The GBA Grade A Office rental and price indexes decreased by 0.9% and 0.8% in 1H/2022, simultaneously, under global and domestic economic headwinds, the covid recurrences in multiple cities, and the temporary oversupply issues.

Despite the current challenges affecting the office leasing and sales market, the GBA saw a continuous flow of new supply, adding up to the disequilibrium of supply and demand which persisted during the first half. The overall leasing market across the GBA region slowed, relative to 2021, with most office occupiers showing more prudent corporate real estate strategies and decisions for office requirements. The regional net take-up slumped while the vacancy rate increased. By end-1H/2022, the regional semi-annual net take-up decreased by 77.1% HoH and 72.4% YoY to 268,609 sqm and the regional average vacancy rate increased by 1.0 ppt HoH and 1.1 ppts YoY to 22.4%.

While more market choices and reduced total occupancy costs (because of excessive new supply and decreased rents) came as good news to office occupiers, landlords on the other hand saw it as bad news. Yet most occupiers still need to take the CAPEX into consideration when calculating corporate real estate costs, which hindered possible expansions or relocations given the current economic and financial backdrops. Investors were also widely holding up their acquisition plans during 1H/2022 given the covid outbreak in multiple cities and its impacts on the literal market behaviour, e.g., the difficulty of undertaking site visits, deal scrutiny, negotiations and so on. Meanwhile, the tough financing environment along with undermined asset performance pushed many landlords to list their assets for sale, reducing their price expectations and putting all cities in an early downswing market cycle in due course.

The GBA office leasing and investment markets should continue to see unabated challenges associated with the global and national economic development, stringent covid regulations, cautious real estate strategies among businesses, as well as a plethora of new supply in most cities, if not all, during 2H/2022. However, there is plenty of room for policies that could lead to a bolstered economy and market confidence after Q4/2022. On the other hand, new supply is yet again likely to become a significant factor in the decrease of the Grade A office rental and price indices in 2H/2022.