Vacancy continues to decline; rents keep steadily rising
Insights & recommendations
In Q1 2021, Shanghai’s office market was affected by the Chinese New Year and the recurrence of Covid. Some deals have been delayed to subsequent quarters while leasing activity slowed compared to Q4 2021 . the underlying stable leasing demand and diverse tenant types effectively reduces the vacancy rate and supports rental growth during the traditional Chinese New Year off season and in a market with significant supply.
- The DBD will face peak supply in the next two years, which should put pressure on rental performance. CBD rents should outperform that of Shanghai’s overall market.
- The negative impact of the Covid outbreak brings short term uncertainty to Shanghai’s office market. Despite that, we recommend tenants continue focusing on high quality properties with environmentally friendly facilities. We recommend that developers evaluate the overall market conditions and adopt more proactive leasing strategies.