2023-07-26-莱坊-Guangzhou_office_market_report_Q2_2023_6页_1mb

Guangzhou Grade-A Office Market Q2 2023 Summary

Overview

The Guangzhou Grade-A office market showed fluctuating leasing demand in Q2 2023, primarily driven by small transactions, as the market recovered but remained cautious. The vacancy rate increased slightly by 0.8% QoQ to 14.0%, while rents continued declining to RMB147.8/sqm/month, marking an eighth consecutive quarterly drop and an annual decrease of 11.7%. The investment market saw two major transactions totaling RMB5.8 billion, highlighting ongoing activity despite macroeconomic pressures.

Key Market Indicators

• Leasing Demand: Demand recovered but saw highs and lows; small transactions (mostly 200-500 sqm) dominated, with some large deals, such as LORÉAL leasing 26,800 sqm.
• Supply and Vacancy: New supply reached 258,000 sqm in Q2 2023, with cumulative annual supply expected to double. The vacancy rate rose due to oversupply, with submarkets like Pazhou seeing rates increase.
• Rent Trends: Rents fell to RMB147.8/sqm/month, with all submarkets experiencing decreases; landlords employed "price for volume" strategies and personalized incentives.
• Development Pipeline: High supply anticipated through 2026, focusing on areas like Pazhou and Guangzhou North Station, extending beyond the second half of 2023.

Investment Market

The investment sector recorded two significant transactions summing to RMB5.8 billion: Fosun International Center purchased for RMB4 billion, and BYHEALTH intended to acquire Guangbao Yunhui Commercial for RMB1.83 billion. State-owned enterprises led buying activity, expected to drive demand in the second half of 2023.

Outlook for Q3 2023

Leasing demand is projected to sustain a mild recovery trend, with vacancy rates potentially rising if fundamentals do not improve. Rent stabilization depends on sharp demand increases. Overall, the market faces challenges from oversupply, though large transactions indicate ongoing investor interest.