Shanghai office Market: Year on year rental growth returns to positive territory
In 2021, rents in the Shanghai Grade A office market bottomed out due to a surge in demand for office space, with net absorption totaling almost triple the 2020 figure. However, we expect rental performance to diverge between the central (CBD) and decentralized (DBD) areas in 2022 and 2023. We expect rents to continue rising in the CBD, but to edge down temporarily in the DBD in response to a supply influx, before picking up again in 2024. Therefore, we recommend occupiers to tailor their strategies accordingly:
- For the CBD market, occupiers relocating or expanding should act quickly to secure long term leases and lock in today’s low rents before the rental pick up gathers momentum;
- For the DBD market, occupiers should consider new projects with high build quality, great accessibility, environmental friendliness, and low rent.