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Demand for offices in GBA expected to grow in H2

An aerial view of the 599-meter Ping An International Finance Centre, the fourth-tallest building in the world, in Shenzhen, Guangdong province. (WU LUPING / FOR CHINA DAILY)

Backed by a steady economic recovery and a massive vaccine rollout, the office market in the Guangdong-Hong Kong-Macao Greater Bay Area is expected to see growth both in rental and sales demand in the second half of the year, international real estate service provider Savills said.

Market sentiment in the Greater Bay Area’s commercial property sector saw a “significant improvement” in the first six months, as businesses gained confidence in the market outlook amid positive trends in the economy and in pandemic control, said Carlby Xie, Savills’ head of southern China research.

Market sentiment in the Greater Bay Area’s commercial property sector saw a “significant improvement” in the first six months, as businesses gained confidence in the market outlook, said Carlby Xie, Savills’ head of southern China research

Savills studied 10 Greater Bay Area cities — all of them except Macao.

Although the Grade-A office rental index in the area continued to record a decline in the first half due to oversupply and the lingering coronavirus impact, the decline narrowed to 1.6 percent, four percentage points lower than the figure in the second half of 2020, showing an index of 147.6, he said.

“Thanks to the rapid economic recovery in the first half, nine GBA cities except Jiangmen have entered the final stage of office rental decline. Performance on Grade-A office renting in those cities has seen a significant improvement compared with that of last year,” Xie said.

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Meanwhile, the sales price index of those offices edged up 0.2 percent, recording an index of 194, reflecting enhanced confidence among property buyers in the macroeconomic environment, he said.

Xie forecast overall rental and sales demand in the office market in the Greater Bay Area to grow in the second half of the year, especially in mainland cities with a high growth rate like Guangzhou and Shenzhen.

Because of the large office supply to be delivered, office rental index could still see a decline in the coming months, but growing market sentiment is projected to push up sales prices in the region, he said.

Roughly 1.45 million square meters of new Grade-A offices in the Greater Bay Area came into the market in the first half, taking the total market volume to 30.4 million square meters. Shenzhen, Hong Kong and Guangzhou took up 74.4 percent of the total volume.

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The vacancy rate of those offices in the Greater Bay Area stood at 21.2 percent in the first six months, rising 0.6 percentage points from the second half of 2020.

sally@chinadailyhk.com