Guangzhou real estate market set to strengthen
Foreign investors' interest in retail property in Guangzhou is expected to continue to grow, with constantly increasing inquiries by them, said Carlby Xie, head of southern China research at international real estate adviser Savills.
Six new quality retail property projects have come online this year, bringing the total standing space to 5.99 million square meters in Guangzhou, capital of Guangdong province.
The vacancy rate at quality retail property projects across the city has dropped by 1.3 percentage points year-on-year to 6.1 percent at the end of this year.
Average monthly rental for first-floor space at those projects has risen by 6.1 percent to 740.4 yuan ($107) per square meter.
Retail rentals in Guangzhou rose by 7.5 percent in the first 10 months of this year to about 758 billion yuan, fueled by the sizable population and ever increasing income, although the growth rate continued to decrease.
Five new quality retail property projects are set to enter the market in Guangzhou next year, with a combined area of 370,000 square meters.
The new supply is estimated to slightly increase the vacancy rate and result in a decrease in rental growth.
The coming five years are forecast to feature continuous new supply, a better balance of supply and demand, and constant rental growth, Xie said.
Meanwhile, demand for grade-A office space in Guangzhou would be robust in the coming five years, said Sally Li, director of Savills Guangzhou Commercial Leasing, foreseeing a largely balanced market.
The coming three years are expected to embrace a peak of new supply of a grade-A office space in Guangzhou, totaling more than 2.55 million square meters and mainly located in the Pazhou area and International Financial Town.
With hot demand and limited new supply of 200,000 square meters, the vacancy rate in the grade-A office market has declined by 4.3 percentage points to 4.3 percent and average monthly rental has surged by 11.2 percent to 190.9 yuan per square meter in Guangzhou this year.
Behind the strong demand lies the 18.2 percent increase in the number of newly registered domestic and foreign companies, especially those in the sectors of new generation information technology, artificial intelligence and biopharmaceuticals, Li said.
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