Sep 15, 2011
15 September 2011, Shanghai - The global leading real estate service provider Colliers International today releases Shanghai Business Park Market Report 2 Q 2011, which indicates that in the second half of the year Shanghai will witness approximately 642,000 sq m of new supply added to its business park market, an aggressive 43% increase compared to the first half of the year. 72% of the new supply is coming from Puxi, primarily in Caohejing Hi-Tech Park, Caohejing Pujiang Hi-Tech Park, Hongqiao Linkong Economic Zone and Zhabei District. However, strong demand for office space in 2Q 2011 is extending into the second half of the year, vacancy rates and rental rates are expected to remain stable.
In the past quarter, Shanghai business park market was boldly stimulated by robust demand, underpinned primarily by multinational corporations’ (MNC) plans of establishing regional headquarters and research & development centers. In June, thirteen companies, including British Petroleum and Hewlett-Packard, signed contracts totaling USD800 million to build new headquarters or increase capital for their existing headquarters in Pudong New Area; and in July, Caohejing Hi-Tech Park signed deals for ten projects worth USD290 million.
Notwithstanding the new supplies in the second quarter increased 35% y-o-y, the vacancy rate only slightly decreased by 1% to 11% due to strong demand. Lujiazui Software Park’s 3% vacancy rate was the lowest among Shanghai’s major business parks, due in large part to a premium location.
Rental rates in Shanghai’s major business parks averaged RMB3.1/sq m/day in Q2 2011, unchanged from the previous quarter. Rental rates at both Caohejing Hi-Tech Park and Zhangjiang Hi-Tech Park stood at RMB3.2 per square meter per day, supported by premium locations and high-quality office buildings.
On the sales front, average capital values varied by business parks. Yangpu district’s Knowledge and Innovation Community (KIC) saw the highest asking price at RMB32,000 per square meter, while the second highest asking price were commanded at Hongqiao Linkong at RMB28,000 per square meter.
Lina Wong, Colliers International Managing Director of East and Southwest China and China Investment Services, commented, “Shanghai’s headquarter economy has maintained rapid development in recent years, particularly in Pudong, now home to the regional offices of 164 multinational corporations. And continued preferential policies are attracting more companies to the area. According to Shanghai’s 12th Five Year Plan, the city has set a target of being home to 250 regional headquarters by 2015, adding 15 to 20 new regional headquarters per year. We expect vacancy and rental rates in Shanghai’s business park market to remain stable, underpinned by robust demand. ”
