Property developers under pressureThe properties of leading office developers were mainly in larger, developed cities such as Beijing, Shanghai, and Shenzhen. In 2019, the Chinese office developer SOHO China ranked first among leading developers with 72 percent of the market in terms of gross asset value. It has developed around 5.5 million square meters of A-level office buildings in Beijing and Shanghai. Office buildings developed by SOHO China are known for becoming famous landmarks due to their unique modern designs. Despite its leading position in China’s office market, SOHO China has been changing its development strategy by selling some of its real estate assets from individual floors and parking spaces and focusing more on the overseas market. Similar to the situation in Mainland China, property development and management companies in Hong Kong were under pressure from shrinking demand. Even though rent and real estate prices were the highest among all major cities in the Asia Pacific region, income from real estate stagnated in many districts in the city. Local real estate companies, such as Champion REIT, had recorded substantial losses in rental income in 2020.
The financing problems of co-working businesses has also exacerbated the decline of the office market in China. Shanghai was the most affected city, being home to the most co-working centers in the country while simultaneously bringing in the highest revenue from co-working office spaces. Co-working companies may need to find a more stable profit model beyond rents and aggressive expansion to avoid a crash as recently experienced by the American real estate company WeWork.