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JAN 2007 VOL. 2

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Will 2007 bring give the overheated Shanghai office market a breather? Will Beijing draw more investment? As China's main money center, Shanghai has mushroomed along with the Chinese economy. It is now, according to Colliers International, home to 151 regional headquarters for 151 multinational corporations. In 2006, an estimated 227,00 square meters of Grade A office space was delivered and Colliers figures another 452,000 meters will become available in 2007. That may relieve some pressure on lease prices, which have soared along with demand, Colliers concludes. But vacancies are not expected to move above 5%.

Shanghai's office market has been so tight that it may be benefiting Beijing, according to Jones Lang LaSalle. “Because of the significant amount of new supply, more and more companies are turning to Beijing to expand given Shanghai's lack of available supply and Hong Kong's exorbitant rents," says Anna Kalifa, Jones Lang LaSalle's head of research for Beijing. Kalifa predicts that 300,000 square meters of new Grade A office space will be delivered in the capital this year.

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