In this undated photo, skyscrapers border a lush green landscape in the central business district in Shenzhen, Guangdong province. (PHOTO PROVIDED TO CHINA DAILY)
Shenzhen’s high-end office market plunged in the first half of the year with vacancy rate going up as enterprises adopted a conservative approach over business expansion amid economic slowdown and oversupply.
The average vacancy rate of Grade-A offices in the city stood at 27 percent at the end of June, up 4.1 percentage points from a year earlier according to international real estate services provider Savills.
Five new projects totaling 444,000 square meters were delivered in the second quarter, pushing total Grade-A office space in Shenzhen to 10.4 million square meters, according to the real estate advisory firm
Average monthly office rents dropped to 174.1 yuan per square meter, declining 2.9 percent year-on-year.
“Although market activities bounced back somewhat in the first quarter, businesses, in general, still adopted a conservative strategy in office leasing and the trend intensified in the second quarter,” said Carlby Xie, head of southern China research at Savills.
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“This can be attributed to the challenging economic environment domestically and internationally, and the massive new supply of offices.”
The mainland’s economy grew by 6.3 percent year-on-year in the second quarter of 2023 and 5.5 percent in the first half, official data released on Monday showed.
Five new projects totaling 444,000 square meters were delivered in the second quarter, pushing total Grade-A office space in Shenzhen to 10.4 million square meters, according to the real estate advisory firm.
Six more projects are expected to come into the market in the third quarter, bringing another 400,000 square meters.
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Xie expects the commercial property market to face growing pressure for the rest of the year, with vacancy rate further rising and office rents falling.
In the retail property sector, meanwhile, positive signs are emerging as consumer sentiment improves.
While more visitors have been seen in shopping malls in Shenzhen, many of them are from Hong Kong.
According to a recent report by mobile payment platform AlipayHK, Hong Kong residents’ spending on the mainland increased by over three times in the second quarter compared to the previous three-month period.
“Coming to shop in Shenzhen is attractive for people in Hong Kong, as the price level is lower and there are more options,” Xie said.
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He said the increasing number of shoppers from Hong Kong will particularly benefit such industries as catering, entertainment, and healthcare.
Daily traffic volume at Shenzhen’s shopping malls surged by 68 percent year-on-year on average in the first four months, according to a local media report, citing the data from US-based property consultancy Debenham Thouard Zadelhoff.
