Institutional expansion tide
Jiasha’s rental demand is strong. At least seven of the central districts in the first half of the year were rented out. With the active expansion of Chinese-funded institutions and shared workspaces, it is predicted that the rent of Jiaxia in Central is expected to hit a record high this year.
According to the records, there were at least seven central districts in the first half of the year, and the rents hit a new high. The top wave was mainly concentrated in the past two months, including the Bank of America Central Bank. After the rent exceeded 100 yuan this year, the rent performance was upward. The latest record is an area of 7,900 square feet of medium-sized households, renting a new high of 120 yuan per square foot.
International Finance Center 2, 30% increase in rent
The big owners are optimistic about the market outlook and also increase the rent to the renewal unit. For example, the 14th to 16th floor of the second phase of the Central International Financial Center, with an area of about 4,282 square feet, the latest renewal of the rent of 779,000 yuan, renting 182 yuan. Although the rent has not reached a new high, it is 30% higher than the old rent of 3 years ago, which was 5.9 million yuan in 2014.
The demand for Jiasha is large and the vacancy rate is falling again. According to the CB Richard Ellis Research Department, the first half of 2018 was the performance of the Jiasha market, which was the strongest after 2015. The net absorption reached 1.5 million square feet, surpassing the annual average of 1.2 million square feet in 2017, and the overall vacancy rate dropped by 0.8. The percentage points to 5.1%.
Expansion of Chinese-funded enterprises to stimulate leasing demand
The bank pointed out that Chinese-funded enterprises and shared workspace operators are the main sources of demand for the commercial rental market in the first half of the year. Examples of Chinese-funded large-scale leases include One Hennessy, a commercial building on 1 Hennessy Road, Hua Hin, and a total of 86,000 square feet of high-rise buildings on the 8th floor of the project. It is reported that Shanghai Pudong Development Bank has rented 100 yuan per square meter and created Wanchai District. Commercial buildings are renting new highs.
However, there are quite a few new buildings in the vicinity of the Central District, including one in Taikoo Place, which attracts tenants to move out of the expensive core area. According to statistics, the floor that was moved out in the first half of the year involved 361,000 square feet. However, Luo Yingming, executive director of CB Richard Ellis’ Hong Kong Consultancy and Trading Services Office, believes that Central is still the first choice for Chinese-funded financial companies to settle in and to enter the vacant floor. The vacancy rate in the core area will continue to be low.
As for the latest effective net rent in Central District is 135 yuan, it will break the historical high of 137 yuan per square foot set in 2008, an increase of 4.4% in the first half. The bank estimates that central rents may increase by 5% to 10% for the whole year.