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Thursday, July 11, 2019, 19:40
Bay Area a 'shot in the arm' for Shenzhen's office sector
By Zhou Mo
Thursday, July 11, 2019, 19:40 By Zhou Mo

This Aug 18, 2004 photo shows a view of the skyline of Shenzhen in Guangdong province across the border from Hong Kong. (SAMANTHA SIN / AFP)

The adverse impact of the ongoing Sino-US trade frictions on Shenzhen’s property market, notably the commercial-property sector, is expected to be cushioned by the development of the Guangdong-Hong Kong-Macao Greater Bay Area, according to international real-estate services provider Savills.

According to Savills’ latest report, the average vacancy rate of Grade-A offices in Shenzhen had risen 2.5 percentage points year-on-year to 18.9% in the second quarter of this year

The nation’s grand plan to turn the 11-city cluster Bay Area into a world-class business and innovation hub will accelerate the growth of tertiary industries in the region, said Carlby Xie, head of southern China research at Savills.

The number of enterprises in the region will increase at a faster speed, he said.

“That could dilute some of the impact on Shenzhen’s property market due to the trade tensions between China and the US.”

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According to Savills’ latest report, the average vacancy rate of Grade-A offices in Shenzhen had risen 2.5 percentage points year-on-year to 18.9 percent in the second quarter of this year. 

Average monthly rents for Grade-A offices stood at 220.4 yuan (US$32.1) per square meter at the end of last month -- down 6.4 percent from a year ago. 

Despite the overall market’s decline, several other sectors had performed well, with the demand for offices in the TMT (technology, media and telecom), manufacturing and professional services sectors having surged in the second quarter. 

Nearly 1.2 million sq ms of new commercial offices are due to come on stream in the second half of this year.

“Oversupply may last some time, but we expect Shenzhen’s (commercial office) vacancy rate to continue going up in the short term,” Xie said. 

Shenzhen’s total office space reached 6.08 million sq m at the end of last month.

In the residential market, the transaction volume of new homes in Shenzhen shot up 58.6 percent on a quarterly basis to roughly 1.27 million sq m in the second quarter, but average transaction prices dropped by 4.1 percent to 55,340 yuan per sq m, according to Savills. 

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“We don’t expect any policy changes for Shenzhen’s residential market in the third quarter. But, as mortgage rates keep coming down, part of the dented demand will return, causing the transaction volume to rise further,” Xie said.

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