Strong tenant from the rapidly expanding banking
and financial sectors will make Lujiazui in Pudong the largest business district
in Shanghai by 2010, an industry report forecast yesterday.
The grade-A office space in Pudong, which is all located in Lujiazui, amounts
to about 1.1 million square meters and account for 43 percent of all grade-A
office space in Shanghai currently. Lujiazui should be home to more than half of
the city's grade-A office space by 2010 with a number of new projects starting
up over the next few years, according to the report by Jones Lang LaSalle, a
real estate service company.
"The Lujiazui precinct has had a substantial share of the office supply since
the mid-1990s, but vacancy has trended downward after spiking just prior to the
Asian Financial Crisis in 1997. Tenant demand since then has been driven largely
by the financial and banking sector," said Anthony Couse, the company's local
As much as 43 percent of all office space in Pudong has been taken up by
banking and financial users since 1993.
LaSalle forecast the percentage will rise to 50 to 55 percent by 2010.
Last year, the State Council reaffirmed the positioning of the
31.78-square-kilometer Lujiazui area, as the only finance and trade zone among
the 185 state-level development zones on the mainland.
Overall, grade-A office absorption in Lujiazui has averaged some 165,000 sqm
over the last 10 years, and is likely to average 277,000 sqm over the next five,
the report said.
Office rents in Lujiazui, which posted an average annual growth rate of 7.7
percent to date since bottoming out in 2000, is likely to grow some 27 percent
over the next two years on strong demand, LaSalle said.
Tax benefits and incentives offered by Lujiazui have attracted more and more
international and large domestic occupiers, the report said.
If a multinational company selects Lujiazui for regional headquarters, the
company's employees will receive a tax rebate of 100 percent on personal income
tax in the first year of operations.
(For more biz stories, please visit Industry Updates)