Office rents in Shenzhen's submarkets surge

Office rents in the submarkets of Shenzhen have risen sharply, supported by thousands of companies that failed to find office accommodation in Qianhai's special economic zone.

While no grade A office buildings have been completed in Qianhai, many of the tens of thousands of companies that have registered in the zone have sought office accommodation in other areas of Shenzhen, notably the Futian Central Business District and elsewhere in Nanshan district, particularly Houhai, says property consultant Cushman & Wakefield in a report. That contributed to growth in office rents in these areas in the past two years.

Average grade A office rents in nearby Shekou and Houhai rose 28 per cent and 24 per cent respectively from the first quarter of 2013 to the first quarter of this year, according to Cushman Wakefield.

"The average rent in Futian CBD - Shenzhen's business and financial centre - increased by nearly 35 per cent during the same period," it said.

Qianhai, covering a site of 15 sq km, was first approved by the State Council in 2010. It was supposed to be a financial hub to test reform in yuan internationalisation and interest rate liberalisation.

It was included in the Guangdong free-trade zone, which was approved by the central government in April.

Consultants are still optimistic about its outlook. As of March, there were more than 25,000 companies registered in the zone, an increase of about 5,000 companies compared with the end of last year, according to JLL.

JLL estimates if each company occupies office space of 500 sq metres, total demand will be more than 12.5 million sq metres, surpassing the projected completion of 1.6 million sq metres in the zone.

In 2020, if all goes according to plan, Qianhai will look more like Manhattan: a global financial centre, dense with skyscrapers and malls, apartments and grassy parks, all woven together by top-notch infrastructure, according to Cushman & Wakefield.

"We anticipate that the zone will evolve into a significant CBD of Shenzhen and assume an important role as a regional financial and commercial hub over the coming years," said Cushman & Wakefield.

It believes Qianhai will ultimately even replace the Futian CBD as the city's business and financial centre.