“During Q3/2024, market take-up increased while rental decline accelerated. On the demand side, the service sector continued to expand steadily. In addition, SOEs’ leasing transactions boosted market de-stocking.”

JAMES MACDONALD, SAVILLS RESEARCH



Take-up ticks up with rental decline accelerating

• In Q3/2024, World Fortune Center in the Optics Valley submarket was launched, adding 35,000 sqm of new supply to the market.

• SOE operators leveraged their group resource advantages and rapidly improved occupancy rates through transactions of affiliated companies.

• Driven by SOE contributions, traditional finance and real estate sectors accounted for 22.4% and 14.8% respectively. Information technology and business service remained resillient throughout Q3/2024, taking 14.4% and 14.3% respectively.

• The rental decline released the upgrade demand - accounting for 53.3% of the new leasing in Q3/2024. During this quarter, relocation demand went up to 25.3%.

• The limited new supply and temporarily recovered demand led to a 0.3 ppt QoQ and 1.8 ppt YoY decline in vacancy rate to 38.5%.

• For stock project adjustment, landlords continued to soften leasing policies to boost occupancy. By quarter-end, rents fell to an average of RMB84.7 psm pmth. The rent index fell 2.4% QoQ and 8.4% YoY.

• Hong Kong Center T1 has been postponed delivering to 2025. Looking forward, the launch of Alibaba Central China Headquarter next year will intensify the competition in Xudong Avenue, Zhongnan Zhongbei Road and also Hankou Riverside.