KCRE

RENTS for Grade A office declined at a lower pace in Shanghai in the third quarter of this year as a result of improved leasing activity and market sentiment.The average asking rent dropped to 6.80 yuan (US$1) per square meter per day at the end of last month, down 3.6 percent from a quarter earlier. That compared with a 4.6-percent quarterly drop during the April-June period.On a yearly basis, the rent had declined by 21.6 percent over the past 12 months, according to the company's research.

"Though positive signs in office take-up began to emerge over the past quarter and are expected to continue amid a brighter business outlook and macro-economic forecasts, the average office rent will continue to dip primarily due to a significant amount of supply coming on stream," With the completion of three new buildings during the past quarter - Shanghai IFC-HSBC Tower, GC Tower and International Corporate City - the overall vacancy rate in Shanghai rose by a further 0.6 percentage point to 15.4 percent at the end of last month.For the fourth quarter, some 270,000 square meters of new office space are projected to be launched in the local market, while new supply for next year is estimated at about 1 million square meters.

During the past quarter, while occupiers from the less affected industries such as pharmaceutical and insurance remained the most active players in the leasing market, buying demand from owner-occupiers, especially domestic firms, also rose."Strong liquidity position and the ready availability of capital have enabled many domestic companies to purchase office space,"