+6017 2123544

gp@property360digest.com

Compare Listings

Asia Pacific Prime Office Market Sees Better-than-Expected Economic Results

Asia Pacific Prime Office Market Sees Better-than-Expected Economic Results

 

Better-than-expected economic results lift Asia-Pacific prime office market

 

Prime Office Rental cycle for Q2 2017

In a recent report announced by Knight Frank, it was stated that the Prime Office Rental Index has increased 1.2 per cent quarter-on-quarter and 0.6 per cent year-on-year as at end of the second quarter of 2017.

According to the report, in the first half of 2017, the regional economies of China, ASEAN-5 and Japan performed considerably better than expected, as the IMF revised its growth projections upwards for emerging and developing Asia. The pickup in global trade and domestic demand has negated geo-political risks to a certain extent, thereby providing a strong foundation for the Asia-Pacific prime office markets.

“Kuala Lumpur has been experiencing rental decline for a year, coupled with creeping overall vacancy rates. However, we expect to see sustained demand in selected established and upcoming decentralized office locations served by the LRT and new MRT lines”, said Teh Young Khean, Executive Director of Corporate Services, Knight Frank Malaysia.

Bengaluru / New Delhi and Mumbai

Bengaluru continued to attract occupier interest from the IT/ITeS sector with a 4.0 per cent increase quarter-on-quarter and 7.1 per cent year- on-year in Q2 2017.

Office project delays have plagued New Delhi in H1 2017, leading to an all-time low in new completions. Coupled with a stable pace of absorption, vacancies have dropped whilst rentals have risen. Mumbai witnessed a fresh office supply of close to 530,000 square meters last quarter, causing vacancy rates to soar by 2.0 percentage points.

Beijing / Shanghai / Guangzhou and Taipei

In Beijing, domestic corporations were nvolved in most of the leasing activities, especially those from the finance, Internet and high-tech sectors. Rents and vacancies remained stable in Shanghai in Q2, with new supply concentrating in Pudong.

No new offices were added to the Guangzhou and Taipei markets, where vacancy rates dropped and rents rose further. The former will see limited supply of less than 300,000 square meters in 2017 while the latter is witnessing a relocation trend from Grade-B to Grade-A offices.

Hong Kong / Seoul and Tokyo

Hong Kong, as prime rents continued to edge higher, cost-conscious tenants are expected to continue to relocate to other areas such as Wong Chuk Hang. Seoul experienced a 3.5% increase in rents supported by healthy absorptions even with new supply and relocation of several large occupiers.

While a positive economic growth bodes well for the Tokyo office market, the looming supply influx for the next few years is set to turn the market in favour of tenants.

Singapore / Jakarta and Kuala Lumpur

Despite delivering around 92,000 square meters of new prime supply, Singapore’s prime rents held steady in Q2 2017 after a two-year decline, owing to continued demand from sectors such as technology, co-working and professional services.

In Jakarta, rents remained unchanged but a downward trend is expected for the next 12 months due to a huge incoming supply. Prime rents in Kuala

Lumpur had been sliding for a year, coupled with creeping overall vacancy rates. In the mid to long term, the city’s improving public transport may drive demand for offices near the new transport lines.

Bangkok / Manila and Phnom Penh

Bangkok experienced its first rental decline in close to three years, having slid marginally by 0.2% in the quarter. Given a limited supply, a rising trend may resume for the remaining of 2017. Contrastingly, more than 132,000 square meters of office spaces were added to Manila’s office stock in Q2, which contributed to a significant rise in vacancy rate.

A new Grade-A office building boosted the overall office stock in Phnom Penh by close to one- fourth, exerting upward pressure on both rents and vacancies.

Perth / Sydney, Melbourne and Brisbane

All four Australian cities performed strongly with rising rents and dropping vacancy rates in Q2. Perth continued its rental recovery track, aided by minimal new stock. Sydney prolonged its rental growth for 18 consecutive months, albeit slowing to 1.0 per cent compared to 1.4 per cent in Q1.

A landlord-favourable market condition in the Melbourne CBD has led to a gradual drop in incentives over the past few quarters. With an improving market sentiment and tight supply, Brisbane office market is set to extend its acceleration for the next 12 months.

“The pickup in global trade and domestic demand has negated geo-political risks to a certain extent, thereby providing a strong foundation for the Asia-Pacific prime office markets”, said Nicholas Holt, Head of Research for Knight Frank Asia-Pacific.

img

GP

Related posts

1200 low-cost flats residents receive free upgrade of new condominium homes

UPPER LABEL’S CSR UPGRADE IMPROVES LIVES By Gunaprasath Bupalan (YouTube - Emjay...

Continue reading
by GP

Mr. Gan Teck Seong, where we touched base on Meta_city, Villamas Group, Seri Kembangan, as well as the property market in general.  

By Gunaprasath Bupalan (YouTube - Emjay Communications / www.newshubasia.com / www.ihaus.com.my /...

Continue reading
by GP

Diving into the minds of Malaysia’s future designers

By Gunaprasath Bupalan (YouTube - Emjay Communications / www.newshubasia.com / www.ihaus.com.my /...

Continue reading
by GP

Join The Discussion