(Yicai) Dec. 26 -- Shenzhen’s office leasing market is recovering, thanks to supportive policies and as companies search for better deals when relocating and upgrading their working spaces, UK property consulting and services firm Savills said in a report yesterday.

The net absorption rate of office rentals in the hi-tech hub jumped 42.8 percent this year from the year before, according to the report. The net increase in office space rented has risen each quarter to amount to 312,000 square meters over the course of the year. The recovery has yet to reach the peak in 2021, but it is back to 2015 levels.

In terms of office rentals, Shenzhen performed better than other Chinese cities, said Carlby Xie, head of south China market research at London-based Savills.

This year, there was strong demand for office space from companies in the information technology sector, while demand by those in the finance and professional services sectors remained stable, the report said.

In the fourth quarter, the city’s net increase of rented office space climbed 6.9 percent from the previous quarter to one million sqm, largely driven by players in the artificial intelligence, hardware equipment, and new retail sectors.

The vacancy rate of office buildings in Shenzhen dipped 0.9 percentage point at the end of the fourth quarter from the previous quarter to 29 percent, due to the absence of new supply and the growing demand by the above-mentioned emerging sectors, Xie said.

Although demand recovered this year, there is still pressure on a number of office inventories. The average monthly rent slumped to CNY151.10 (USD20.70) per sqm and the rental index tumbled 3.3 percent as of the end of 2024 from the previous quarter and 9 percent year on year.

Growth in industries such as artificial intelligence, semiconductors, biomedicine, new energy vehicles and cross-border e-commerce will push up demand for office leasing in the city next year, Xie said. However, given that almost one million sqm of new supply is set to enter the market in 2025, most sectors will maintain a cautious leasing strategy and the rental market is likely to remain under pressure.

Editors: Shi Yi, Kim Taylor