Market Overview and Outlook - The Guangzhou Grade A office market is gradually recovering, but growth momentum still needs to accumulate [1] - In Q3 2024, leasing demand in Guangzhou cooled slightly, with net absorption dropping to 22,073 sqm [1] - The average Grade A office rent in Guangzhou stabilized, with a slight decrease of 0.1% QoQ to RMB 134.8 per sqm [1] - The overall vacancy rate increased by 0.5 percentage points QoQ to 12.6%, influenced by new supply and slowing demand [1] - Newly established companies and expansion demands showed resilience, indicating a gradual recovery in the market [1] - TMT, public services, and financial sectors were the main drivers of leasing demand, with TMT showing particularly strong growth [1] - One major office transaction was recorded in Q3, with a transaction value of RMB 1.96 billion, signaling a recovery in large-scale transactions [1] Supply and Demand Dynamics - In Q4 2024, delayed office projects are expected to enter the market, adding over 100,000 sqm of new supply [2] - The annual net absorption in Guangzhou over the past decade averaged 300,000 sqm, but by Q3 2024, it only reached 80,000 sqm [2] - A backlog of leasing demand is expected to be released by the end of the year, driven by both supply and demand growth [2] - Rents and vacancy rates are expected to remain within reasonable cyclical fluctuations, without significant volatility [2] Rent Trends - In Q3 2024, Guangzhou office rents showed signs of stabilization, with average rents dropping to RMB 134.9 per sqm per month, a 0.1% QoQ decline [6] - Submarkets outside Zhujiang New Town showed relatively stable rents, with mild QoQ changes, indicating a trend towards stabilization [6] - Zhujiang New Town adopted more aggressive pricing strategies, resulting in a 2.2% QoQ rent decline [6] - Over 100,000 sqm of new supply is expected in Q4 2024, which may intensify downward pressure on rents [6] Submarket Performance - In Q3 2024, Tianhe North had an average rent of RMB 128.5 per sqm per month, with a vacancy rate of 7.6% [7] - Zhujiang New Town's average rent was RMB 149.3 per sqm per month, with a vacancy rate of 11.3% [7] - Yuexiu's average rent was RMB 115.2 per sqm per month, with a vacancy rate of 8.2% [7] - Pazhou's average rent was RMB 122.4 per sqm per month, with a vacancy rate of 19.5% [7] - Financial City's average rent was RMB 104.4 per sqm per month, with a vacancy rate of 31.7% [7] Leasing Activity - In Q3 2024, relocation activities dominated leasing, accounting for 58% of total activity [8] - Newly established companies accounted for 25% of leasing demand, showing strong resilience [8] - Expansion demand was twice the reduction demand, indicating a stabilizing market [8] - TMT led the leasing demand with a 36.8% share, followed by public services at 10.9% and financial services at 10.0% [9] - The insurance sector contributed nearly 80% of the financial sector's leasing demand in July-August 2024 [9] Investment Market - In Q3 2024, the Guangzhou office investment market showed signs of recovery with one major transaction worth RMB 1.96 billion [11] - The transaction involved the acquisition of a Grade A office project with a total GFA of 56,970 sqm, at a unit price of RMB 34,404.07 per sqm [11] - The transaction was completed in two stages, with the second stage finalized in August 2024 [11] - Low valuations and attractive investment returns are expected to attract more external capital in Q4 2024 [11] Regional Data - As of Q3 2024, Zhujiang New Town had a total Grade A office stock of 4.46 million sqm, with an average rent of RMB 149.3 per sqm per month and a vacancy rate of 11.3% [12] - Tianhe North had a total stock of 1.13 million sqm, with an average rent of RMB 128.5 per sqm per month and a vacancy rate of 7.6% [12] - Financial City had a total stock of 210,000 sqm, with an average rent of RMB 104.4 per sqm per month and a vacancy rate of 31.7% [12] - Pazhou had a total stock of 2.14 million sqm, with an average rent of RMB 122.4 per sqm per month and a vacancy rate of 19.5% [12] - Yuexiu had a total stock of 1.59 million sqm, with an average rent of RMB 115.2 per sqm per month and a vacancy rate of 8.2% [12]

Market Overview and Outlook - The Shenzhen Grade A office market experienced a moderate recovery in Q3 2024, with no new supply entering the market and a significant increase in net absorption of 89,000 square meters [3] - Average rents continued to face downward pressure, declining by 2.8% quarter-on-quarter to RMB 161.3 per square meter per month, while the vacancy rate decreased by 0.7 percentage points to 25.1% [3] - The recovery is expected to accelerate due to major economic stimulus policies, with accumulated leasing demand likely to be released in the coming quarters [3] Supply and Demand Dynamics - No new supply was recorded in Q3 2024, with the market focusing on absorbing existing inventory [10] - Net absorption reached 89,000 square meters, a 30% increase quarter-on-quarter, driven by the peak leasing season [10] - Over 200,000 square meters of new supply is expected to enter the market in Q4 2024, potentially putting upward pressure on vacancy rates [10] Rental Market Trends - The overall rental market remained tenant-favorable, with landlords adopting aggressive pricing strategies to attract tenants [6] - Submarkets such as Futian CBD, Chegongmiao, Technology Park, and Houhai experienced significant rent declines, averaging 5.0% quarter-on-quarter [6] - The westward migration of tenants, particularly to Qianhai, is expected to intensify rental market pressures in traditional business districts [8] Industry Sector Analysis - TMT sector dominated leasing demand, accounting for 57% of total demand, with notable transactions in AI software development and cultural media [10] - Accommodation and hotel industry emerged as the second-largest demand driver, benefiting from expansion plans and favorable rental conditions [10] - Professional services ranked third, with law firms and human resources showing strong demand resilience [10] Investment Market - No major transactions were recorded in Q3 2024, but market inquiries showed significant growth [11] - Policy factors, including a 50-basis-point Fed rate cut and China's comprehensive economic stimulus measures, are expected to boost market activity [11] - Further Fed rate cuts anticipated in Q4 2024 may enhance global capital flows and increase investment opportunities in the office market [11] Submarket Performance - Futian CBD recorded the highest rents at RMB 188.8 per square meter per month, despite a 4.0% quarter-on-quarter decline [7] - Technology Park maintained the lowest vacancy rate at 15.4%, while Houhai had the highest at 34.8% [7] - Qianhai emerged as a key destination for tenant migration, with rents at RMB 151.9 per square meter per month and a vacancy rate of 30.8% [7] Future Outlook - The market is expected to enter a supply peak in Q4 2024, with over 200,000 square meters of new supply [10] - Rental levels are likely to remain under pressure, though the rate of decline may narrow as demand is released [8] - The westward migration trend and policy-driven capital inflows are expected to reshape the market landscape in the coming quarters [8][11]

Market Overview and Outlook - The Beijing Grade A office market showed signs of recovery in Q3 2024, with a decrease in vacancy rates and an increase in net absorption, despite a decline in rents [2] - The average Grade A rent in Beijing decreased by 1.9% QoQ to RMB 275.6 per square meter per month [2] - The vacancy rate dropped by 0.4 percentage points QoQ to 17.6%, and net absorption remained high at 85,263 square meters [2][5] - A new Grade A office project, Beijing Hunan Investment Building in Lize, was completed, adding 40,000 square meters to the market, bringing the total Grade A office stock to 13.116 million square meters [2] - Two new Grade A office projects are expected to be completed in Q4 2024, adding approximately 140,000 square meters, which may further increase vacancy rates and put downward pressure on rents [2] Demand and Supply Dynamics - High-tech industry tenants were a key driver of market activity, with relocation demand increasing due to cost-saving measures and the pursuit of better value-for-money office spaces [6] - The market saw increased activity from state-owned enterprises and large tenants, but overall demand remained dominated by relocations rather than new demand [6] - The Lize area is expected to see significant new supply in the coming years, with projects like the National Financial Information Building adding 60,000 square meters of leasable office space [6] Rent Trends - Rents continued to decline in Q3 2024, with a 1.9% QoQ drop, and are expected to remain under pressure due to ongoing price reductions by landlords [7] - The Wangjing-Jiuxianqiao submarket saw increased activity, with rents rising due to strong demand from tech companies, while other submarkets experienced varying degrees of rent declines [7] Investment Market - Two major transactions were recorded in Q3 2024, both led by domestic investors [8] - Alibaba Pictures acquired a 70% stake in Huayi Headquarters Building for RMB 350 million, while Xinhua News Agency invested RMB 1 billion to acquire an 85.05% stake in Guojin Company, which holds assets in the National Financial Information Building [8] Submarket Performance - Key submarkets such as Zhongguancun, Financial Street, and CBD showed varying performance in terms of stock, rents, and vacancy rates [8][9] - Emerging markets like Lize and Fengtai had lower rents and higher vacancy rates compared to established submarkets [8][9]

Investment Rating - The report indicates a cautious investment outlook for the UK commercial real estate market, with a focus on potential recovery in H2 2024 as monetary policy shifts [14][15][17]. Core Insights - The UK commercial real estate investment totaled £9.6 billion in Q1 2024, reflecting a -2% decrease from Q4 2023 and a -14% contraction compared to Q1 2023 [15][22]. - The Living Sectors emerged as the most invested sector in Q1 2024, with £2.0 billion, followed by Retail and Industrial sectors, each also at £2.0 billion [15][22]. - Cross-border investment into the UK showed signs of moderation, with £3.6 billion invested, down -27% from Q1 2023, although US investors increased their investment by +3% QoQ and 37% YoY to £2.9 billion [15][22]. Economic Update - The UK economy is projected to grow by 0.5% in 2024, with inflation expected to stabilize around 1.9% in 2024 and 1.8% in Q1 2025 [9][10]. - Global economic resilience is noted, with GDP growth expected to be around +3.2% in 2024, despite geopolitical tensions and inflationary pressures [6][9]. Capital Markets - The UK remains the second most invested market globally in Q1 2024, with London being the top location for cross-border capital [15][14]. - Investment volumes in the City & Southbank were the lowest since Q1 2002, totaling £0.3 billion, with prime yields stable at 5.25% [22][24]. - The Industrial sector is forecasted to record the highest capital and rental value growth in 2024 [17]. Office Market - Active demand for office space in the City & Southbank rose to 5.5 million sq ft, an 8.8% increase from the previous quarter [28]. - Prime rents in the City & Southbank remained stable, with significant rental growth in the City Core and Midtown at annual rates of 16.7% and 14.3% respectively [29][22]. - The West End experienced a 55.9% drop in take-up to 0.6 million sq ft, the lowest in almost three years, but with a strong near-term demand supported by 0.95 million sq ft of deals under offer [36][37]. Sector Performance - Hotels, Senior Housing & Care, and Living Sectors recorded increases in investment YoY in Q1 2024, with Hotels up by +221% and Senior Housing & Care by +137% [15][22]. - The report highlights a broad-based sectoral breakdown in take-up, with financial services leading at 25.6% of total lettings in Q1 [36][28].

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