RESEARCH
BEIJING
OFFICE markEt rEpOrt Q2 2018
2018
15+
2 3 4500+
BEIJING OFFICE MARKET REPORT Q2 2018
RESEARCH
HIGHlIGHtS
In the second quarter (Q2) of 2018, the average vacancy rate in Beijing's Grade-a office market dropped by 0.2 percentage point quarter on quarter (Q-o-Q) to 5.1%, while the average rent increased by 0.2% Q-o-Q to rmB382 per sqm per month. a number of major Grade-a office leasing transactions were concluded in Q2.
In Q2 2018, Beijing's Grade A office market remained stable and the vacancy rate declined slightly to 5.1%. The average rent of Grade A office buildings in the city increased slightly by 0.6% Q-o-Q to RMB382 per sqm per month (see Table 1). In Q2 2018, there was no new supply in Beijing Grade-A office market. A number of new Grade A office projects are expected to be launched in Q3, most of which are located in the core areas of Beijing, bringing more than 300,000 sqm of new supply to Beijing's office market. During this quarter, domestic-funded enterprises remained the main force for new leases, renewals and relocations, especially those from the financial, Internet, and high-tech sectors, and several new leases or renewals were recorded. In Q2 2018, the transaction price of the Grade A office sales market remained stable, and several en-bloc transactions were recorded in the office, and retail sectors. In the second half of 2018, it is expected the market will welcome a number of new office projects, with supply concentrated in Beijing's core business areas like CBD, Wangjing-Jiuxianqiao submarkets. The overall vacancy rate is forecasted to remain at a low level of around 5% due to the strong market absorption in the coming months, and the average rent is expected to remain stable.
rENtS
In Q2 2018, there is no new supply enter into the Grade-A office market. The overall vacancy rate decreased by 0.2 percentage point Q-o-Q to 5.1%. The average rent increased 0.6% Q-o-Q to RMB382 per sqm per month. Wangjing and Zhongguancun submarkets remained stable in rents at RMB306 and RMB 380 per sqm per month respectively, while Wangjing area saw a decrease in the vacancy rate to 10.6% due to continued demand from the hightech and Internet industries. (see Table 2). Financial Street remained the most expensive submarket in Q2, where rents increased by 1.6% Q-o-Q to RMB664 per sqm per month. It was followed by the CBD where rents increased 2.7% Q-o-Q to RMB408 per sqm per month (see Table 2). In the East Second Ring Road and Asian-Olympic Area submarkets, average rents were recorded dropping slightly to RMB342 and RMB348 per sqm per month respectively; while the vacancy rate increased by 2.4 and 1.0 percentage point Q-o-Q to 6.4% and 5.1% (see Table 2). A number of new office projects, mainly located in the core areas of Beijing, with a total gross floor area of more than 500,000 sqm are scheduled to be launched in the second half of 2018, but due to the strong absorption rate, the average vacancy is expected to remain at a low level of around 5%, while stable rental performance is foreseeable in the coming months.
FIGUrE 1
2013Q1=100
Grade-A office rental and price indices
165
150
135
120
105
90
Source: knight Frank research
taBlE 2
Beijing Grade-A office market indicators, Q2 2018
Submarket CBD Lufthansa Financial Street East Second Ring Road Zhongguancun Asian-Olympic Area Wangjing Rent* (RMB / sqm / month) 408 362 664 342 380 348 306 Rent % change (Q-o-Q)2.70.81.60.3 0.02.6 0.0 Vacancy rate 3.5% 5.3% 2.2% 6.4% 1.1% 5.1% 10.6% Vacancy rate percentage point change (Q-o-Q) 0.01.90.42.40.91.02.5
taBlE 1
Beijing Grade-A office monitor
Indicator New supply Rent Vacancy rate
Source: knight Frank research
Q2 2018 figure 0 sqm RMB382 / sqm / month 5.1%
Q-o-Q change68%0.2%0.2%
Outlook (Q3 2018)
Note: rent* refers to average effective rent Source: knight Frank research
taBlE 3
Beijing major Grade-A office leasing transactions, Q2 2018
District Lufthansa CBD CBD Wangjing Building Gateway China Central Place Yintai Center Tenant BMW Beckton Dickinson Singapore Airline Area (sqm) 4,600 2,400 1,000 12,000 Transaction Type Expansion Renewal Renewal New Lease
Source: knight Frank research Note: all transactions are subject to confirmationQ1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
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Rosin Technology
Liepin
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