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According to reports, Beijing city authorities announced this week that Tencent, China’s largest information technology (IT) company, bought 70,601 square meters of land in Beijing’s Haidian.
Tencent explained that the land purchased to SCMP was “to provide a stable and centralized work space.”
Tencent, headquartered in Shenzhen, employs more than 12,000 people in Beijing as of the end of last year.
“Tencent’s land purchase comes as China’s technology sector continues to recover from regulatory upheaval over the past few years that have resulted in job and job cuts,” the SCMP explained.
“Although the market capitalization of leading technology companies has disappeared by billions of dollars due to the deterioration of the Chinese stock market, authorities expect the IT sector to play a key role in the digital growth of the Chinese economy in the future,” he added.
Earlier this month, Alibaba, China’s largest e-commerce company, completed a new office building with a total floor area of 470,000 square meters in Chaoyang District, Beijing, the Beijing Daily reported.
In October last year, game company Mihoyo purchased land in Shanghai for 1 billion yuan, and Alibaba’s fintech affiliate Ant Group spent 1.5 billion yuan to purchase land in Hangzhou the same month.
In addition, last year, e-commerce company Jingdong Dotcom bought land in Beijing’s Yizhuang area for 3 billion yuan.
Local big tech companies, which made large-scale layoffs between 2021 and 2022 as Chinese authorities cracked down on the IT sector, started hiring new ones after the authorities hinted at easing regulations last year along with re-opening (reopening economic activity).
However, unlike technology companies that are recovering, the Chinese real estate market is not getting out of the recession, and the office vacancy rate continues to rise.
According to real estate consulting firm CBRE, rents are getting cheaper as vacancy rates in China’s first-tier cities (Beijing, Shanghai, Guangzhou, and Shenzhen) rise.
CBRE estimated that the vacancy rate of A-grade offices would have risen from 18.7% in June last year to 21% at the end of December.
