Shanghai's office market slackened in the third quarter of 2008, as “the global financial crisis increasingly weighs on market demand,” says a new report by Colliers.
Slowing demand is coupled with “ample new supply” coming on stream
across the city. The third quarter of 2008 saw 434,900 square metres of
new office space in Pudong alone.
The result is that Shanghai’s office rental market is “facing elevated
pressure in the quarters ahead… [and] there were signs that the growth
in recent years has tapered off,” says Hingyin Lee, Director of East
Asia Research at Colliers Shanghai.
Tighter demand means that landlords are under increased pressure as the
Shanghai office market shifts in favour of tenants. More flexible terms
are now being offered to compete for tenants, Colliers says,
particularly as the supply glut will span through 2008 up to 2012.
“In anticipation of more new supply coming onto the market in 2009, the
vacancy rate is expected to rise further,” the report concludes. “Given
that the global financial crisis would pummel office demand in the
coming quarters, there would be continual pressure on rental markets.”
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