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Colliers: Beijing CBD, Beijing Lufthansa Centre still most active submarkets

BEIJING: Colliers International believes that the central business district (CBD) in Beijing and the Beijing Lufthansa Centre will continue to be the most active submarkets, as several domestic and multi-national corporations (MNCs) are actively looking for office space. It added, however, that new office space supply will be constrained due to postponement of completion day for some projects.

The real estate research house said the corporations — from the automobile, IT and pharmaceutical industries — are looking for spaces of over 10,000 sq m each for relocation or expansion, and expects most landlords — including those of new completions — will take the advantage of the bullish market situation to review their pricing strategies, resulting in continued rental growth in the 4Q10.

"Given the statutory framework setting out insurance companies' investment scale and direction that were put in place in 2Q10, the commercial property market, including the office sector, will directly see an enlarged investor profile and an expansion of capital funds in the mainland's property investment market.

"In addition, domestic investors should continue to maintain their competitive edge of deal structuring/restructuring, demonstrating a strong potential of market dominance in Beijing within the short to medium term," it noted in the Colliers International Beijing Knowledge Reports 3Q 2010.

Colliers International said that although Beijing's economic growth in 3Q10 was moderate compared to 1H10, it is widely considered a reasonable adjustment due to the government's gradual withdrawal of the unprecedented post-crisis stimulus and strengthened focus on the optimisation of economic structure.

It said that the overall Beijing office property market's growth momentum remained strong in 3Q10, adding that many sizable leasing transactions were reported in various submarkets in the quarter, with tenants from more diversified industries — indicating an essential and widespread boost of demand in the market.

"As a result, the overall vacancy rate fell for the fifth consecutive quarter, while rentals were pushed up to a new height for the last 20 months," it said, concluding that the Beijing office property market should remain active in 4Q10 and end 2010 with positive outcomes.
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