Office rentals in Beijing see record 70% rise

Property Guru – Tue, Feb 7, 2012

The Beijing office market has recorded the fastest year-on-year rental rate growth, with a 70 percent growth in prime office rents from last year, said Cushman & Wakefield in a report.

The global real estate services firm also revealed Hong Kong as the most expensive office location in 2012, for the second consecutive year.

In the global office market, a three percent growth was seen in 2011, up from 2010's one percent, with Asia Pacific witnessing the highest rental rate growth.

The boost in Asia Pacific, particularly Beijing, was backed by rising demand as well as increasingly limited supply. The city's office rent figures leaped from 48 percent in 2010 to 75 percent in 2011, a record for any city in the world.

That said, Beijing was ranked the third most expensive Asian city, after Hong Kong and Tokyo. Shanghai (27 percent) and Singapore (24 percent) follow Beijing.

Regionally, the Asia Pacific region saw an eight percent growth in 2011 rents, the world's highest.

"From a broad global perspective, rental rate growth has been driven primarily by modest economic improvements in an environment of limited new supply," said Glenn Rufrano, President and Chief Executive Officer of Cushman & Wakefield.

Meanwhile, Jones Long LaSalle (JLL) data showed that prime office rents for Q4 2011 continued growing for the eighth consecutive quarter, seeing a further 0.8 percent increase and marking a six percent growth in Q4 2010.

However, rental growth for Asia Pacific markets fell to 0.9 percent in Q4 from 2.5 percent in Q3, as corporate demand weakened.

"The majority of global leasing markets are holding firm, and many are showing remarkable resilience especially among the BRIC countries, as well as robust showings from Canada, Australia, Germany and the Nordics," said Jeremy Kelly, Director in JLL's Global Research team and author of the firm's Global Market Perspective.

"While leasing markets in the major financial centres are softening, the limited supply pipeline should ensure that they do not move significantly out of balance."