This May 2018 file photo shows the view of Shenzhen's Luohu district. (PHOTO / XINHUA)

Shenzhen’s commercial property market showed signs of recovering from the coronavirus pandemic, with office demand in the fourth quarter of 2020 growing strongly.

Net absorption of the city’s Grade-A offices from October to December hit a 2020 high of 276,000 square meters, tripling the figure recorded in the previous quarter, according to international real estate services provider Savills.

“That shows office-renting demand in Shenzhen was recovering strongly in the fourth quarter,” Carlby Xie, head of southern China research at Savills, said, adding that tenants mainly came from TMT (technology, media, telecom), financial and professional services sectors.

For 2020 as a whole, net office absorption dropped 13 percent year-on-year to 553,000 square meters as the COVID-19 outbreak dealt a blow to many businesses, causing them to scrap their office-renting plans or scale back office space.

Net absorption of ShenZhen’s Grade-A offices from October to December hit a 2020 high of 276,000 square meters, tripling the figure recorded in the previous quarter, according to international real estate services provider Savills

ALSO READ: Shenzhen property market showing signs of recovery

On the supply side, more than one million square meters of Grade-A offices came onto the market in 2020, pushing total supply to over 8.3 million square meters.

The large amount of supply, along with shrinking demand, caused offices’ vacancy rate to climb to 27.9 percent at the end of 2020, 2.9 percentage points higher than a year earlier.

Average monthly rents dropped 6.3 percent year-on-year to 188.3 yuan (US$29) per square meter.

Xie said the trend of large office supply will continue in the coming years, with more than one million square meters expected to be delivered each year on average between 2021 and 2025.  

READ MORE: Shenzhen announces tighter property market rules

“Massive supply as well as (the) lingering impact of the COVID-19 will put pressure on Shenzhen’s office market this year, pushing (the) vacancy rate to rise even higher and rents to drop further,” he said, without giving exact figures.

“But with preferential policies given by the central government and Shenzhen’s own growth momentum, we are still very upbeat over the prospect of the city’s office market in the long term.”