By end of Q4 2021, the total Grade A office inventory in the core markets of the 21 major cities in Greater China we track totaled 63.19 million sq m. In the meantime, total premium core city office net absorption across the Greater China market for the whole year was 3.89 million sq m, amounting to a 129.6% increase compared to the figure registered at the end of Q4 2020. This should take some pressure off upcoming supply in 2022.
Among the six major cities in the region, at 2.1%, Taipei registered the lowest vacancy rate at the end of 2021. As for the tier-2 city group, Chengdu recorded the lowest vacancy rate at 12.8% at the end of the same year.
The volume of quality office supply in many cities in Greater China is expected to enter a peak period this year. Between 2022–2025, 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, we believe overall prime office demand will continue to be resilient in Greater China. In particular, certain industry sectors have seen new business opportunities or have the potential to realize business growth, given recent governmental policy directives and recent commercial, societal and lifestyle changes. These industry sectors are:
- The financial sector
- The technology, media, and telecommunications (TMT) sector
- The healthcare sector
Looking at the individual major gateway cities in Greater China, Grade A office market demand performance in 2021 generally turned out to be better than expected. Into 2022, we expect a number of factors, including the state of the general economy, government policy and individual city initiatives, to help drive continued demand.
