CBRE publishes Beijing Property MarketView for Q3 2015 and key outlook ahead
October 16, 2015, Beijing – CBRE, the world’s leading commercial real estate services and investment firm, announced today the results of its latest research report Beijing Property MarketView Q3 2015. According to the report, the overall office market in Beijing remained stable. Three new projects will be delivered in the next six months, adding 240,000 square meters of office space. With abundant pipeline, fierce competition will put pressure on office rental growth. Underpinned by their better market feedback, some shopping malls actively raised rental levels. The average G/F rents registered a 0.7% q-o-q increase as a result. We anticipate the vacancy rate to remain low and rent to increase steadily in the logistics and warehousing sector as two pipeline projects are scheduled to come on stream.
I: Prime Office Sector in Beijing
Overall market grows steadily; future supply may exert pressure on rental growth
During Q3 2015, the Beijing office market remained stable. Poly International Plaza, Tower T1 in Wangjing area was delivered during the quarter, adding 56,700 sq. m. new office space to the market. Net absorption remained largely flat q-o-q at around 60,000 square meters. On account of the new supply in the quarter, the average vacancy rate dropped by 0.1 ppt q-o-q to 6.2%.
Traditional manufacturing and finance were the most active industries seeking office spaces in the quarter. The lower rental quoted by the new supply led the average rent of overall market down to RMB 423.2 psm per month. Rents of existing projects remained stable, and like-for-like rental remained unchanged.
In the next six months, Beijing office market will usher in the peak season of project completion. Three projects totaling 240,000 square meters are anticipated to come onto market. The intensive new additions are expected to alleviate the tight supply and exert pressure on the rental growth of existing projects.
II: Prime Retail Sector in Beijing
Vacancy rate drops q-o-q; fast fashion retailors continue their expansion
During Q3 2015, two projects, AEON and Full Mall both in Fengtai District were completed, adding 170,000 square meters to the Beijing retail market. The overall vacancy rate declined by 0.3 ppt q-o-q to 6.9% due to the high level of initial leasing rates from these new projects.
Fast fashion brands keep current decentralization trend with New Look, Old Navy and Hollister registering new store openings in the suburbs. British fast fashion brand Topshop debuted at Galleries Lafayette. Meanwhile, French jewelry brand Mauboussin and Spanish fashion jewelry brand Tous opened their first China store at Season’s Place and Xidan Joy City, respectively. Some shopping malls actively raised rental levels underpinned by their better market feedback, leading to an increase in average G/F rents by 0.7% q-o-q to RMB 35.8 psm per day.
In the next six months, two projects, amounting to a combined GFA of nearly 180,000 square meters, are projected to launch. Given current preleasing rate for future projects, we anticipate the vacancy rate to rise, while rental level is set to remain stable.
III. Industrial & Logistics Sector in Beijing
Total volume of industrial land transactions experiences sharp rise
In Q3, Beijing industrial land transacted area increased q-o-q to 785,000 square meters. Industrial land price went up 2.4% q-o-q to RMB 2,079.
For business park market, new supply of 93,600 square meters led the overall vacancy rate up 0.4 ppt q-o-q to 8.5%. Domestic software development and internet financial enterprises were key demand drivers. In Q3, the average asking rent increased by 1.3% q-o-q on a like-for-like basis, quoted at RMB 153.2.
With no new supply, the overall vacancy rate of warehouse and logistics market declined 2.5 ppts q-o-q to 1.3% due to the buoyant activities from auto parts and 3PLs. The largest leasing transaction was closed by an automobile maker occupying 18,000 square meters in GLP Park Pinggu I. On balance, the average rental kept flat q-o-q at RMB 38.7 psm per month. In the next six months, two pipeline projects are scheduled to deliver in warehouse and logistics market. The vacancy rate is expected to remain low, and rents are likely to grow at a moderate pace.
About CBRE Group, Inc.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2014 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.
