Savills released the grade A office index of Dawan District in the first half of 2021. According to the report, in the first half of 2021, the confidence of market participants was generally boosted, and the grade A office market in Dawan district began to recover.
Institution: regional rent index narrowed and price index increased month on month
According to the analysis, the depressed rental demand has been released, the regional rent index has narrowed down, and the price index has increased month on month. During the period, the rent index of Grade A office buildings in Dawan District narrowed by 4.0 percentage points to 1.6% on a month on month basis, reaching 147.6%; The price index rose slightly by 0.2% to 194.0.
In terms of rent, due to continued COVID-19 and immigration restrictions, Hongkong office market demand growth is limited. The rental index has continued downward since the second half of 2019, falling 3.1% to 147.2 in the first half of this year. Shenzhen’s rent continued its downward trend, with the rent index nearly reaching the bottom, with a slight decline of 0.9% to 138.5 on a month on month basis. Meanwhile, Guangzhou fell 1.6% to 144.6% on a month on month basis under the influence of a large number of new supply expectations. During the period, Dongguan, Zhuhai and Huizhou’s office rent index fell by less than 1% month on month, while Jiangmen, a small market, was the only city in the region to record rent increases.
In terms of sales prices of office buildings, the Hong Kong office price index stopped falling and rebounded, rising 1.2% to 207.5 on a month on month basis. After four consecutive month on month declines, the Guangzhou office price index rose 1.7% to 127.5, the largest increase in the region. On the contrary, the worries of Shenzhen owners about oversupply dampened the positive sentiment brought about by the economic recovery. During the period, the price index recorded the largest regional decline, with a month on month decline of 5.2% to 179.7.
According to the report, in the first half of 2021, the pace of new projects entering the market of Grade A office building market in Dawan district gradually recovered, and the regional new supply reached 1.449 million square meters. As a result, the total stock of the market increased to 30.392 million square meters, with a month on month expansion of 5.0%. Shenzhen, Hong Kong and Guangzhou continue to occupy the dominant position in the stock, and the stock of Shenzhen has surpassed that of Hong Kong, ranking first in Dawan district.
Office rental demand picked up in Dawan District
In the post epidemic period, the rental demand of Dawan district office market picked up. During the period, the regional net absorption rose to 972000 square meters, 3.7 times and 2.4 times of that in the first and second half of last year respectively. Nevertheless, in view of the severe oversupply situation in many cities, the average vacancy rate of Grade A office buildings in the region still increased by 0.6% month on month and 2.2% year on year to 21.2%.
Savills said that looking ahead, the domestic economic outlook is expected to remain cautiously optimistic. In 2020, the GDP growth rate of Dawan district will reach 3.0%. In the next ten years, the regional GDP is expected to increase by 1.8 times. Although there was a small-scale outbreak in Guangzhou, Shenzhen, Dongguan and Foshan in the second quarter, the pattern of economic recovery is expected to be little disturbed by the strong recovery of China’s economy, the rapid development of new economy and the strong expansion of upstream and downstream industries. The overall rental and trading demand of Dawan district office market is expected to continue to grow, especially in Guangzhou, Shenzhen and other mainland cities with rapid economic growth. At the same time, the positive economic environment and the recovery of investment activities in the mainland have significantly boosted the confidence of many owners, which is expected to drive up the price of office buildings.