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Office rents in Shanghai's Pudong district rose 26.39 per cent last year, according to a survey, in contrast to a fall of 29.35 per cent in Hong Kong.

The rate of increase topped the nine cities and districts in the greater China zone surveyed by property consultant DTZ Debenham Tie Leung.

Pudong's monthly occupancy costs - rents and outgoings -  were HK$21.07 per square foot, making it the fourth most expensive centre surveyed. Hong Kong led the list at HK$48.61 per square foot. Taiwan was second most expensive at HK$29.76 and Beijing third at HK$26.58.

Pudong was ranked the 10th most expensive place in the Asia-Pacific region, up from 13th in 2000.

DTZ research director Alva To said Shanghai, as a key commercial city in China, would benefit most from the mainland's membership of the World Trade Organisation.

Mr To said more multinational corporations were expected to establish regional offices in Shanghai's financial districts.

However, Mr To said rental increases would vary from district to district: the Lujiazui financial area in Pudong would see a 15 per cent rise in office rents this year due to limited supply.

Puxi, Shanghai's traditional business district, saw a modest 5.14 per cent increase in its occupancy cost last year to HK$20.05 per square foot.

The vacancy rate in Pudong was sharply lower, standing at 12.4 per cent last year down from 28 per cent in 2000, while Puxi's vacancy rate decreased marginally to 15 per cent from 15.8 per cent.

Changning district was the district with the highest vacancy rate, followed by Huangpu, Lujiazui, Luwan, Xuhui and Jingan.

In contrast to Shanghai, Beijing suffered an average rental decrease last year, with the rate falling 6.18 per cent to HK$26.58 per square foot.

DTZ said grade-A office take-up in Beijing fell from 1.27 million square metres in 2000 to 314,000 square metres last year. The vacancy rate jumped from 7.2 per cent to 12.5 per cent.

Mr To said Shenzhen and Guangzhou recorded an increase of almost 10 per cent in occupancy costs but office rents varied considerably within the cities due to a great range of quality property.

Shenzhen was the fifth most expensive city in Greater China with Guangzhou sixth.

Hong Kong suffered a 29.35 per cent decline in occupancy costs last year but its Asia-Pacific ranking was still up to second from third place, overtaking Tokyo's outer area which recorded a 45.2 per cent drop.

Tokyo's central area remained the most expensive in the Asia-Pacific region despite a 32.4 per cent fall last year.

Hong Kong's global ranking was fourth, up from fifth in 2000.



Rents rocket as multinationals eye packed Pudong