APAC-BFSI-Outlook-2017

MARKET OVERVIEW SHANGHAI BANKING AND FINANCIAL SECTOR SUMMARY

52.58

6.0%

39%

Prime Rent (USD/Sf/Year)

Rent Growth (YOY in local currency)

% Occupancy by Financial Sector

Banking and Financial Sector Trends Mainland China’s economic hub, Shanghai, is home to a booming financial sector, increasingly driven by domestic firms that are voracious users of oŸce space. According to data from DTZ/Cushman & Wakefield Research, the banking and financial sector’s share of oŸce leasing activity (by number of transactions) increased by 12 percentage points year-on-year (YoY) to 39% as of the end of 2015. The rapid growth of China’s internet finance industry has helped fuel a proliferation in the number of financial institutions in Shanghai; growing by 93 in 2015, including 17 monetary financial service providers, 57 capital market service providers, and 19 insurance companies, according to the Shanghai Statistics Bureau. However, the ongoing rollout of tougher regulations on peer-to-peer (P2P) lending in 2016 has tempered the growth of this new sector. This has significantly curbed leasing demand from P2P firms in the first two quarters, dampening overall demand in the Grade A market. Seeking to cut costs, a number of banking and financial institutions have moved their oŸces back to the city’s decentralised business parks, including call centers, clearing house operations, and some e-banking services.

Outlook, Opportunities & Strategies for Occupiers Looking ahead, the massive amount of Grade A oŸce supply to completed between 2016 and 2021 will provide occupiers with great options in decentralized areas. Tenants are also likely to enjoy greater bargaining power for renewals and new leases in these emerging, non- core submarkets. Amidst a wave of oŸce decentralization programs, mature business parks such as Zhangjiang and Caohejing are likely to attract a growing number of banking and financial institutions, primarily domestic, that are looking for high-quality but cost-e¥ective premises. Looking forward, leasing demand from the banking and financial sector is expected to continue to increase. Although the growth of the P2P industry is likely to slow down due to the tightening of regulations, occupiers from the traditional financial sector are expected to continue to expand steadily. Moreover, banking and financial institutions are always active in the en-bloc o…ce sales market. - Leslie Jin, Occupier Services

Key Banking and Financial Services Sector Lease Transactions – 2015/2016 PROPERTY SF TENANT

TRANSACTION TYPE SUBMARKET

Shanghai Tower

129,167

Ant Financial

Lease

Pudong

Century Link

64,583

PICC

Lease

Pudong

Century Metropolis

53,820 Zheyin Investment

Lease

Pudong

Century Link

21,528

Caitong Securities

Lease

Pudong

SWFC

18,299

Jiangnan Rural Commercial Bank Renewal / Expansion Pudong

SWFC

17,222

Jiangxi Bank

Lease

Pudong

Key Banking and Financial Services Sector Sale Transactions – 2015/2016 PROPERTY SF BUYER PRICE (US$ MIL) PRICE (US$/SF)

SUBMARKET

Corporate Avenue Blocks 1 & 2 895,072 Link Reit

1,063

1,188

Huangpu

SOHO Century Plaza

462,357 Guohua Life

497

1,074

Pudong

East Asia Bank Building

457,466 ARA

462

1,011

Pudong

45