2015Q1. Shanghai Lujiazui FTZ office and serviced office market review. by Aquaspace Group Marketing Team

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1 215Q1 Shanghai Lujiazui FTZ office and serviced office market review 1 by Marketing Team

2 Financial Sector Grow Fast in Shanghai In year 214, Shanghai GDP is 2,356.1 billion yuan, up 7% y-o-y. The domestic credit provided by financial sector is billion yuan, up 14% y-o-y and its ratio to total GDP is 13.9%, up.8% y-o-y. 215 Q1, the domestic credit provided by financial sector is 96.8 billion yuan, up 28.7% y-o-y. The demand for financial service becomes larger in Shanghai which attract more and more financial institution to set their office even headquarter in Shanghai, especially in Lujiazui district. It indicated that the demand for office will increase in the future. Shanghai Economy and Financial Sector 16 25, , , 1, 5, Shanghai GDP Ratio of Financial Industry's GDP to Overall GDP (%) Growth Rate of Financial Industry's GDP (%) Source: Shanghai Bureau of Statistics, Aquaspace Research Agriculture 215 Q1 Growth Rate of Different Sectors (%) Accommodation and F&B Architecture IT Real Estate Transportation and Storage Retail Industry Financial Sector -1 Source: Shanghai Bureau of Statistics, Aquaspace Research 2

3 Lujiazui New Free-Trade-Zone Since it was established on September 29, 213, the China (Shanghai) Pilot Free Trade Zone has carried out institutional reform and innovation in areas of investment, foreign trade, finance and post-filing supervision to form a legal framework for investment and trade within the zone. On December 28, 214, the State Council approved the expansion of Shanghai FTZ by incorporating the Lujiazui Financial Area, the Jinqiao Economic and Technological Development Zone and the Zhangjiang High-Tech Park. The Lujiazui financial area plays a key role in Shanghai s drive to establish a financial system that follow international rules and practices, to attract headquarters of multinational corporations, to develop modern services, to carry out reforms to facilitate foreign investment, cross-border trade, international financing and market supervision, and to create a good legal environment for business. 3

4 Office market in Lujiazui District According to the data of CORC, in the end of year 214, the average rent of offices in Shanghai was 1 rmb/square meter/day, UP 9.% y-o-y. The average vacancy rate is 9.2% y-o-y, up 16.5%. Shanghai is still one of the hottest cities that investors are interested in. The demand for office is outstripping supply in Pudong. In 214, The average vacancy rate of office in Pudong is 2% and the growth rate of rent is 9% compared to last year. In the end of Q1 215, the average rent of Shanghai Grade A office was 8.93 yuan/ square meter/day and the average rent of Pudong Grade A office was 9.7 yuan/ square meter/day, up 2.2% Q-O-Q. In Lujiazui district, the average rent of Grade A office is 1.7 yuan/square meter/day, up 1.9% Q-O-Q. The rent of CBD s office has been keeping increasing in two years. The rent of office in Pudong especially lujiazui was always 15% higher than other districts which indicate the high demand for office in Pudong. 215 Lujiazui New Office Supply (Square Meter) 22, 61,935 58, 64,85 Shanghai Center Lujiazui Century Financial Square Cloves International Business Center Century I Source: Aquaspace Research Shanghai Grade A Office Rent (yuan/square meter/day) Shanghai Grade A Office Rent Pudong Grade A Office Rent Lujiazui Grade A office Rent 2 213Q3 213Q4 214Q1 214Q2 214Q3 214Q4 215Q1 Source: Colliers, Savills, Aquaspace Research 4

5 Lujiazui Serviced Office Market Huge market and demand attracts local entrepreneurs and international companies to set their offices in Shanghai. As Lujiazui was incorporated into Shanghai FTZ, Lujiazui become to one of the most popular choices for companies to set their offices. Companies offering serviced offices are generally able to offer more flexible rental terms, as opposed to a conventional leased office, which may require furnishing, equipment and more restrictive leases. Space is also flexible when you rent serviced office, allowing for additional space to be allocated at short notice. Traditional Grade A Office Serviced Office Contract Fixed rental terms Flexible leasing terms Rent Service Calculate by floor space, high start up cost Basic property management service Calculate by working place unit, no/low start up cost Modern fit-out and fully furnished offices, Receptionist and support staff available as needed 215 Q1 Shanghai Lujiazui Office Leasing (yuan/square Meter/Day) Average Rent of Grade A Office Average Rent of Serviced Office (Contract <1 Year) Average Rent of Serviced Office (Contract >1 Year) Source: Aquaspace Research 215 Q1, the average rent of serviced office was about 5,5 yuan per month per working unit with windows and about 4,5 yuan per month per working unit without windows. Although the average rent of serviced office in Lujiazui seems Higher than Grade A office, it s better choices for small enterprises or temporary office of international companies because they don t need to purchase furniture and recruit concierges, IT or securities. Flexible is one of the core reasons that SMEs choose serviced office because they can easily adjust the contract terms. It is expected to have high growth in the future. 5

6 About Us Aquaspace Investment & Consulting was founded in the Lujiazui financial district of Shanghai in 25, owned by Royal Bank of Canada Trust. We provides world-class financial and management services and we has nine sub-companies providing professional services, including prime real estate leasing and sale service, real estate investment consulting service, interior design service. We have our own digital and paper Magazine Vantage and Mediterranean-style Aqua Club. Besides, Aqua Travel designs unique trips for our clients. also takes social responsibility to create a better world, so we set Aqua Arts Foundation and Aqua Charitable Trust as well. Please visit our website for more information: Please contact us for further information InquirY marketing team marketing@aquaspace.co.uk +86 (21) *81 * This report is for general informative purpose only. While we make every effort to ensure the accuracy of the data and information, Aquaspace accepts no liability for any direct or consequential loss arising from its use. This information is presented by Aquaspace research team and all rights are reserved. 6