GRADE A office rents continued to rise mildly in Shanghai in the second quarter of this year amid weak demand in the overall market, according to a latest industry research.

The average rents at Grade A office buildings rose slightly to 9 yuan (US$1.42) per square meter per day in the April-June period, a quarterly gain of 1.4 percent, the report released yesterday by Jones Lang LaSalle said.

"Tenant leasing decisions continued to be impacted by economic uncertainty, leading to subdued demand in the overall market," said Anthony Couse, managing director of Jones Lang LaSalle Shanghai.

Couse said the rising rents were driven by the Pudong New Area where office supply is tight and demand from domestic tenants, particularly the financial sector.

In Pudong, rents rose 1.9 percent from the previous quarter to 8.70 yuan per square meter per day. On the Puxi side across the Huangpu River, rents edged up only 0.9 percent to 9.20 yuan per square meter per day.

The company predicted that in the second half, rents in Puxi will remain under pressure from new supply and large volume of relatively inexpensive decentralised office space while Pudong rents will continue to grow moderately as space in Lujiazui remains very tight.

So far there are 375,000 square meters of new supply in the decentralised areas, over twice that of new supply in CBD areas, the firm said.

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