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Office Snapshot Q4 2016Beijing

MARKETBEAT

Economic Indicators

Grade A CBD Market Indicators

Grade A CBD Rent & Vacancy Rate

Supply Pipeline

www.dtzcushwake.com

Q2 16 Q3 16Past 12-Month

Growth

GDP Growth 6.7% 6.7%

Tertiary Sector Growth 7.6% 7.3%

CPI Growth 1.2% 1.2%

Q3 16 Q4 1612-Month

Forecast

Average Effective

Rent* (RMB/sq m/mo)403.2 409.5

Vacancy Rate 4.5% 5.0%

0%

2%

4%

6%

8%

200

220

240

260

280

300

320

340

360

380

400

Vacancy

Rate

(%

)

Ren

t (R

MB

/sq

m/m

o)

Overall Rent Vacancy Rate (%)

Source: Beijing Statistics Bureau

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

2,600

2017 2018 2019 2020

Lettable

Offic

e A

rea (

‘000 s

qm

)

Core Submarkets Emerging Submarkets

10 year (2007–2016) Historical Average= 647,000 sq m

BEIJING OFFICEEconomyBeijing’s GDP increased 6.7% over the first three quarters. The city’s

tertiary industry expanded 7.3% y-o-y for the year at the end of Q3,

up 1.1 percentage points over the same period in 2015.

Market OverviewDemand for office space continued to be strong in Q4, with net

absorption amounting to 785,000 sq m for the year. Wangjing-

Jiuxianqiao was the most active submarket, accounting for 22.9% of

transaction volume, followed by the Lufthansa submarket at a 16.3%

share. Robust demand was the main driving force behind rental

increases in the city.

Grade A offices averaged a gross effective rent of RMB387.2 per sq

m per month at the end of Q4, up 0.9% q-o-q. The five core

submarkets recorded a gross effective rent of RMB409.5 per sq m

per month on average, up 1.6% q-o-q. The Zhongguancun, Financial

Street and Lufthansa submarkets achieved the strongest rental

growth among submarkets.

New office supply in Q4 included Emperor, Lei Shing Hong Plaza

Phase II Tower B, Jinhui Building, Kaisa Plaza and Central Park

Plaza. These added a combined 267,220 sq m of Grade A offices

and helped lift the city’s annual new supply to 1,012,430 sq m, the

highest mark since 2008. Strong pre-leasing activity limited a

significant rise in the vacancy rate, which increased 0.8 percentage

points q-o-q to 6.6% at the end of Q4. Availability in the five core

submarkets remained stable at 5.0%, up 0.5 percentage points q-o-q.

Domestic companies dominated leasing activity, comprising 81.3% of

all transactions. Finance, high-tech and professional services firms

ranked as the top three sectors, accounting for 40.2%, 22.6% and

14.9% of volume, respectively.

OutlookIn 2017, approximately 2.38 million sq m of new office supply is

scheduled to launch. This will create both challenges and

opportunities in Beijing’s office market.

Ahead, Beijing’s July 2016 policy notice regarding real estate taxes

will take effect. The government policy could result in a tax hike on

landlords, resulting in additional costs passed on to tenants down the

road. We will closely monitor implementation and a possible rental

increase spurred by the new policy over the next year.


MARKETBEAT

www.dtzcushwake.com

SUBMARKETINVENTORY

(SQ M)VACANCY RATE

NEW

COMPLETIONS

YEAR-TO-DATE

(SQ M)

UNDER

CONSTRUCTION

(SQ M)

GRADE A EFFECTIVE RENT*

RMB/SQ M/MO US$/SF/MO EUR/SF/MO

CBD 3,015,926 7.3% 172,949 2,631,429 380.2 5.1 4.9

Financial Street 1,382,533 0.6% 45,000 658,405 664.5 8.9 8.5

Lufthansa 1,008,293 8.4% 170,000 48,957 351.6 4.7 4.5

East 2nd Ring Road 1,130,655 3.4% 48,000 473,000 344.9 4.6 4.4

Zhongguancun 992,972 2.6% 90,632 654,000 358.9 4.8 4.6

BEIJING CBD Grade A Total 7,530,379 5.0% 526,581 4,465,791 409.5 5.5 5.2

WangJing-Jiuxianqiao 560,660 17.3% 209,000 475,552 280.9 3.8 3.6

Olympic Games Village (OGV) 557,039 14.4% 136,854 341,651 369.8 4.9 4.7

Beijing Development Area (BDA) 474,648 20.3% 30,000 - 159.6 2.1 2.0

Li‘ze Financial Business District - - - 1,439,717 - - -

Others* 179,353 - 109,995 563,042 - - -

BEIJING Overall Grade A Total 9,302,079 6.6% 1,012,430 7,285,753 387.2 5.2 5.0

Key Leasing Transactions Q4 2016

PROPERTY SUBMARKET TENANT SQ M LEASE TYPE

Oriental Plaza East 2nd Ring Road Roche Diagnostics 4,145 Renewal

Tian Run Fortune Center East 2nd Ring Road EDF 3,600 Relocation + Expansion

Beijing IFC CBD AstraZeneca 3,048 Renewal

Winland Int'l Center Financial Street Bloomberg 2,058 Renewal

Oriental Plaza East 2nd Ring Road Zhong Ou Asset Management 1,640 Relocation

Fortune Financial Center CBD China Orient Asset Management 1,401 Relocation

Oriental Plaza East 2nd Ring Road Diaoyutai MGM Hospitality 1,197 Renewal

UBP WangJing-Jiuxianqiao SONY 1,073 Relocation

Winland Int'l Center Financial Street Royal Bank of Canada 925 Renewal

Significant Projects Under Construction

PROPERTY SUBMARKET MAJOR TENANT SQ M COMPLETION DATE

Hademen Plaza Other (Caishikou) - 86,000 Q1 2017

China World Trade Centre IIIB CBD - 71,429 Q1 2017

Aojin Building OGV - 71,000 Q1 2017

Metro Park Li‘ze - 250,000 Q2 2017

International Electronic Headquarter WangJing-Jiuxianqiao 160,000 Q2 2017

World Profit Center II Lufthansa - 48,957 Q3 2017

China Overseas Fortune Center OGV - 80,000 Q4 2017

Joy City Property Limited Building East 2nd Ring Road - 100,000 Q4 2017

Samsung Headquarters Building (Z2b) CBD - 120,000 Q1 2018

* Projects of others not belonging to any of the above submarkets.

** Effective Rent is calculated based on gross floor area and assuming a letting mid floors for a typical three-year lease term with rent-free periods factored in.

*** Exchange Rate: 1 USD = 6.950 CNY = 0.958 EUR


MARKETBEAT

www.dtzcushwake.com

James ShepherdManaging Director

Research, Greater China

Tel: +86 21 2208 0769

[email protected]

Sean Wang Vice President, Greater China,

Managing Director, North China

Tel: +86 10 8519 8168

[email protected]

Sabrina WeiSenior Associate Director

Head of North China Research Tel: +86 10 8519 8087

[email protected]

About Cushman & WakefieldCushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop and live. The firm’s 43,000

employees in more than 60 countries provide deep local and global insights that create significant value for occupiers and investors around the world. In

Greater China, the firm has a co-branded presence under the name of DTZ/Cushman & Wakefield and operates 20 offices in the region. Cushman &

Wakefield is among the largest commercial real estate services firms with revenues of $5 billion across core services of agency leasing, asset services,

capital markets, facility services, global occupier services, investment & asset management, project management, tenant representation and valuation &

advisory. To learn more, please visit www.dtzcushwake.com or follow us on Weibo/WeChat (DTZ_China).

DisclaimerThis report has been produced by DTZ/Cushman & Wakefield for use by those with an interest in commercial property solely for information purposes. It is

not intended to be a complete description of the markets or developments to which it refers. The report uses information obtained from public sources which

DTZ/Cushman & Wakefield believe to be reliable, but we have not verified such information and cannot guarantee that it is accurate and complete.

No warranty or representation, express or implied, is made as to the accuracy or completeness of any of the information contained herein and DTZ/Cushman

& Wakefield shall not be liable to any reader of this report or any third party in any way whatsoever. DTZ/Cushman & Wakefield shall not be held responsible

for and shall be released and held harmless from any decision made together with any risks associated with such decision in reliance upon any expression of

opinion in the report. Our prior written consent is required before this report can be reproduced in whole or in part.

© 2017 DTZ/Cushman & Wakefield All rights reserved.

Contact

Jonathan WeiSenior Director

Head of Mainland China Occupier ServicesTel: +86 21 2208 0119

[email protected]

Charles Yan Director

Head of North China Occupier Services

Tel: +86 10 8519 8194

[email protected]

Office Snapshot Q4 2016Guangzhou

MARKETBEAT

Economic Indicators

Guangzhou Grade A Office Market Indicators

Guangzhou Grade A Office Rent & Vacancy Rate

Supply Pipeline

www.dtzcushwake.com

EconomyGuangzhou’s economy expanded 8.1% y-o-y over the first three

quarters compared to 8.0% in the first half. The city’s tertiary

sector increased 8.9% y-o-y, while CPI accelerated 1.9% y-o-y.

Market OverviewThe Guangzhou office market added 310,982 sq m of new Grade

A supply in Q4, raising stock in core submarkets to 4.68 million sq

m. New office buildings included Central Tower and Top Plaza

East Tower in Zhujiang New Town, pushing up the submarket’s

stock to 3.15 million sq m. Elsewhere, Baodi Plaza in the Pazhou

submarket formally launched.

The market’s overall vacancy rate dropped 1.1 percentage points

q-o-q to 14.3% in Q4. Zhujiang New Town continued to attract

companies from other submarkets due to a wide selection of new

premium quality buildings and aggressive leasing campaigns,

driving down the vacancy rate 2.5 percentage points q-o-q to

13.2%. The vacancy rate in Pazhou increased 4.3 percentage

points q-o-q to 45.9%, while levels in other submarkets remained

stable.

Rents for Grade A offices averaged RMB168.8 per sq m per month

in Q4, up 0.6% q-o-q. Among submarkets, average rents in

Zhujiang New Town advanced the most at 1.3% q-o-q due to

steady occupancy at newer buildings. Average rentals were stable

in Yuexiu and Tianhe Sport Center, but declined 1.8% in Pazhou

as a number of properties struggled with high vacancy and leased

out their premises by using a low-rent strategy.

For the full year, Guangzhou received a record 940,000 sq m of

new office supply. Although net absorption also amounted to a

new high of 575,000 sq m in 2016, the vacancy rate increased 6

percentage points y-o-y. Owing to the high quality of new office

supply, average rents grew 0.4% in 2016 compared to the

previous year.

OutlookA total of 279,000 sq m of Grade A office supply is planned for

delivery in 2017, with all new buildings located in Pazhou. A

significant drop in new office supply in the coming year compared

to 2016 should bring down vacancies given a continuation of

strong absorption. We forecast average rents to remain stable, but

Zhujiang New Town should see a gradual rise in rents.


Growth




Q3 16 Q4 1612-Month

Forecast

Average Face Rent

(RMB/sq m/month)167.9 168.8


0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

160

162

164

166

168

170

172

174

Vacancy R

ate

(%

)

Fa

ce R

ent (R

MB

/sq

m/m

o)

Face Rent Vacancy Rate (%)

Source: Statistics Bureau of Guangzhou Municipality

0

10

20

30

40

50

60

70

80

90

2017 2018 2019 2020 2021

GF

A (

‘000 s

qm

)

GUANGZHOU OFFICE MARKET

*Data only covers major business hubs in urban Guangzhou

10 year (2006–2015) Historical Average = 336,621 sq m

Office Snapshot Q4 2016Guangzhou

MARKETBEAT

www.dtzcushwake.comCopyright © 2017 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from mult iple sources considered

to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy.

About Cushman & WakefieldCushman & Wakefield is a global leader in commercial real estate services, helping clients transform the way people work, shop, and live. The firm’s 43,000

employees in more than 60 countries provide deep local and global insights that create significant value for occupiers and investors around the world.

Cushman & Wakefield is among the largest commercial real estate services firms in the world with revenues of $5 billion across core services of agency

leasing, asset services, capital markets, facilities services (branded C&W Services), global occupier services, investment management (branded DTZ

Investors), tenant representation and valuations & advisory. To learn more, visit www.dtzcushwake.com or follow @Cushwake on Twitter.

SUBMARKETINVENTORY

(SQ M)VACANCY RATE

NEW COMPLETIONS

YEAR-TO-DATE

(SQ M)

UNDER

CONSTRUCTION

(SQ M)

GRADE A FACE RENT*


Tianhe Sports Center 826,963 3.6% 0 0 ¥170.7 $2.3 $2.2

Zhujiang New Town 3,150,141 13.2% 631,152 281,000 ¥179.7 $2.4 $2.3

Yuexiu 269,988 8.4% 57,000 0 ¥126.8 $1.7 $1.6

Pazhou 436,175 45.9% 253,220 1,532,499 ¥115.5 $1.5 $1.4

Others - - - 1,251,129 - -- --

GUANGZHOU Grade A Total 4,683,267 14.3% 941,372 3,064,628 ¥168.8 $2.3 $2.2



Guangzhou IFP Zhujiang New Town LUSO International Banking 1,666 New Setup

Central Tower Zhujiang New Town Can-Achieve 1,000 Relocation

Central Tower Zhujiang New Town NITECORE 1,000 Relocation

Leatop Plaza Zhujiang New TownA department of Country

Garden Real Estate580 New Setup



Guangzhou Hypermedia Center Pazhou - 67,918 2017

Bravo International Trade Pazhou - 123,136 2017

Poly Tianmu Tower Pazhou - 88,858 2017

GF Securities Building Zhujiang New Town - 100,000 2018

Sancheng IFC Zhujiang New Town - 120,000 2018

Huijin Center Financial Town - 100,000 2018



Tel: +86 21 2208 0769

[email protected]

Kelvin LiManaging Director, Central China

General Manager,

Guangzhou & ZhengzhouTel: +86 20 8510 8138

[email protected]

Coco LinAssociate Director

Head of Central China Research

Tel: +86 20 8510 8209

[email protected]

1US$ = 6.950￥= 0.958 € as at 23 December 2016

Contacts

Jonathan WeiManaging Director

Head of Greater China Occupier

Service

Tel: +86 21 2208 0119

[email protected]

Connie QiuSenior Associate Director

Head of Guangzhou Occupier Service

Tel: +86 20 8510 8282

[email protected]

Office Snapshot Q4 2016Shanghai

MARKETBEAT

Economic Indicators


Grade A CBD Rent & Vacancy Rate

CBD Supply Pipeline

www.cushmanwakefield.com

EconomyShanghai’s GDP increased 6.7% y-o-y over the first three

quarters of 2016 compared to 6.8% growth in 2015. The city’s

service sector posted 10.6% growth in Q3, while CPI edged up

slightly to 3.2%.

Market OverviewNew Grade A completions for the quarter included HKRI Centre

One and Shanghai Tower. The 545,591 sq m of total new office

supply increased Grade A central CBD stock to more than 6.41

million sq m at the end of Q4. The large volume of new supply,

plus growing competition in suburban office markets, pushed up

the vacancy rate to 10.5% in Shanghai’s central CBD area, up

from 7.3% in Q3. New Huangpu recorded the highest availability

ratio among CBD office submarkets at 16.8%.

The leasing market picked up due in part to landlords’ moving to

fill empty space in newly added buildings. Pre-leasing activity at

several landmark office projects helped net absorption increase

from the previous quarter and amount to 301,751 sq m in Q4.

The market recorded a total of 411,429 sq m of net absorption for

2016, down 25.6% from 2015 as a number of private financial

firms walked away from their leases.

Rents for Grade A offices in Shanghai’s core CBD edged down

0.9% q-o-q to RMB316.5 per sq m per month on average at the

end of Q4. The modest decline was softened because of higher

rents commanded at recently added landmark downtown projects,

as properties like HKRI Centre One and Shanghai Tower drove a

rebound in take-up in the central CBD area.

On the sales side, our estimated capital values for Grade A

central CBD office buildings reached an average of RMB81,835

per sq m in Q4, down slightly from the previous quarter due to

the rental correction. Chinese domestic buyers continued to

dominate the en-bloc office investment market. Market yields slid

back further to 4.6% at the end of Q4.

OutlookAhead, the market will receive approximately 200,000 sq m of

new office supply in the first quarter of 2017 in core CBD, which

will continue to put short-term pressure on vacancies in some

districts. Emerging areas, such as the Hongqiao Hub, will

continue to add new office buildings, providing more options for

occupiers. Thus, into 2017, downward pressure will be placed on

rents, as new office buildings are delivered and slower economic

growth conditions persist.

Looking generally ahead, Shanghai’s office rentals should

continue to adjust between -1.5% and -0.5% in Q1 2017.

Vacancy levels are expected to increase marginally by 1–3

percentage points, as the market digests several new

completions. Investor sentiment is expected to stabilize in the

coming year and yields should remain low.


Growth


Service Sector GDP

Growth11.6% 10.6%


Q3 16 Q4 1612-Month

Forecast

Average Face Rent*

(RMB/sq m/mo)319.4 316.5


0%

2%

4%

6%

8%

10%

12%

240

260

280

300

320

340

Vacancy R

ate

(%

)

Rent (R

MB

/sq m

/mo

)

Overall Rent Vacancy Rate (%)

Source: Shanghai Statistics Bureau

Note: Growth figure is y-o-y growth

0

200

400

600

800

1,000

2017 2018 2019 2020

Gro

ss F

loor

Are

a (

‘000 s

q m

)

10-year Historical Average = 0.41 million sq m

SHANGHAI OFFICE

Source: Cushman & Wakefield Research





MARKETBEAT

SUBMARKETINVENTORY

(SQ M)VACANCY RATE

NEW

COMPLETIONS

YEAR-TO-DATE

(SQ M)

UNDER

CONSTRUCTION

(SQ M)

GRADE A FACE RENT


Core Jing’an 958,520 8.0% 130,169 419,652 ¥338.1 US$4.52 €4.33

New Huangpu 1,456,434 16.8% 219,775 745,125 ¥305.3 US$4.08 €3.91

Lujiazui 1,758,402 8.6% 248,000 478,527 ¥400.3 US$5.35 €5.13

Zhuyuan 730,847 9.6% 64,836 154,836 ¥294.1 US$3.93 €3.76

Changning 834,435 10.8% 84,291 255,029 ¥233.0 US$3.12 €2.99

Core Xuhui 677,044 6.0% - 377,700 ¥289.5 US$3.87 €3.71

SHANGHAI CBD Grade A Total 6,415,682 10.5% 747,071 2,313,569 ¥316.5 US$4.23 €4.05

Shanghai Suburban Grade A 2,251,909 17.3% 421,954 5,154,416 ¥204.8 US$2.74 €2.62



Sinar Mas Centre Hongkou Yinheng Law Firm 3,000 Relocation

Jinmao Tower Lujiazui Euler Hermes 2,600 New Setup

Changning Plaza 88 Changning Lianhezhongchuang 2,600 Relocation

Corporate Avenue T3 New Huangpu SDIC 2,000 New Setup



HKRI Centre Two Core Jing’an - 60,000 2017

China Life Financial Centre Lujiazui - 105,000 2017

Qiantan World Trade Centre I Qiantian - 78,007 2017

ITC Phase I Xuhui - 16,634 2017

Sinar Mas Centre Hongkou - 136,798 2017

One Museum Place Core Jing’an - 132,000 2018

CapitaMall Luone New Huangpu - 44,125 2018

Qiantan Crystal Plaza Qiantian - 200,000 2018

ITC Phase II T1 Xuhui - 29,409 2018

Park Avenue Central Core Jing’an - 98,952 2020

* Rental equals “Gross Transacted Face Rental”

1 USD = 6.950 RMB = 0.958 EUR


Note: All figures are approximate.


MARKETBEAT

James ShepherdManaging Director, Research, Greater China

Tel: +86 21 2208 0769

[email protected]

Mimie Lau Managing Director, East China

Tel: +86 2208 0100

[email protected]

Shaun BrodieHead of China Strategy ResearchTel: +86 21 2208 0529

[email protected]






advisory. To learn more, please visit www.cushmanwakefield.com or follow us on Weibo/WeChat (DTZ_China).

DisclaimerThis report has been produced by DTZ/Cushman & Wakefield LLP for use by those with an interest in commercial property solely for information purposes. It

is not intended to be a complete description of the markets or developments to which it refers. The report uses information obtained from public sources

which DTZ/Cushman & Wakefield LLP believe to be reliable, but we have not verified such information and cannot guarantee that it is accurate and complete.


& Wakefield LLP shall not be liable to any reader of this report or any third party in any way whatsoever. All expressions of opinion are subject to change.

Our prior written consent is required before this report can be reproduced in whole or in part.

© 2017 DTZ/Cushman & Wakefield LLP. All rights reserved.

Contact

Jonathan WeiHead of Mainland China Occupier ServicesTel: +86 21 2208 0119

[email protected]

Vicky Shen Head of Office Services

Tel: +86 21 2208 0189

[email protected]

Office Snapshot Q4 2016Shenzhen

MARKETBEAT

Economic Indicators

City Overall Grade A Market Indicators

Overall Rent & Vacancy Rate

Supply Pipeline

www.dtzcushwake.com

0

500

1,000

1,500

2,000

2,500

2016 2017 2018 2019 2020

Lett

able

Off

ice A

rea (

‘000 s

qm

)

Future Supply New Completions Year-to-Date

EconomyShenzhen’s economy expanded 8.7% y-o-y to RMB1,376.8 billion through

the first three quarters of 2016. The tertiary sector grew 10.5% y-o-y to

RMB845.1 billion, accounting for over 60% of GDP.

Market OverviewThe market added 404,760 sq m of new Grade A office supply in Q4. There

were four project launches, including the headquarters of China

Construction Steel and CNOOC in the Houhai area of Nanshan district, as

well as 172,700 sq m of new quality buildings in other areas . New supply for

2016 totaled 650,020 sq m, raising stock to more than 3.4 million sq m.

The vacancy rate jumped 4.9 percentage points q-o-q to 13.3% in Q4

despite a large proportion of space being taken up for owner-occupation. By

submarket, a surge of new supply in Nanshan caused the vacancy rate to

spike 15.7 percentage points q-o-q to 26.9% despite attracting robust net

absorption amounting to 159,194 sq m in Q4. Futian district was a strong

spot, maintaining a vacancy rate below 10% thanks to mature supporting

facilities, a convenient transportation network and industry clustering.

Grade A office rents slid back for the third consecutive quarter in Q4, edging

down 1.9% to average RMB247.7 per sq m per month. Futian and Luohu

districts saw average rents dip 0.4% and 0.3% q-o-q, respectively. However,

average rents in Nanshan grew 0.4% q-o-q on strong demand, property

upgrades and favorable policies.

Net absorption amounted to 202,283 sq m in Q4. Due to the completion of

several headquarter buildings and promulgation of favorable policies,

Nanshan has done well to attract a large number of companies in the

financial and scientific industries. In particular, banks are tending to fill out

their back offices in Nanshan for its lower rental levels and high-tech

industry clustering.

OutlookAhead, the market is set to add a massive 1,387,306 sq m of new Grade A

office supply in 2017, resulting in downward pressure on rents across the

market. At the same time, the launch of new premium quality buildings will

pull up rentals to some extent and help the market maintain stable to

modestly declining rents in 2017.

Despite the supply surge, Shenzhen has good prospects for stable demand

of quality office space thanks to the kicking-off of Shenzhen-Hong Kong

Stock Connect and ongoing development of the city’s financial and high-tech

industries.


Growth




Q3 16 Q4 1612-Month

Forecast

Average Face Rent*

(RMB/sq m/mo)252.4 247.7


0%

2%

4%

6%

8%

10%

12%

14%

0

50

100

150

200

250

300

Vacancy R

ate

(%

)

Rent (R

MB

/sq

m/m

o)

Overall Rent Vacancy Rate

Source: Shenzhen Statistics Bureau

SHENZHEN OFFICE

10-year Historical Average = 0.19 million sq m

Office Snapshot Q4 2016Shenzhen

MARKETBEAT

www.dtzcushwake.comCopyright © 2017 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from mult iple sources considered

to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy.

About Cushman & WakefieldCushman & Wakefield is a global leader in commercial real estate services, helping clients transform the way people work, shop, and live. The firm’s 43,000

employees in more than 60 countries provide deep local and global insights that create significant value for occupiers and investors around the world.

Cushman & Wakefield is among the largest commercial real estate services firms in the world with revenues of $5 billion across core services of agency

leasing, asset services, capital markets, facilities services (branded C&W Services), global occupier services, investment management (branded DTZ

Investors), tenant representation and valuations & advisory. To learn more, visit www.dtzcushwake.com or follow @Cushwake on Twitter.

SUBMARKETINVENTORY

(SQ M)VACANCY RATE

NEW COMPLETIONS

YEAR-TO-DATE

(SQ M)

UNDER

CONSTRUCTION

(SQ M)

GRADE A FACE RENT*


Luohu 541,813 5.7% 0 40,170 ¥ 223.42 US$2.99 €2.86

Futian 2,034,677 9.5% 244,700 2,129,214 ¥ 272.63 US$3.64 €3.49

Nanshan 860,923 26.9% 405,320 5,719,126 ¥ 203.98 US$2.73 €2.61

SHENZHEN Grade A Total 3,437,4513 13.3% 650,020 7,888,510 ¥ 247.68 US$3.31 €3.17



CNOOC Tower Nanshan Qihan Technology 4,000 New Lease

China Energy Storage Tower Nanshan BOE 2,156 New Lease

NH ECOOL Nanshan Hasbro 6,221 Renew Lease

KK ONE Luohu Dah Sing Bank 2,832 Relocation



PAFC (North Tower) Futian - 320,000 2017

China Life Building Futian - 76,000 2017

China Merchants Securities Building Futian - 50,000 2017

WTC Futian - 80,000 2017

Bosera Asset Building Futian - 75,000 2018

Hanking Financial Center Nanshan - 62,719 2018

China Investment Headquarters Building Nanshan - 49,300 2018

Shenzhen Center (350m) Futian - 150,000 2019

China Resources Dachong T7 Nanshan - 101,000 2019

Kerry Qianhai Center Nanshan - 120,000 2019



Tel: +86 21 2208 0769

[email protected]

Edward CheungChairman, Asia Pacific Board

Chief Executive, Greater ChinaTel: +86 21 2208 0338

[email protected]

Cheng Jia-longManaging Director,

South & West ChinaTel: +86 755 2151 8188

[email protected]

Zhang Xiao-duanHead of South & West China ResearchTel: +86 755 2151 8116

[email protected]

*Grade A Transacted Face Rent is exclusive of service charges and government rates and based on gross area

1 USD = 6.95 RMB = 0.958 EUR as at 23 December 2016

Office Snapshot Q4 2016Hong Kong

MARKETBEAT

Economic Indicators


Overall Grade A Rent & Availability

Supply Pipeline

www.cushmanwakefield.com

0%

2%

4%

6%

8%

$70

$72

$74

$76

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$80

Q113

Q213

Q313

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Q114

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Q314

Q414

Q115

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Q416

Overall Rent Overall Availability Rate

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2016 2017 2018 2019 2020

MSF(Net)

EconomyHong Kong’s economy continued to pick up, posting GDP growth

of 1.9% y-o-y in Q3. CPI increased 1.2% y-o-y, while the

unemployment rate fell for the first time since 2015 to 3.3%.

Market OverviewGrade A office rents were flat in Q4 compared to the previous

quarter. Overall rents increased 1.9% in 2016, fueled by a 9.6%

advance in Prime Central. Other key submarkets had little or no

rental change in Q4, finishing up as high as 3% in 2016 compared

to the previous year.

Net absorption amounted to 25,944 sf in 2016, a plunge compared

to the 1.7 million sf recorded in 2015 as leasing activity slowed in

core submarkets. Greater Central, Wanchai/Causeway Bay and

Tsimshatsui each recorded over 100,000 sf negative absorption

for 2016. On the other hand, decentralized areas such as Hong

Kong South, Kowloon East and Kowloon Others each recorded

positive net absorption of 100,000 sf. This continues a pattern of

occupiers relocating to decentralized areas for cost savings.

Due to one new completion in Kowloon East, availability in the

submarket surged from 7.3% to 11.5% at the end of Q4. The

increase pulled up overall availability in the market 0.8 percentage

points q-o-q to 7.2%. This is believed to be only the beginning of

some landlords in Kowloon East being under pressure to destock.

PRC occupiers did not slow down take-up of core office spaces.

Huarong expanded by a total of 44,800 sf in Two Pacific Place and

AIA Central. Haiyin Wealth Management also leased over 15,000

sf in Three Pacific Place.

OutlookRents across all submarkets are expected to flatten in 2017

although Greater Central may post 3% growth provided that PRC

occupiers remain active. Overall demand is unlikely to be strong,

and a 300,000 sf annual absorption level is forecasted. With

approximately 3 million sf of new supply to be delivered next year,

of which nearly 2 million sf coming from the Kowloon East

submarket, rents in the Kowloon East and Kowloon West

submarket are expected to trend downwards.

Q2 16 Q3 1612-Month

Forecast



Unemployment Rate 3.4% 3.3%

Q3 16 Q4 1612-Month

Forecast

Overall Rent (HK$/SF/MO) $118.73 $120.09

Availability 4.1% 4.2%

Source: Census and Statistics Department, Oxford Economics

10-year Historical Average = 1.43 million sf

HONG KONG OFFICE

Office Snapshot Q4 2016Hong Kong

MARKETBEAT

www.cushmanwakefield.comCopyright © 2017 DTZ/Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources

considered to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy.

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than 60 countries provide deep local and global insights that create significant value for occupiers and investors around the world. Cushman & Wakefield is among the largest

commercial real estate services firms in the world with revenues of $5 billion across core services of agency leasing, asset services, capital markets, facilities services (branded

C&W Services), global occupier services, investment management (branded DTZ Investors), tenant representation and valuations & advisory. To learn more, visit

www.cushmanwakefield.com or follow @Cushwake on Twitter.

SUBMARKETINVENTORY

(SF NET)AVAILABILITY

UNDER

CONSTRUCTION

(SF NET)

GRADE A NET EFFECTIVE RENT

HK$/SF/MO US$/SF/MO EUR/SF/MO

Prime Central 7,540,999 3.1% 0 134.21 US$17.29 € 16.56

Greater Central (CBD) 15,445,040 4.2% 0 120.09 US$15.47 € 14.81

Wan Chai / Causeway Bay 8,816,654 6.3% 498,400 72.98 US$9.40 € 9.00

Hong Kong East 7,354,079 4.2% 1,676,500 47.42 US$6.11 € 5.85

Hong Kong South 1,972,175 14.0% 445,100 29.36 US$3.78 € 3.62

Hong Kong Island Total 33,587,948 5.3% 2,620,000 84.42 US$10.87 € 10.41

Tsimshatsui 8,136,180 4.6% 435,400 67.83 US$8.74 € 8.37

Kowloon East 11,913,393 11.5% 3,156,200 29.80 US$3.84 € 3.68

Kowloon West 3,715,673 6.8% 135,500 40.90 US$5.27 € 5.05

Kowloon Others 2,139,747 22.3% 79,500 33.96 US$4.37 € 4.19

Kowloon Total 25,904,994 9.6% 3,806,600 42.15 US$5.43 € 5.20

Overall Total 59,492,942 7.2% 6,426,600 78.79 US$10.15 € 9.72


PROPERTY SUBMARKET TENANT SF LEASE TYPE

Lot NKIL 6512 – Hoi Bun Road Kowloon East JP Morgan 225,000 Relocation

COS Centre Kowloon East Bank of Communications 39,300 Relocation

Two Pacific Place Greater Central Huarong 32,300 Expansion

Manulife Financial Centre Tower B Kowloon East Crown Motors 30,700 Relocation

The Gateway – Tower 1 Tsimshatsui AIA 24,300 Expansion

*Grade A Net Effective Rent is exclusive of service charges and government rates and based on net area. US$/HK$ = 7.763; €/HK$ = 8.106 as at 23 December 2016


PROPERTY SUBMARKET DEVELOPER SF COMPLETION TIME*

18 King Wah Road Hong Kong East Henderson 256,000 Q3 2017

Junction of Hang Yip Street, Wai Yip Street Kowloon East Mapletree 532,000 Q4 2017

Hong Kong K11 Office Tsimshatsui New World 283,000 Q4 2017

Lee Garden Three Wan Chai / Causeway Bay Hysan 349,000 Q4 2017

Junction of Wang Chiu Road and Lam Lee Street Kowloon East Swire 511,000 Q3 2017

Contacts

John Siu James Shepherd Catherine Bai

Managing Director Managing Director Manager, Hong Kong Research

16/F, Jardine House Research, Greater China 16/F, Jardine House

1 Connaught Place, Central, Hong Kong 1366 Nanjing West Road, Shanghai 1 Connaught Place, Central, Hong Kong

Tel: +852 2956 7088 Tel: +86 21 2208 0769 Tel: +852 2956 7077

[email protected] [email protected] [email protected]

*Preliminary figure

Office Snapshot Q4 2016Taipei

MARKETBEAT

Economic Indicators

Grade A Market Indicators

Grade A Rent & Vacancy Rate

Supply Pipeline

www.dtzcushwake.com

0

10,000

20,000

30,000

40,000

50,000

60,000

2017 2018 2019

Lett

ab

le O

ffic

e A

rea (

Pin

g)

EconomyTaiwan's GDP increased 2% y-o-y to NT$4,282,125 billion

(US$135.75 billion) in Q3. The economy remained in positive territory

thanks to strong domestic demand, such as a lively auto market and

stable private investment. The tertiary sector posted 0.9% y-o-y

growth in Q3, while CPI cooled to 0.7% y-o-y.

Market OverviewTaipei’s Grade A office rents dipped 0.5% q-o-q to average

NT$2,480 (US$78.58) per ping per month at the end of Q4.

Leasing activity was robust with takeup of 4,700 ping in Q4, driving

down the citywide vacancy rate 0.7 percentage points q-o-q to 9.7%.

Xinyi District saw the largest vacancy decline among submarkets at

1.1 percentage points q-o-q, followed by Western District at a 0.6

percentage point decline. The refurbishment of a number of outdated

office buildings has been an important driver of leasing demand.

Delivery of new quality office buildings helped push takeup to 19,000

ping for 2016, which is above the 10-year average of 16,000 ping per

year. Relocations were the major source of occupier demand in 2016.

In Q4, relocations from the Dunbei/Minsheng submarket to Xinyi led

the way at about 4,000 ping, whereas relocations within the Xinyi

Area submarket amounted to 2,700 ping.

Xinyi District attracted a number of tenants with an expiring lease

due to its favorable location, convenient transportation network and

resources. Elsewhere, a number of companies upgraded their

premises to Grade A offices in Western District, which boasts strong

connectivity to other areas of Taiwan and cheaper rentals on the

whole. A clustering effect also is driving a number of Japanese

companies to Western District.

OutlookTaipei is set to add approximately 60,000 ping of new office supply in

2017. Two expected deliveries are Taiwan Cooperative Bank

Headquarters Building at about 30,000 ping and the 29,000-ping Nan

Shan Plaza. The new properties should help continue the market’s

relocation trend. Rental levels in Xinyi District are forecasted to

remain stable, while those in other areas will face downward

pressure on rents.


Growth




Q3 16 Q4 1612-Month

Forecast

Rent (NT$/ping/mo) 2,490 2,480


10-year Historical Average = 11,600 ping

TAIPEI OFFICE

Source: Directorate-General of Budget, Accounting and Statistics

0

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Q4

Rent (NTD/ping/mo) Vacancy Rate (%)

Office Snapshot Q4 2016Taipei

MARKETBEAT

www.dtzcushwake.com






advisory. To learn more, please visit www.dtzcushwake.com or follow us on Weibo/WeChat (DTZ_China).

DisclaimerThis report has been produced by DTZ/Cushman & Wakefield LLP for use by those with an interest in commercial property solely for information purposes. It

is not intended to be a complete description of the markets or developments to which it refers. The report uses information obtained from public sources

which DTZ/Cushman & Wakefield LLP believe to be reliable, but we have not verified such information and cannot guarantee that it is accurate and complete.


& Wakefield LLP shall not be liable to any reader of this report or any third party in any way whatsoever. All expressions of opinion are subject to change.

Our prior written consent is required before this report can be reproduced in whole or in part.

© 2017 DTZ/Cushman & Wakefield LLP. All rights reserved.

SUBMARKETINVENTORY

(PING)VACANCY RATE

UNDER

CONSTRUCTION

(PING)

GRADE A RENT

NT$/PING/MO US$/SF/MO EUR/SF/MO

Western 46,800 6.2% 0 2,100 US$1.87 €1.76

Nanjing/Songjiang 35,700 24.9% 0 2,050 US$1.83 €1.71

Dunbei/Minsheng 166,000 12.6% 41,500 2,280 US$2.03 €1.91

Dunnan 103,700 5.4% 0 2,400 US$2.14 €2.01

Xinyi 306,800 8.4% 51,800 2,930 US$2.61 €2.45

Taipei City 659,000 9.7% 93,300 2,480 US$2.21 €2.07


PROPERTY SUBMARKET TENANT PING LEASE TYPE

Cathay Landmark Xinyi Mizuho Bank 2,100 Relocation

Union Recreation Building Dunbei/Minsheng AIA Group 1,700 Relocation

Hua Nan Financial's Headquarters Xinyi Appier Technology 1,000 Relocation

Hung-Sheng International Finance Center Dunbei/Minsheng Zhang Zhong Qian Kun 700 Relocation

Hung-Sheng International Finance Center Dunbei/Minsheng Fantasy Plus 700 Relocation

Farglory Financial Center Xinyi Takeda Yakuhin 600 Relocation

Cathay Landmark Xinyi LVMH Group (LV, Bvlgari) 600 Relocation

Shin Kong Xinyi Financial Building Xinyi Amazon 500 New Lease


PROPERTY SUBMARKET MAJOR TENANT PING COMPLETION DATE

Taiwan Cooperative Bank Headquarters Building Dunbei/Minsheng - 20,500 2017

Nan Shan Plaza Xinyi Regus Business Centre 29,400 2017

Cathy Minsheng Jianguo Building Dunbei/Minsheng - 11,900 2018

UDN Zhongxiao Building Xinyi - 11,000 2018

Taipei Dome Xinyi - 11,400 2018

* NT$/US$ = 31.55; NT$/ € = 33.61 as at 23 December 2016



Tel: +86 21 2208 0769

[email protected]

Billy YenManaging Director

Head of Taiwan

Tel: +886 2 8788 3288

[email protected]

Wendy HsuehDirector

Head of Consulting and Research Taiwan

Tel: +886 2 8788 3288

[email protected]

Contacts

Charlie YangDirector

Head of Valuation & Advisory Services Taiwan

Tel: +886 2 8788 3288

[email protected]

Alber LiuAssociate Director

Head of Occupier Services, Taiwan

Tel: +886 2 8788 [email protected]

Mei ChiangAssociate Director

Head of Tenant Representation, Corporate Client, Taiwan

Tel: +886 2 8788 [email protected]

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