By Zheng Lifei (China Daily)
Updated: 2007-08-20 06:50

Office market

The grade-A office market, propelled by demand from finance, professional services and other industries, is also expected to remain strong, analysts say.

The amount of grade-A office space taken off the market through rentals reached about 103,000 sq m in the first half of the year, pushing the overall vacancy rate down to 3.4 percent, the lowest level in five years, according the Colliers report.

"Despite the government's recent more stringent property regulations, we expect the Shanghai (property) investment market to remain active in the second half of this year, with office, residential and mixed-use properties continuing to be the main focus of institutional players," says Lina Wong, managing director, East China, Colliers International.

"Foreign banks' expansion following the liberalization of the banking sector last year will see more banks opening more outlets, which will translate into strong demand for grade-A office property in the city, especially in the financial district," says Ho from Jones Lang LaSalle's.

Industrial market

As the country's commercial hub, Shanghai's industrial property market is also expected to remain strong in the second half of the year as logistics and manufacturing companies continue their expansion and more companies relocate their back-end operations to business parks.

Average rentals at industrial parks rose 5.1 percent to $3.28 a sq m a month while business parks rose 4 percent to $12.47 a sq m a month in the first half.

Such momentum, experts say, is likely to continue as the municipal government is encouraging industries, especially in the manufacturing sector, to move into industrial and business parks to save land .

"Such a policy is likely to see the booming of industrial and business parks in the coming years," says Tang Hao, professor at Institute of the Real Estate at Shanghai University.

Anticipation of future land appreciation following the implementation of new industrial regulations has also led to upward movement in capital investment and institutional investor interest in industrial properties, experts say.

(China Daily 08/20/2007 page7)

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