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Poor air quality in Beijing, China, has been the subject of significant local and international scrutiny in recent years, and is the second-largest concern for office occupiers in the city.
Real estate firm CBRE recently published conducted an online survey and a series of interviews with industry experts and office landlords to gauge the impact of poor air quality on the Beijing real estate market.
The resulting white paper, Property and Pollution: The Impact of Smog on the Beijing Office Market, revealed that around 66 percent of respondents identified air pollution as a key disadvantage for Beijing as an office location, second only to rising rents.
On the various impacts of air pollution, 68 percent of respondents believed that “air pollution threatens employees’ health and work efficiency”. In addition, 60 percent believed that “air pollution has made senior expatriates less willing to work in Beijing”. A further 29 percent believed that air pollution has “a significant impact”.
Office occupiers’ concern over the poor air quality in Beijing has increased significantly in recent years. At the same time, leasing activity and net absorption of office space have both declined. This has led to speculations on whether or not these two situations are directly related.
However, CBRE’s research findings and key data of the office market shows that demand for office space in Beijing remains strong. There is no evidence that suggests any direct link between lower net absorption and poor air quality.
Tin Sun, Associate Director, CBRE Research Northern China, said: “Whilst poor air quality is a major concern, Beijing remains a top choice for when corporate occupiers choose locations for their regional or national headquarters.
“The major concerns of the companies surveyed focus on their employees’ health and the increasing difficulties of relocating senior expatriates to work in Beijing. However, no evidence shows that there’s direct link between the poor air quality and the declining office leasing activity over the past two years or so.”
As employees’ concerns over their personal health and working environment are increasing, indoor air quality is coming into play when companies make leasing decisions. Buildings with green features will help retain tenants by increasing occupier satisfaction and loyalty. As the white paper reveals, only 37 percent of respondents were very satisfied or satisfied with “indoor environment and air quality”. Around 14 percent were dissatisfied or very dissatisfied, recording the second lowest point in the satisfaction portion of the survey.
Looking forward, as the Chinese government continues to issue more measures to tackle air pollution issues, CBRE predicted growth in the tertiary sector is expected to create additional demand for office space.
In the long term, the renovation of manufacturing sites to become office space is likely to create more office supply and support a more balanced supply and demand structure. Furthermore, the synergised development of the Beijing-Tianjin-Hebei region is expected to transform the demand patterns for the overall office market in Beijing, according to the firm.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
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