Office space sales tumble 53 percent in first 9 months

Supply constraints drove volumes down, but prices surged.

SHANGHAI office space sales plunged in the first three quarters on limited supply but the leasing sector was vibrant as emerging outer markets outperformed central areas, real estate services provider Cushman & Wakefield said on Thursday.

Office sales volume across the city plunged 53 percent in the first nine months from the same period a year earlier. About 270,000 square meters, or 36.5 percent of the city’s total sales volume, were traded in Minhang District, making it the busiest area, the Cushman & Wakefield report showed.

“Yangpu, Changning, Zhabei and Pudong New Area also recorded comparatively robust sales in the first nine months, with office buildings in emerging markets being the most popular among buyers,” said Vicky Shen, head of office services for the China operation at Cushman & Wakefield.

“In the leasing market, abundant supply helped boost vibrancy with decentralized areas registering extremely strong performances.”

In the nine months through September, the supply of new office space for leasing surged to 1.36 million square meters, 23.6 percent more than for all of 2016.

With limited supply dampening sales, demand pushed property values higher.

In the third quarter, when sales volume dropped 55.7 percent from the previous quarter to only 58,129 square meters, capital values gained 1.7 percent year on year to 42,262 yuan (US$6,355) per square meter, according to a separate report released by JLL.

JLL forecast that strong demand and limited supply would continue to support price growth over the next 12 months.

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