Real estate market warming up

By Zhao Qian

The retail and office real estate markets in Beijing appeared to begin a recovery in the third quarter, according to a report released Wednesday by DTZ, a global real estate adviser.

A steady increase of retail supply was observed in Beijing in the third quarter. This includes the Scitech Premium Outlet in Shunyi District and the ECMall in Haidian District, which added a total of 200,000 square meters of retail space, according to DTZ.

Another 700,000 square meters of retail supply is expected to come soon, while new supply in 2010 should amount to around 600,000 square meters.

Much of the new supply for the coming year will be found in non-core business areas, like Joy City at Chaowai, One Mall at Wanliu, and Le Mall at the Wukesong business circle, the report predicted.

Major international brands H&M and C&A led the fashion and clothing sector's expansion into retail property. The companies leased two stores over 1,000 square-meter each in the third quarter.

"With the rapid growth in luxury consumption, more high-end shopping centers are moving into Beijing," Wang Chen, the head of the Consulting Department North China at DTZ said.

"But some tenants were drawn away from projects with long-term management problems," Wang said.

Office space is also becoming a hotter commodity as the vacancy rate decreased from 20.9 to 20.2 percent quarter-on-quarter, according to the data.

Average sale prices increased 6.77 percent quarter-on-quarter from 29,714 yuan ($4,352.37)/ square meter to 31,726 yuan ($4,647.10)/square meter, the report said.

Average rental prices rose 6.3 percent over the previous quarter from 139 yuan ($20.36)/square meter per month to 148 yuan ($21.68)/ square meter per month.

"The rate of return from investing in high-end commercial real estate is much higher than that of regular office buildings," said Nie Qibing, head of Business Space-Retail North China at DTZ.

"The burgeoning economic recovery and a series of targeted stimulus policies helped revitalize the high-end real estate market," Wang Chen of DTZ said.

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