Shanghai’s industrial property market was “lackluster” in the first half of 2009, according to a new report by Colliers International. The report says that although new supply declined, “the vacancy rate in Shanghai’s major industrial parks surged and rents fell in H1 2009 due to slackened demand amidst the slowdown of the macro economy.”
Colliers adds that while take-up of factory space in and around Shanghai contracted “due to shrinking external demand and moderating domestic demand,” the demand for retail-oriented warehouse and logistics properties “remained firm.”
Due to weak demand, rental rates at the major Shanghai industrial parks declined to an average of RMB 0.81 per sq m per day during January-June, down by 8 per cent year on year. Rents at the more mature industrial areas, such as Northwest Logistics Park, Waigaoqiao and Hongqiao Airport Logistics Park, “held stable,” according to Colliers.
The report predicts “the business parks’ market will continue to soften in H2 2009.” A further decline in rents in both Grade A and Grade B office buildings “will pose a threat to demand for business park-type offices.” Meanwhile, “the increase in new supply in H2 of 2009 will also exert pressure on rentals.”