INDEPENDENT MARKET RESEARCH Demand and Occupancy Over the past five years, the average gross absorption of business park space in Hangzhou stood near 852,900 sq m per year. As of 2023, the average gross absorption recorded was about 196,600 sq m and the business park occupancy rate declined by 7.1% to 79.4%. Softer leasing demand arising from technology and corporate layoffs and the new supply added, have placed pressure on Hangzhou’s business park occupancy rate. Rental Values Hangzhou’s average business park rents declined to RMB63.00 psm pm as at 2023, down 4.1% yoy. Hangzhou’s average rent recorded a figure higher than the nation-wide average and its pre-pandemic levels. New business park developments contributed to an overall uptick in rents from pre-pandemic levels. Due to the larger pool of competing developments, landlords remained flexible in lease terms and rent negotiations to attract occupiers. Market Outlook With the Hangzhou government’s plan to develop high value-added manufacturing and anchor corporate headquarters through subsidies, loan support and resources benefits, Hangzhou’s business parks will benefit in the long-run with advanced manufacturing, biomedical, digital economy, and renewal energy industries as the focus. New supply is expected to continue to add pressure to occupancy rates. Rents may however observe a slight increase supported by newer business park developments coming to market. Source: Colliers International Consultancy & Valuation (Singapore) Pte Ltd 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 HANGZHOU AVERAGE BUSINESS PARK RENTS (2018 TO 2023) 2018 2019 2020 2021 2022 2023 RMB psm pm 57.59 61.80 65.70 63.00 60.85 66.90 Source: Colliers International Consultancy & Valuation (Singapore) Pte Ltd 2.5 2.0 1.5 1.0 0.5 0.0 100 90 80 70 60 50 40 30 20 10 0 HANGZHOU BUSINESS PARK SUPPLY, DEMAND, AND OCCUPANCY RATE (2018 TO 2023) 2018 2019 2020 2021 2022 2023 Gross Absorption (LHS) Net New Supply (LHS) Occupancy Rate (RHS) sq m (million) % 0.7 86.3% 84.1% 86.5% 84.6% 84.8% 79.4% 0.7 0.8 1.0 1.5 1.0 0.9 0.7 1.1 1.5 1.7 0.2 70 CAPITALAND CHINA TRUST
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