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Beijing running out of office space despite construction boom

BEIJING — The Beijing Olympics was accompanied by a huge infrastructure and property building spree that was supposed to set China’s capital up for years to come. But five years on, with barely a pause in its breakneck growth, the capital appears to have run out of office space.

BEIJING — The Beijing Olympics was accompanied by a huge infrastructure and property building spree that was supposed to set China’s capital up for years to come. But five years on, with barely a pause in its breakneck growth, the capital appears to have run out of office space.

With the city’s existing office space more or less full up, Beijing has “no option” but to build further out in the suburbs, according to Mr Marcos Chan, head of North China research at Jones Lang LaSalle, a real estate services firm.

At just 4.4 per cent, he thinks the city’s office vacancy rates are below the “natural rate” needed to allow the market to churn.

“It’s basically fully occupied,” he said. “If you want to expand your business in Beijing, there is simply not much space available.”

That has made Beijing offices the country’s most expensive for tenants, with top-grade rents almost doubling between 2008 and last year.

Shanghai office rents grew by less than 10 per cent in the same period, according to JLL figures.

The average monthly rent for Beijing’s grade-A offices is about 396 yuan (S$82.24) per square metre, according to a China Daily report in May.

The government has grand plans for a new financial district at Lize in south-western Beijing to ease the shortage. The planned cluster of banks, insurers and private equity firms will make up the capital’s third financial zone.

In the 1990s, when the authorities dreamed up Finance Street on the west side of town, the new centre was supposed to take pressure off the capital’s traditional business district in the east. Finance Street did not take long to fill up — vacancy rates there are as low as 2 per cent, Mr Chan said.

Beijing’s government also has a vision for the satellite towns surrounding the capital. A new airport is planned for Daxing, south of the city. Beijing Capital International Airport, the world’s second-busiest by passenger numbers, said in its latest annual report that it was reaching saturation point.

And unglamorous suburbs like Fangshan and Tongzhou will be designated as “hubs” for specific industries, like petrochemicals and “cultural industries”, respectively.

China is in the midst of an orgy of building, with 5.7 billion sq m of office space under construction, according to the National Bureau of Statistics.

Far away from the capital, smaller cities like Zhengzhou, Changsha and Nanchang are building whole new commercial districts.

In the Shuitouzhuang area of Beijing, a half-demolished compound that was once home to 400 residents, only one family remains.

A woman there said she and her family were still discussing compensation with the city government. Though visibly saddened by the loss of her neighbourhood, she said the authorities had been reasonable.

“I have faith that the government will resolve this question,” she said. “I’ll accept their decision on compensation. Whatever they decide, I won’t ask for one fen more.” AGENCIES

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