Rents Fall in Shanghai Financial District, Private Lending Surges Amid Credit Crunch

Caijing: 上海:陆家嘴写字楼一年两轮降价
According to some building owners, building investment and property managers, the occupancy rate of some office buildings in Shanghai Lujiazui area was over 90% at the beginning of 2018, but the occupancy rate has dropped to about 80% since the third quarter, with a drop of more than 10%. The watershed mainly appears. From August to September 2018.

Generally speaking, it is normal for commercial office buildings in large cities such as Hangzhou and Nanjing to remain below 10%. However, the occupancy rate has dropped by 10% in the first half of last year, resulting in a vacancy rate of 20% or more. More is not so normal. Generally speaking, due to the large number of holidays at the beginning of the year and the end of the year, the customer's rent retreat mostly occurs in the second and third quarters of each year, but there are some in and out, and the appropriate amount of small vacancy is normal.

A Taiwan-funded real estate agent told the Securities Times reporter that Shanghai’s financial institutions, like some of Beijing’s financial institutions, have retreated, but the name of the specific institution is not disclosed. The source said that some companies have reduced one original floor to half. If the industry continues to be sluggish, this half of the floor may not be there after the Spring Festival.
Supply may finally exceed demand:
The person said that there are many reasons for the company to withdraw the rent: some of them are shrinking their own business, in order to reduce costs, they no longer work in Lujiazui. In addition, there are a number of emerging industrial parks in Shanghai, and the rent and tax incentives are more attractive. For small and medium-sized enterprises, some of them will be relocated in the past.

The Securities Times reporter had previously learned that in order to encourage the support of high-tech enterprises to settle in, Shanghai Zhangjiang Hi-Tech Park recently released a lot of office buildings for sale, the price is not high. In addition, Shanghai Hongkou, Jiading and other districts also launched entrepreneurial incentives for different types of technology companies, in addition to talent and tax-related policies, including office space leasing and sales.
P2P lenders are among the firms clearing out of the Lujiazui area:
The Zhongrong International Shopping Mall (now 1088 Square) opposite Shanghai's No. 1 Yaohan is in a prime location, roughly the transition zone between the large residential area in the south and the Lujiazui Financial City, close to the exit of Shanghai Rail Transit Line 9. When the Securities Times reporter visited the surrounding merchants, he was informed that the building was completed in 2004, initially in the department store industry, and later changed to a large electrical appliance store, witnessing the huge impact of Internet e-commerce on the retail industry. Relevant property consultants told reporters that before and after 2015, the occupancy rate of the building malls fell to around 70%. In 2016, the building was repositioned in education and training. Today, the occupancy rate of such institutions has exceeded half.

The Securities Times reporter learned that when the business center model was sought after in the previous two years, the unit price of the floor of the building above 6 floors has reached 8 yuan / square meter / day or more. At that time, the rent of the shopping mall below is only 4 to 5 yuan / square. M/day or so. Most of the above customers are small Internet finance P2P organizations, which can be checked in, but they often see rights defenders. After the management took over the rectification, the rents here began to go down. On the contrary, the rents of the education and training institutions in the malls began to rise. "New Oriental is my first customer here. Now that the 5-year contract is coming, I will definitely renew it next year," said the insider of the building.
Occupancy is declining along with rates:
A domestic real estate agent revealed that since 2018, the market has had a relatively large impact on financial institutions. “From the perspective of office investment, as long as it is a company like Internet finance, we may not accept it (it is leased). For example, he said that some P2P companies are suspected of fraud, which will lead to the rights of investors. The relevant business premises will be sealed up by law enforcement agencies, which is too risky for the owners. “There are only “small owners” or “two landlords” who are willing to do business in this type of business, and the rent will definitely be higher than the market,” he said.

According to the situation of many interviewees, office rents in the region have seen two rounds of price cuts since 2018. Generally speaking, the owners will raise the rents at the end of the previous year. However, the renting and selling situation at the beginning of 2018 is very unsatisfactory. Many owners have cut prices at the beginning of the year, and some even lower than the end of the previous year. In the third quarter, the market remained sluggish, and some buildings made a second round of price cuts. Despite this, the occupancy rate of office buildings near Shangcheng Road and Zhangyang Road is still declining.
What business is growing in the area? Private lending.
In the course of the interview, the reporter obtained another important message: According to a person familiar with the matter, a small licensed loan company in Shanghai has soared from more than 20 people to more than 100 in just three months. The office area has also increased from a few hundred square meters to thousands of square meters. This may indicate that the current domestic bank financing channels are still narrow, and the capital needs of small and medium-sized and small and micro enterprises are not fully met, thus promoting the rapid development of “counter-trading” of private lending. Subsequently, the reporter asked the name of the small loan company, but the respondent refused to rely on too sensitive, only revealed that the small loan company is located in Zhangjiang, Shanghai.
That answers the question: China's SMEs Cannot Obtain Low Cost Credit, Can Li Keqiang Finally Save Them?

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