Bookmark & Share
Asia Pacific saw prime office rents increase 0.6 percent quarter-on-quarter and 1.0 percent year-on-year at end-Q3 2016, revealed a Knight Frank report.
This came as eight of the 19 market tracked by Knight Frank registered increases in rents, while six experienced rental declines.
Tokyo stood out as rents increased 6.5 percent quarter-on-quarter. It is, however, difficult to project a sustained strong growth there given the static office workforce and large supply in the pipeline. Neighbouring Seoul, on the other hand, witnessed moderate growth of 1.5 percent quarter-on-quarter.
Prime office rents in Singapore and Kuala Lumpur fell 2.8 percent and 0.4 percent respectively from the previous quarter, while that in Jakarta held firm. These three Southeast Asian markets are expected to witness more flight-to-quality leasing activities in the next 12 months as occupiers seek to take advantage of compressed rents.
Over in Greater China, Shanghai and Beijing posted rental declines largely due to the significant new supply entering the market. In Beijing, 250,000 sq m of supply is expected to come next quarter, while a similar amount of supply was recently introduced in Shanghai. Three new Grade A office buildings were completed in Guangzhou, putting pressure on rentals and vacancy rate. In Hong Kong, Grade A office rents in some areas are expected to witness downward pressure next year as 200,000 sq m of office supply are set to enter Kowloon East.
Knight Frank noted that tenants in these markets probably have more rooms for negotiation and chances to upgrade their office spaces.
Prime office rents in India have been increasing in the past 12 months, although no markets registered any rental movement over the quarter except Mumbai which posted a 1.3 percent decline. As such, the outlook for the Indian office market is optimistic, said Knight Frank.
The office market metrics in Australia remained active and landlord favourable. Sydney, for instance, is experiencing unprecedented stock withdrawals, with around 585,682 sq m to be permanently withdrawn over the next four years, enhancing rental growth prospects. Rents in Melbourne are similarly under upward pressure as no new supply entered the market for the last two quarters.
Meanwhile, the property consultancy expects Donald Trump’s election victory to lead to more uncertainty across the region, with the likely demise of the Trans-Pacific Partnership (TPP) a blow to export-dependent countries.
“While some occupiers could seize the opportunity to upgrade into superior space, many are likely to take a more cautious approach,” said Nicholas Holt, Knight Frank Asia Pacific head of research.
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg.
Related Articles:
Singapore generates highest built asset income per capita in Asia: report
Perennial, SPH acquire 60% stake in Chinatown mall
S-REITs to remain resilient despite looming oversupply, interest rate spike