Shanghai property remains healthy during H1 2018
Shanghai’s property market remained healthy, buoyed by strong economic fundamentals, according to Colliers International. Net absorption grew further and drove down vacancy in the office, retail and logistics sectors. Meanwhile, rental growth in business parks was the highest in a year in the second quarter.
The investment market in Shanghai remained active in the first half of 2018. A total of 33 deals were concluded with an aggregate transaction volume of RMB44.9 billion ($6.8 billion). Office properties continued to lead the market for en-bloc sales, representing 40 percent of the total transaction volume. Domestic RMB funds and foreign investors continued looking for projects with stable income. In addition, the Shanghai government announced a plan to create an international consumer city, which serves to upgrade the existing trade mixes and enhance consumers’ shopping experience. As a result, the retail sector attracted significant attention from investors, with five deals ultimately transacted in second quarter 2018.
During the second half of 2018 Colliers International expects:
In the office market, sustained new supply should push up vacancy slightly while average rents will probably show modest growth in mature business districts as demand from finance, professional services, trading, TMT and flexible workspace operators continues to expand.
Sustained demand coupled with limited supply in the business park sector should support its rental growth and drive down the vacancy rate.
In the retail sector, the vacancy rate will pick up while average rent edges down given the below-average rent of the large new supply in decentralized areas.
In the logistics sector, the vacancy rate should inch up as some new supply faces registration requirements and needs more time to fill. Meanwhile, rental growth should be sustained by robust demand from e-commerce and third-party logistics providers.
