“The market starts 2025 with a positive net take-up in the first quarter despite the seasonality and other issues. But the expected annual new supply which is nearly one million sqm will sabotage the stability of the leasing market this year.”

CARLBY XIE, SAVILLS RESEARCH



Larger rental concessions

• Four new Grade A office buildings with a total of 160,132 sqm leasable office space were completed in Q1/2025, pushing up the total stock to 7.3 million sqm by quarter end.

• Professional services, finance, and retail and trade sectors remained the key demand drivers in terms of transaction numbers, while the media and entertainment sector recorded the largest QoQ increment in the transaction areas.

• More small and medium-sized local companies upgraded their offices to newly completed Grade A office properties with lower rents, leveraging on the tenant-favoured market.

• The citywide average vacancy rate increased to 21.0% by end-Q1/2025, up 1.5 ppts QoQ and 2.0 ppts YoY.

• The citywide average rent decreased to RMB130.0 psm pmth by the end of Q1/2025 with rental index down 3.2% QoQ – the largest QoQ rental index decrement since Q1/2009.

• Market stock is forecast to further expand by 3.9% QoQ by end-Q2/2025 with the injection of 284,605 sqm new supply in Q2/2025.

• Office occupiers are expected to be more prudent in corporate real estate decision making given the growing uncertainties from the US tariff policies and their fiscal impacts.