The office rents in China’s capital have fallen by approximately 30% over the last five years since 2019, amidst a real estate slump, the latest data shows.
According to the latest report by Caixin on Friday, the rents for the grade A office buildings in Beijing suffered a challenging period in the second quarter of this year as the price averaged 279.2 yuan (about $43) per 10.76 square feet, a 3.9% decrease from the first quarter.
Caixin cited data released by market research firm Cushman & Wakefield and Colliers International. Caixin explained that this drop marks the largest since the 5% decrease in the second quarter of 2020 when the COVID-19 pandemic was at its peak.
Office rentals in Beijing have been declining since reaching a peak in 2019. There was a 29.5% decrease when comparing the average rentals from the second quarter of this year with the price in the second quarter of 2019.
The report pointed out that the second quarter of 2024 was characterized by increased transactions and price decreases in the Beijing office market as landlords actively used various strategies to attract tenants such as price reductions, extensions of rent-free periods, and facility enhancements.
As a result of reduced prices, rental transactions have increased, centered around the financial industry (33.8% of the total rental area) and the tech, media, and telecommunications industries (TMT·25.5%), resulting in an 18% total office vacancy rate in the second quarter. The figure marks a 0.3% point decrease from the first quarter this year.
However, considering that the vacancy rate was only over 1% at the end of 2019, the current vacancy rate is still high. Among Beijing’s core business districts, Zhongguancun, often dubbed China’s Silicon Valley, became the area with the largest increase in vacancy rate. The rate rose from 1.2% at the end of 2019 to 12.6% in the second quarter of this year.
“There is still a lack of demand and systemic issues in the market that hinder the sustained recovery of the office market,” said Lu Ming, Director of the North China Research Department at Colliers.
“More time and patience are needed for demands to recover.”
