Although Chinese housing sales have been picking up, boosted by pent-up demand and falling prices, there have been few signs of life in the non-residential property market.
In the commercial property market, both sales and prices were up, because people were buying properties for investment. Yet rents were down and vacancies were up, indicating that perhaps a rebound in demand was, according to some analysts, still to come.
Chen Sheng, vice president of the China Index Academy (CIA), a private-sector research institute that specializes in real estate, told Xinhua that the rebound of the nation’s non-residential property market largely depended on the overall economic situation.
Chen Seng said, ‘Unlike homes that are for shelter, the buyers of office buildings, retail and industrial properties purchase them for investment purposes or their own business needs.’
Richard Wang, director of DTZ’s north China consultancy department, said over-supply was a key problem facing the Beijing office property sector.
He added that 1.3 million sq m of new supply would come into the market in Beijing this year, mostly in the central business district, where many multinational companies were based. That’s more than double the 603,000 sq m of new office building space that came into Beijing’s market in 2008, according to DTZ figures.
Beijing is not the only city with an office space overhang. DTZ figures showed that office vacancies hit 11.86% at the end of March, up from 9.29% a quarter earlier, in Shenyang, capital of northeastern Liaoning Province.
China View suggested these figures likely reflect a spending binge in 2008.
Total investment in the property sector in Shenyang, a traditional heavy industrial base, was 101.1 billion yuan in 2008, up 38.4 % year on year. The growth rate was 17.5 percentage points above the national average.
In the long run, these investments might pay off, Fan said, because secondary cities with the prospects of rapid development meant better investment prospects in terms of value appreciation.