By the end of Q4 2022, the total Grade A office inventory in the core markets of the 21 major cities in Greater China that the firm tracks totaled 65.3 million sq m. In the meantime, total premium core city office net absorption across the Greater China market for the whole year was 1.0 million sq m, a decrease of 74.3% when compared to the figure registered at the end of Q4 2021.
Among the six major cities in the region, Taipei registered the lowest vacancy rate, at 2.8%. As for the tier-2 city group, Hangzhou recorded the lowest vacancy rate at 16.6% among our tracked city markets in Greater China.
The volume of quality office supply in many cities in Greater China is expected to enter a peak period this year. Between 2023-2026, much of the future supply expected to complete will land in suburban locations, which will continue to drive decentralization as a number of tenants seek quality space at a discounted rental.
Looking to the year ahead, considering the economy, policy direction and COVID-19 control relaxation in mainland China, we believe overall prime office demand will be more resilient than last year in Greater China. In particular, certain industry sectors have seen new business opportunities of late or have the potential to realize business growth, given recent governmental policy directives and recent commercial, societal and lifestyle changes. These industry sectors are:
- Technology, media, and telecommunications (TMT)
- Life sciences
- Trading
Looking at the individual major gateway cities in Greater China, Grade A office market demand performance in 2022 generally turned out to be lower than expected. Into 2023, we expect a number of factors, including the state of the general economy, government policy and individual city initiatives, to help drive demand.
