China Merchants Commercial Real Estate Investment Trust reported unaudited operating statistics for the three months ended 31 December 2023. For the period Over the fourth quarter, the property market remained in a transitional recovery period and operating conditions continued to be challenging. There was fierce competition in the office market between existing stock and new supply and the backfill of vacant space has slowed.

Against this background, the average occupancy rate of property portfolio continued to improve significantly due to pricing adjustments in pro-occupancy strategy. As various new technology companies moved in, the occupancy rate of Technology Building 2 recorded a remarkable 17.5 percentage point increase to 96.6%, achieving the best improvement among the six properties. The occupancy rates of New Times Plaza and Onward Science & Trade Center both increased significantly, by 9 and 5.7% points, respectively.

Due to the expiry of some leases, the occupancy rate of Cyberport Building dropped by 3% points to 81.4%, while the occupancy rate of Technology Building remained at 100%. While have made material progress in boosting the occupancy of office properties, in light of the weakening demand and a large amount of new supply looming, should pay more attention on the office buildings, especially in the case of Grade-A office buildings. In terms of passing rent, Cyberport Building and Technology Building recorded a slight increase, but the opposite was true of the remaining office buildings, to varying degrees.

In particular, the passing rent at Onward Science & Trade Center dropped by RMB13.40 per sq.m. due to new tenants signed at lower rents. Also, the passing rent at Technology Building 2 decreased by RMB7.00 per sq.m. The occupancy rate of Garden City Shopping Centre rose significantly this quarter, by nearly 10 percentage points to 73.7% as tenants started to move in after the upgrading and renovation of the North Zone was completed. However, there was a fall in passing rent to RMB152.30 per sq.m. Throughout most of 2023, the passing rents as well as the occupancy rate at Garden City Shopping Centre have fluctuated greatly due to the renovation.

In 2024, the situation should stabilize and a recovery in occupancy is expected.