The Evolution Of Chinese Office Markets: A Comparison Of Beijing And Shanghai

The past two decades have witnessed substantial change in the Chinese economy. Consequent upon this has been significant new office development. Beijing and Shanghai are the two largest commercial property markets in China. These two markets emerged since 1990s and have been growing and becoming relatively more transparent. Office stock has increased rapidly in both cities. This has been accompanied by large fluctuations in rental value and vacancy rates. There are similarities and dissimilarities between the two markets in terms of cyclical patterns, oversupply and occupier mix. Shanghai offices are mainly occupied by multi-national companies; while in Beijing, large-scaled state owned Chinese companies take an equal, if not more, important role in developing, investing and occupying office buildings. As the political and administrative centre of China, Beijing office market development may be more influenced by national political and economic factors. This paper examines the performance of office markets in these cities, highlighting the role played by foreign direct investment, differences in occupier mix, and the impact that the amplitude of fluctuation in rents and vacancy rates have on market adjustment processes.