China’s economy is weak》Beijing’s A-grade commercial rents plummeted by nearly 50% in 8 years

Due to China's weak economy, rents for Grade-A commercial properties in the capital Beijing in the third quarter of this year have almost halved from the peak in 2018, a drop of 49.1%. As for the commercial vacancy rate, it shows a K-shaped differentiation. Driven by the demand for artificial intelligence (AI) in Zhongguancun, a cluster of the technology industry, the commercial vacancy rate fell to 5.6% in the third quarter of this year, but the commercial vacancy rate in the central business district climbed to 20.4%, exceeding the international warning line of 20%.

According to the latest report from Knight Frank, a global private real estate consulting company, Zhongguancun, located in Beijing’s Haidian District and close to many universities, was driven by the demand for the AI ​​industry chain and embodied intelligence. The average local commercial rent in the third quarter of this year bucked the trend of 0.8% compared with the second quarter, and the vacancy rate fell to 5.6%.

However, the originally prosperous central business district located on the East Third Ring Road in Beijing was affected by the release of a large amount of idle office space. In the third quarter of this year, the local commercial and office vacancy rate climbed to 20.4%.

Data from commercial real estate investment institution Jones Lang LaSalle (JLL) shows that in the third quarter of this year, the average rent of Grade A commercial offices in Beijing dropped to 198 yuan per square meter (the same below, approximately NT$3,210 per square meter); compared with the peak of 389 yuan (approximately NT$6,300 per square meter) in the third quarter of 2018, the decline has reached 49.1%.

Yao Lingzhen, dean of the Shanghai Pudong Development Bank Financial Innovation Research Institute, recently issued a report stating that China's commercial offices are facing multiple pressures such as rising inventory, aging housing, falling rents, and rising vacancy rates. The vacancy rate of commercial offices in first-tier cities has generally exceeded the international warning line of 20%.