With approximately 13 million people now living in China's third largest city the Guangdong government continues it's concerted effort to turn Guangzhou into one of Asia's most vibrant commercial hubs and leading the charge is the exploding serviced office sector.
Despite experiencing an office vacancy rate of over 22% in 2012 there are signs that the 10% year-over-year growth the city has been experiencing in recent times is having an effect on the market with some big names including Poly Real Estate Group and Guangzhou R&F Properties planning to invest in over 18m square feet of Grade A office space in the coming months. Much of this new growth will be focused on Guangzhou's up-and-coming central business district of Zhujiang Xincheng which was transformed in 2003 when the government spent over $30 billion upgrading it's transport and services infrastructure, bringing it into line with other major players.
Due to this burgeoning availability of office space in Guangzhou which seems to have outstripped the city's economic growth, rental rates have remained relatively flat with some figures indicating a year-on-year drop of about 2.2% in 2012 but with the Chinese trade figures showing signs of rejuvenation in 2013 Q1, the likelihood is that this situation will reverse in the coming months.
So what does this mean for companies who may need to expand or upgrade their office space in the coming months? Now is a good time to take advantage of the saturation of office space on the market as centres, eager to fill surplus floor space are increasingly willing to negotiate favourable terms and service agreements with interested parties. With big name companies being attracted to the region including Britain's largest retailer, Tesco, The worlds biggest mobile phone service provider China Mobile and General Motors to name but a few this situation cannot go on indefinitely, so if your company is in a position to sign an extended lease agreement in this climate of supply over demand, there are some extremely enticing and future-friendly deals to be had.
Rental prices in the new business district of Zhujiang Xincheng are a little higher than the old business district of Tianhe at about 280 RMB per sq/m compared to 255 RMB per sq/m. Both these districts compare extremely favourably to China's other major business cities with Beijing coming in at a little over 500 RMB per sq/m and Shanghai at about 400 RMB so it really is worth paying this area a visit and taking advantage of these unique economic times.