Beijing Grade A Office Market

• Net take-up jumps 65.4 per cent in the fourth quarter to 281,000 sqm as demand from multinational companies returns.
• Citywide vacancy rate drops 2.3 percentage points quarter-on-quarter to 19.6 per cent.
• Effective Grade A office rents grow 2.6 per cent to an average of RMB152.7 per sqm per month, the first rebound since the third quarter of last year.
• Leasable supply reaches a new high of 1.14 million sqm for 2009, 15.4 per cent of total stock by the end of 2008.
• Chaoyang government tries built-to-suit model in the CBD eastern expansion plan.

Beijing Retail Market

• During the first eleven months, accumulated retail sales topped RMB479.4 billion, up 15.2 percent year-on-year.
• Ground floor shopping mall rents fell 2.6 per cent in the fourth quarter to an average of RMB720.0 per sqm per month.
• Citywide shopping mall vacancy rate fell 0.8 of a percentage point in the fourth quarter to 15.0 per cent.
• Only one new retail project was launched onto the market in the fourth quarter, bringing with it a total GFA of 37,600 sqm.
• Cinema operators were the most active market driver as three new venues were opened during the fourth quarter.
• Average shopping mall occupancy rate is expected to continue to fall in 2010-2011 as more than 2.5 million sqm of mid to high-end retail centres are expected to be launched onto the market in the next two years.
• The central government stresses the importance of continuing to boost consumer demand in 2010, which should help to support current the current rental levels of prime shopping malls.

Beijing Residential Leasing Market

• Grade A apartment, high-end villa, and serviced apartment rents fall 0.3, 2.8, and 1.2 per cent respectively in the fourth quarter.
• The serviced apartment market sees a 3.8 percentage point increase in occupancy, while Grade A apartment and high-end villa occupancy rates fall 0.1 and 2.6 percentage points respectively.
• Only one new serviced apartment project launched onto the market in the fourth quarter, the 162 unit Ascott Raffles City Beijing. This is Ascott¡¯s second Ascott branded serviced apartment project in Beijing.
• Two new serviced apartment projects are expected to be launched in 2010 adding around 600 units to the market.
• Occupancy rates in all sectors are expected to continue to climb over the next six months while rents in the Grade A apartment and high-end villa market are also expected to rise.

Beijing Residential Sales Market

• During the first two months of the fourth quarter, 2.4 million sqm of residential projects gained pre-sales certification, increasing 1.1 per cent compared with the first two months of the third quarter.
• Transaction volume stood at 3.4 million sqm in the first two months of the fourth quarter, decreasing 8.5 per cent compared with the first two months of the third quarter.
• 2,129 Grade A apartment units were sold in the first two months of the fourth quarter, up 72.4 per cent compared with the first two months of the third quarter.
• The average transaction price of Grade A apartments continued to rise 2.3 per cent to RMB37,966 per sqm in the first two months of the second quarter.
• Four new Grade A apartment projects with 1,137 units were launched onto the pre-sales market during the first two months of the fourth quarter.
• Only three high-end villa projects with 153 units gained pre-sales certification in the fourth quarter, however the transaction volume increased 11.8 per cent over the same period to 447 units.
• The average high-end villa transaction price increased 10.1 per cent to RMB29,659 per sqm in the first two months of the fourth quarter.
• High-end residential transaction volume may fluctuate in the first half of 2010, however land supply in prime locations will remain limited supporting high-end residential prices in the next two to three years.

Beijing Sales & Investment Market

• First-hand office transaction volume slowed in the fourth quarter due to tightened loan supply toward the end of the year and elevated asking and transacted prices.
• The average transacted price for Grade A offices increased 6.0 per cent in the fourth quarter, while prime retail prices increased 5.5 per cent over the same period.
• Rental yields were further compressed in 2009 as prices continued to rise while rents fell.
• RMB43.4 billion worth of en-bloc investment deals were concluded in 2009, 7.8 per cent higher than 2008 but down 7.6 per cent compared with the peak in 2007.
• Domestic investors executed 89 per cent of all deals in 2009, 17 percentage points more than in 2008.
• International investors, mainly as sellers in these deals, sought to secure their investment returns by disposal at a perceived market high.

Information provided by:
Savills Research & Consultancy

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