Shenzhen's real estate market has showed multiple positive signals since the beginning of 2023, as the city’s economy has steadily recovered and business activities are picking up.
Increased inquiries about and field visits to grade-A offices in the first quarter have showed a sign of returning confidence in the city’s office market, according to a report released by international real estate services provider Jones Lang LaSalle (JLL) on Wednesday.
Hong Kong-invested financial enterprises have been an active player in the office demand upturn, taking up more than 7,000 square meters of office space in Futian CBD in the first quarter, according to JLL.
“Many Hong Kong-funded enterprises have raised their expectations for the integrated development of Shenzhen and Hong Kong, and their confidence in investing in Shenzhen has also been boosted,” said Alfred Li, head of office leasing advisory at JLL Shenzhen.
The vacancy rate of grade-A office spaces in Shenzhen remained stable in the first quarter, with only a slight drop of 0.4 percentage points compared with the previous quarter to 22.7%, according to the JLL report.
JLL expects that office rental demand in Shenzhen will be further stimulated in the second half of the year, with financial enterprises and professional service industries likely to show the strongest appetite.
However, oversupply will further drive up the city’s grade-A office vacancy rate and office rent will face more downward pressure, the real estate services provider said.
Real estate consultancy Savills also released a report Thursday, which predicted that with the steady recovery of economic activity, office demand from the information technology, finance and professional services industries will continue to grow in Shenzhen.
“Overall, Shenzhen’s grade-A office market posted stronger performance than that of Guangzhou in the first quarter. We are optimistic about the city’s office market in the coming quarters,” said Carlby Xie, head of Savills Southern China Research.
According to Savills’ report, Shenzhen’s grade-A office market may face a tidal wave of supply in 2023, with an estimated supply of 1.405 million square meters throughout the year.
Six new projects are expected to hit the market in the second quarter, bringing approximately 410,000 square meters of office space to the market.