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| Rising Demand for Grade A Office Buildings |
May 23, 2007 |
| In the first quarter of 2007, rental and sale of commercial properties in Beijing maintained strong momentum. Financial service continues to expand in Beijing and many investment banks are considering setting up regional headquarters in Beijing. Market demand for quality warehouses and land has provided many benefits to the better-developed industrial property projects. Increasing demand for Grade A office buildings guarantees rent payment. Anna M. Kalifa, head of research Beijing, Jones Lang LaSalle, told the reporter that in the first quarter of this year the demand for Grade A office building hit a record high. The total demand reached 333.3 thousand square meters, 90 percent more than the total demand in 2006. According to Anna, office buildings put to market this year covers 1.5 million square meters. It was predicted that the rent would fall, but it increased by 1.6 percent over the last quarter. Driven by the market demand, rent has grown by 2.4 percent since this year. Only 25 percent of rental transactions were made by the same tenants, 32 percent by new tenants, 29 percent by those moving out, and the rest by tenants who enlarge their office space. She added that financial and other professional services would increase the demand for office buildings.  Chemsunny Plaza price hits a record high in Beijing In the first quarter of 2007, 6 projects covering 550 thousand square meters were completed successively. Most of the buildings were only for rental, which demonstrates that the market of office buildings has entered a mature stage. The projects finished include the first phase of China Central Place in CBD and Zhuoyue International Financial Center on the Financial Street. Many tenants of these newly constructed buildings are also owners of the property. For example, Wanda Group will move into Building B of Beijing Wanda Shopping Mall and occupy 8 thousand square meters of it. The rest 20 thousand square meters will be rented. Sinochem will move into Chemsunny Plaza located in western Chang’an Street. It will occupy from the 7th to 13th floor and rent the rest space out. Anna also said that by the end of this year millions of square meters of office buildings will have been completed, which will put pressure on rent payment. But she also pointed out this new supply will ease this burden, as many owners are also users. Well-developed industrial properties are enjoying advantages and business gardens emerging. Mature industrial properties continue to profit from Beijing’s high demand for high-performance warehouses and lands. It is reported that there is left only thousands of square meters in Beijing Development Zone. The nearby Tongzhou Logistics Park also has strong demand for industrial land. The retailers and suppliers in Beijing will stimulate more demand for warehousing space, and they usually set up their warehousing facilities in Tianjin. Many other fields such as high-tech, software and pharmaceutical industries need warehousing space. A Beijing developer recently acquired a nearly 100 thousand square meters of warehouse in Beijing Economic Development Zone to attract Japanese companies. There is 138,736 square meters of land left in Tongzhou Logistics Park. A representative of Beijing Airport Logistics Park (BALP) said that about 20 thousand square meters of warehousing space will be put to market in the second quarter of 2007. Another 250 thousand square meters of land, with 825 RMB per square meter, is for sale. BALP strategy is to let domestic developers buy large piece of land to develop warehousing space and then to sell or rent it. A CBRE director of industrial logistics told the reporter that development of business gardens has become a new hot-spot of industrial property investment, as market has demand for multi-purpose or multi-functional office buildings. Low-density small- and medium-sized detached office buildings with novel exterior in an agreeable environment, such as BDA International Business Park, have become the darling of the market. Liando Industrial Park and Beijing Tianzhu Airport Industrial Zone are also planning projects of business gardens. http://house.focus.cn/news/2007-05-23/315173.html |
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