China real estate market

Mild corrections in home prices

According to Knight Frank’s latest research, increasing supply of residential properties will lead to continuous correction in home prices in China’s first-tier cities, with Shanghai seeing sharper correction than Beijing, Guangzhou and Shenzhen.

Policies improve long term affordability

Anyone following the Chinese real estate market, especially the residential sector, in the past year will have been struck by the way in which prices and volumes have fluctuated so dramatically within a short period of time.

Office markets strengthen further

Occupied space in Asia Pacific increased significantly in Q2 2010 as companies resumed expansion plans and upgraded to better quality space on the back of strong economic growth.

Property market fundamentals continue to improve across Asia Pacific, underpinned by stronger economic conditions and business confidence. Take up of space is strengthening and more markets have moved to the upturn phase of the rental cycle. Capital values started to recover earlier than rentals and are now increasing in most markets.

Good consultants can provide valuable help, but choosing the right one requires some homework

The unsuspecting foreign investor will be surprised to find how helpful everyone is in China. Indeed, it often seems that China's biggest sector after manufacturing is China strategy consulting. A Google search of “China consultants” results in more than 20 million results.

The office market has benefited from the rebound in the economy with a stable increase in leasing activity seen in Q2 2010. Meanwhile, the office market rental was supported by increased demand. The average rent for Guangzhou grade A office space was RMB 120.5 (US$17.6) per sq m per month at the end of the quarter, a 2.8% increase quarter-on-quarter (q-o-q).

Hongkou logistics cluster offers incentives to lure China transportation companies

Logistics companies looking to set up offices in China may be in for a bargain. Local governments have recently increased efforts to attract shipping and third-party logistics firms by offering incentives packages including 30-50 percent business tax reductions, 50-100 percent corporate income tax reductions, and 20 percent rental subsidies.

Office market heats up

The Beijing grade A office market continued to rebound in the second quarter of 2010, with the average grade A rental increasing by 3.9% quarter-on-quarter (q-o-q) to reach RMB 155.43 (US$22.76) per sq m per month. Meanwhile, the overall availability ratio for grade A office space fell from 18.1% to 15.41%.

Office rental sees uplift

The average grade A office transacted rental in Shanghai, China was RMB 6.8 (US$1.0) per sq m per day at the end of Q2 2010. The average city-wide grade A availability ratio reached 12.13%, which represented a decrease of a 0.87 percentage point quarter-on-quarter (q-o-q) and a decrease of 4.25 percentage points year-on-year (y-o-y) respectively.

Demand for commercial premises rises

In Q2, most office tenants were from the financial sector. Foreign enterprises also became active in this quarter. The overall net absorption in the grade A office market was 32,392 sq m and the average rental rose 1.29% quarter-on-quarter (q-o-q), reaching RMB 128.58 (US$18.82) per sq per month.