder of this year, with a levelling off next year when new projects begin to come on stream.
International property Consultants Richard Ellis points out that demand quadrupled between 1991 and 1992, making the annual market growth comparable with Singapore and about half that of the Hong Hong rate.
At the same time, office rental levels have increased an average of 40 per cent a year, with rents in office buildings affiliated to hotels jumping by as much as 80 per cent.
The present stock of office space is 300,000 square metres. The only two Grade A facilities are the GITIC Plaza and the Guangzhou World Trade Centre Complex. This means they are aesthetically and efficiently built to an international standard, centrally air-conditioned and have a high level in management/maintenance and security systems.
No new Grade A complexes are due for completion this year, which is expected to increase pressure, as GITIC Plaza Main Tower already has a waiting list for companies wanting to lease.
The GITIC building is also the most expensive for a dedicated office building in Guangzhou, with rents at US$45 per square metre per month. The highest rent for a converted hotel room is $60-$70 at the Dong Fang Hotel on a par with London, Singapore and New York.
Richard Ellis predicted that the sustained demand this year would force prices up, but a host of projects coming on stream next year would see rapidly declining occupancy rates, while there will be a shift in demand from international companies to local firms needing office space.