Shanghai's real estate market has grown strongly in all sectors last year amid robust demographic and economic growth, and the sector can look forward to another generally promising year in 2008 on an optimistic outlook, Colliers International said yesterday in its latest market research.
Rents and capital values are expected to grow across all key property sectors in the coming 12 months though possibly at a slower pace, while increasing monetary control and tightening measures by the government might continue to bring uncertainties especially in the investment market, the firm predicted.
Office
The city's Grade A office market remained vibrant in 2007 amid buoyant business activities, with a notable expansion in demand by tenants in the financial and professional services sectors.
In particular, inhouse expansion and newly set-up businesses have led to additional requirements for office space, bringing an overall net absorption to around 263,000 square meters.
In terms of supply, a total of 227,100 square meters of new Grade A office space were completed during the year. The overall Grade A office vacancy rate fell to a record low of 2.5 percent while the average rent rose 11.3 percent year on year to 9.12 yuan (US$1.24) per square meter per day by the end of fourth quarter as demand surpassed new supplies.
Meanwhile, there was keen interest in acquisition for investment purposes, with en bloc or bulk area transactions hitting 560,000 square meters during the year. Citywide, capital value rose an average 26.6 percent year on year.
For 2008, Colliers predicts increasing corporate demand will continue to underpin the market.
In contrast to 2007, the city's Grade A office supply will increase notably to 843,300 square meters, with the bulk - 608,900 square meters, or 72 percent - coming from Pudong New Area, followed by Jing'an and Putuo districts in Puxi which each contributes 163,400 and 75,000 square meters.