Exit of P2P lenders from Shanghai office market poses a challenge

The recent collapse and exodus of numerous peer-to-peer lending (P2P) companies in China after a government crackdown on fraud has rattled the Shanghai CBD office market and may “pose a challenge for landlords”, experts say.

In the second quarter of the year, supply spiked to a 10-year high, according to real estate firm Colliers International, as overall vacancy rates in the area increased 3.2 per cent quarter on quarter to 7.2 per cent.

Colliers attributed the recent upturn in office supply to “widespread retreats from tenants in the peer-to-peer lending (P2P) sector, which came under scrutiny from the government in recent months”.

Albert Lau, managing director at global real estate services provider Savills, noted that due to the “slowdown in growth of P2P companies due to the government crackdown, landlords are becoming more cautious towards these companies”.

However, Sam Xie, senior director at CBRE Research in Eastern China, believes that despite the closing of some P2P companies and the government’s tighter regulatory environment on the sector, “the negative impact upon the Shanghai market is manageable”.

According to Shanghai-based researcher Yingcan Group, the number of P2P platforms under “normal operation” in China stood at 2,349 at the end of June, down more than 10 per cent since their peak last November.