As the real estate recession in China and Hong Kong continues, demand for real estate is expected to shift to Korea. Thanks to the efforts of international companies to diversify their Asian businesses, interest in real estate in India and Vietnam, along with Korea, has been strong.
A woman walks next to a construction crane near an office building in the main business district of Beijing, China. /AP
On the 9th, Bloomberg reported, “A few years ago, the Asian commercial real estate market was mainly led by Hong Kong and China,” and “However, due to the economic recession and the Chinese real estate market, the attention of global companies -eang has moved to Korea, India, and Vietnam. ” Citing data from CBRE, a global real estate services company, Bloomberg predicted that rents in major Chinese cities will fall by up to 6% this year.
On the other hand, CBRE predicted that rents in Seoul would rise by more than 5%. CBRE analyzed that supply has become scarce in Seoul since 2021 as redevelopment has been limited and construction has been disrupted since the new coronavirus infection pandemic (Corona 19). He explained that Seoul’s occupancy rate is 98%, the highest among major cities in the world.
Bloomberg analyzed that China’s commercial real estate market has two problems. The first is that more and more companies are following the ‘China Plus One’ strategy. The China Plus One strategy refers to a strategy to increase investment in countries other than China to respond to Chinese risks. Goodwin Ge, chairman of Geo Capital Partners, said, “As long as geopolitical tensions between the United States and China continue, the ‘China Plus One’ strategy will continue.”
India and Vietnam are seen as beneficiaries of the China Plus One representative strategy. In particular, India is gradually weakening China’s dominance in the manufacturing sector as companies strive to diversify their supply chains. According to Bloomberg, rents in Mumbai, India, rose 5.6% last year, and rents in Delhi also rose 3.6%. “Many foreign companies are setting up research and development centers in India,” said Henry Chin, head of Asia Pacific research at CBRE.
Another problem is that the supply and demand for real estate in China is unbalanced. Bloomberg said the vacancy rate is rising as demand decreases but supply continues to increase. Knight Frank, a general UK real estate consulting firm, predicted that “a quarter of high-end offices in Shenzhen, China are vacant,” adding, “However, as new construction continues, the number of vacant offices in Shenzhen will. a 23% increase this year.” The combined 52-story Chinese Enterprise Capital Building and multi-tower development, opening this year, will add more than 3 million square feet (278,709 square meters) of space, Bloomberg said.
Hong Kong is in a similar situation. The Financial Times (FT) reported, “The Henderson Tower, a 36-story building in Central Hong Kong, is actually complete, but the occupancy rate is not high,” and “only 60% of the spaces are available on lease that has tenants. .” According to Cushman & Wakefield, a local real estate consultancy in Vietnam, office rents across Hong Kong have fallen by almost 40% compared to the peak in 2019. In addition, the vacancy rate reached an all-time high of 16%.
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