Beijing Grade 'A' Office Market

• Effective Grade 'A' office rents fell 1.8 per cent in the third quarter to an average of RMB148.4 per sq.m. per month, a marked improvement on the previous quarter when rents fell by 5.7 per cent.
• Grade 'A' office rents in the east of Beijing  fell by 3.0 per cent in the third quarter while rents in the west  remained unchanged.
• Net take-up increased 83 per cent in the third quarter to 170,000 sq.m. as stronger economic growth encouraged a resurgence in demand
• The citywide vacancy rate rose 0.1 of a percentage point in the third quarter to 21.9 per cent. East 2nd Ring Road recorded the city's highest vacancy rate at 34.2 per cent.
• Four office projects were launched in the third quarter, adding 225,500 sq.m. of leasable space to the market and bringing the  year-to-date total to 1,030,000 sq.m.
• Haidian District announced plans to encourage the development of creativity and investment industries in the west of Zhongguancun.

Beijing Retail Market

• Beijing retail sales rose to RMB338.9 billion in the first eight months of 2009, up 14.3 per cent year-on-year.
• Ground floor shopping mall rents rose 1.9 per cent in the third quarter to an average of RMB739.3 per sq.m. per month.
• The citywide shopping mall vacancy rate fell 0.1 of a percentage point in the third quarter to 16.8 per cent.
• As consumers tighten their belts in response to weaker economic conditions, outlet stores have benefited greatly becoming a more popular choice for retailers as well as consumers.
• Two retail projects were launched in the third quarter, bringing with them 112,000 sq.m. of new retail space.
• Prime shopping mall rents are expected to fall a further 5 per cent and then remain stable in 2010 while the vacancy rate is expected to remain between 15 and 20 per cent.

Beijing Residential Leasing Market

• Grade 'A' apartment and high-end villa rents rose 1.2 and 0.6 per cent respectively in the third quarter, while serviced apartment rents fell a further 1.6 per cent.
• Citywide occupancy rates in all sub sectors rose in the third quarter. Serviced apartment, Grade 'A' apartment, and high-end villa occupancy rates rose 4.8, 2.2, and 0.3 percentage points respectively.
• Serviced apartment net take-up rose to 302 units in the third quarter, as rental discounts attracted back tenants.
• Two serviced apartment projects with a total of 582 units are expected to be launched onto the leasing market in the fourth quarter.
• Occupancy rates are expected to remain stable over the next six months.
• Limited new supply is expected to underpin a recovery in high-end apartment and villa rents while serviced apartment rents are expected to stabilize.
• Marriott Executive Apartments opened the 168 unit The Sandalwood Beijing in the third quarter.

Beijing Residential Sales Market

• Monthly transaction volume fell to an average of 1.6 million sq.m. in July & August, down 10.8 per cent compared with the first two months of the second quarter despite an increase in pre-sale supply of 5.2 per cent over the same period. Elevated prices are thought to have cooled demand resulting in the drop in transactions.
• The third quarter saw 1,475 Grade 'A' apartment units receive pre-sales certification, doubled the number seen in the second quarter, while transaction volume increased 70.1 per cent to 1,235 units. The average transaction price rose 18.2 per cent to RMB37,110 per sq.m.
• Only 8 high-end villa projects, 184 units, received pre-sales certification in the third quarter while 400 high-end villa units were transacted. The average transaction price rose 7.8 per cent in the third quarter to RMB26,929 per sq.m.
• Robust demand for high-end residential units is expected to persist in the short term helping to support current price levels.

Information provided by:
Savills Research & Consultancy

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