Retail in Asia

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Retail and office to benefit as Shanghai’s residential market cools

Shanghai’s economic growth slowed in the first quarter of 2012 to 7.0 percent from the previous year’s 8.5 percent. The government showed no sign of lifting the cooling measures on the residential market. As these measures continue to deter residential investment, office and retail space will continue to take its place in the city.

Economic growth in Shanghai may have slowed in the first quarter, but foreign direct investment (FDI) continued to increase to USD3.33 billion, 29.2 percent more than a year ago. Increased FDI and strong demand from the professional services, manufacturing, internet and trading industries led to an active office leasing market, with a number of large transactions for floor plates over 10,000 square meters.

This, combined with the fact that commitment rates of most pre-leasing office buildings have reached over 50 percent, have kept the city’s Grade-A office vacancy rate at a low level of 6.7 percent. With limited new supply and high-commitment rates for new buildings, the rents are expected to continue to increase.

(Source: Shanghai Daily )