The GBA Grade A office market appeared to be on its way to recovery in 1H/2021. Many market players were increasingly confident with rental decreases slowing (down just 1.6% half-onhalf(HoH)), and prices once again rising (up 0.2% HoH).

The pace of projects completions almost recovered to pre-COVIDlevels. Total GBA Grade A office stock therefore increased to 30.4 million sq m by the end 1H/2021, up 5.0% HoH and 9.0% year-onyear(YoY).

Leasing demand also picked up, with seven out of ten cities recording a decrease in vacancy rate in 1H/2021 and take-up totalling 972,000 sq m. However, Dongguan, Zhuhai and Foshan still faced with oversupply and weak demand. The regional vacancy rate consequently increased 0.6 of a ppt in 1H/2021 to 21.2% and up 2.2 ppts YoY.

Most landlords remained willing to extend incentives to qualified tenants. This is not only because of the business disruption caused by the pandemic but also the lingering oversupply issue in many cities. Total occupancy costs fell in seven out of ten cities within the GBA, including Hong Kong, Shenzhen and Guangzhou, down 2.2%, 2.2% and 1.0% in 1H/2021, respectively. Zhuhai, Jiangmen and Dongguan witnessed increases of 1.7%, 1.3% and 1.1% thanks to new completions of superior quality.

Nine out of 10 GBA cities, including Hong Kong, Guangzhou, Shenzhen and Foshan, etc entered the late downswing cycle in 1H/2021, except for Jiangmen. This was a notable improvement, compared to 1H/2020.