A fast expansion of Shanghai's financial services and technology sectors has accelerated demand for commercial property, particularly offices, according to a report released on Thursday.
The study by Cushman & Wakefield, an international property services provider, said average monthly office rents climbed 11.3 percent year-on-year to 368 yuan ($60) per square meter in June in the city's financial center Lujiazui, and are expected to hit 375 yuan by the end of the year.
"Although the city's economic growth stabilized and not as fast as it used to be, service sectors especially finance, Internet, and technology, have been booming, pushing up property demand," said Catherine Chen, a Cushman & Wakefield research manager and one of the report's authors.
Shanghai's statistics authorities said the value of the city's financial sector grew by 198.9 billion yuan over the past year, a 30.1 percent year-on-year increase, accounting for 60 percent of its overall economic growth.
Cushman & Wakefield said many financial services providers and finance-related businesses are looking for more space as they take on more staff.
Some have moved from smaller buildings to larger ones, while others have relocated from suburban areas into more central locations.
One recent headline deal was for 18,000 sq m of space in Shanghai Tower, China's tallest building, by e-commerce giant Alibaba Group Holding Ltd.
American Express Co, the payments and financial services provider, is also due to move into 2,400 sq m of space in an office block in the west of Shanghai.
Limits on foreign investment in commercial property, introduced in 2011, were removed earlier this year and there is reported to have been strong interest in office buildings and retail complexes by overseas investors.
The report said about 65 percent of the combined $2.94 billion in office block investments in Shanghai was foreign capital.
Jimmy Yip, managing director of investment sales and advisory at DTZ China, the property services provider, said foreign investors are confident of strong returns, and have had little trouble getting the funding to make purchases in Shanghai.
