In the first half of 2021, the domestic economy continued to recover. In the first quarter, the GDP growth rate of the four first tier cities in Beijing, Shanghai, Guangzhou and Shenzhen exceeded 17% year on year. Among them, the GDP growth rate of Guangzhou was as high as 19.5%, and the fixed assets investment, the growth rate of the tertiary industry and other important economic growth indicators ranked first among the first tier cities.
Under the strong recovery situation, Guangzhou’s grade A office market performed well. According to the latest report released by DTL this afternoon (June 30), in the first half of 2021, the average rent of Grade A office buildings in Guangzhou has experienced an eight quarter rebound, and the net absorption and new supply have also reached the highest level in the same period of nearly five years.
Data show that in the first half of the year, the turnover of Grade A office buildings in Guangzhou was active, and the vacancy rate decreased by 0.9% to 7.2% compared with the end of last year. From the regional point of view, the demand for office property in Zhujiang New Town, Pazhou, sports center and Yuexiu is obvious. Pazhou and Zhujiang New Town are the hottest areas for office location: the proportion of expansion demand (new establishment and rent expansion) is close to that of relocation demand. Especially in Pazhou, the proportion of expansionary demand increased by 8.3 percentage points over the previous year.
In terms of transaction area, TMT and financial industry are still the leading industries of leasing transaction in the first half of the year, accounting for 35.8% and 15.7% of the city’s transaction area respectively. On the other hand, thanks to the sustained economic recovery, the retail industry was driven by the recovery of offline consumption, and the demand for office leasing increased, accounting for 11.86% of the total area of leasing transactions.
In terms of rent, after eight consecutive quarters of decline, the average rent of Grade A office buildings in Guangzhou rose slightly in the second quarter to 179 yuan per square meter per month. Zhang Xiaoduan, vice president of DTZ Research Institute and director of Southern China research division, said that since the end of 2018, the market demand was weak due to the Sino US trade friction, the economic downturn and the influence of COVID-19, and office rents were under pressure. This year, with the strong recovery of the economy and the active market demand stimulated by new supply, rents have been able to stop falling and return to rising.
Supply pattern of office building market in Guangzhou in the future
Looking forward to the second half of the year, the agency expects that some projects delayed due to the epidemic may enter the market one after another, ending the period of low supply since 2017. With the new supply of 777000 square meters entering the market, the vacancy rate may rise, and the absorption is expected to usher in a small peak. By 2025, the city’s total stock may reach 8.42 million square meters.
Reprint indicated source：Spark Global Limited information