Shanghai's commercial property sector to see big deals this year

Shanghai's office and retail property sectors will see significant increases in large-scale deals this year, supported by investors' strong interest in commercial real estate, according to a research report from international property consultant Knight Frank.

China, and Shanghai in particular, are still a focus for multinational companies mulling expansion and new business opportunities, so demand for commercial and residential property will remain buoyant, according to Regina Yang, director of research for Knight Frank Shanghai.

Average Grade-A office rents in Shanghai have dropped 1.5 percent quarter-on-quarter to 9.1 yuan ($1.46) per square meter per day, decreasing for the first time since the third quarter of 2009.

However, due to limited new supply, the average vacancy rate of Shanghai's Grade-A offices remained at 5.1 percent.

Despite the overseas economic turmoil and China's slowing economic growth, the retailers' confidence in the market is intact and they continue to open new stores in Shanghai.

Ground-floor rents in core retail areas have reached 54.7 yuan per sq m per day, an increase of 1.7 percent quarter-on-quarter and 11.6 percent year-on-year.