Asia Pacific offices set for rental growth and increased capital values

Property Guru – Thu, Jul 28, 2011

The Asia Pacific office leasing market was underpinned by ongoing corporate hiring and expanding accommodation requirements in the second quarter, according to latest research conducted by Jones Lang LaSalle (JLL).

The global real estate services firm said that the aggregate net take-up across major Tier I markets was at a similar level to the previous quarter but improved 28 percent year-on-year and remains close to record levels.

Vacancies trended down in many cities in Q1, while office rentals climbed further in most markets outside of North Asia, albeit at a slower rate.

According to JLL, 15 out of 27 featured office markets experienced increase in net effective rents during the quarter, "while for the remainder rents stabilised or recorded small residual declines."

"Activity levels remain strong especially amongst the Asian Corporate sector. The continued re-emergence of Southeast Asia led by Indonesia is very encouraging," said Jeremy Sheldon, Head of Markets in Asia Pacific for JLL.

"The MNC sector, especially in the finance arena, is again having a strong push on costs and cost saves wherever possible. We could see a slowing in leasing activity toward the end of the year from MNC's depending on global economic and sector influences."

Jakarta and Beijing saw the highest quarter-on-quarter rental growth, recording a 14.6 percent and 15.2 percent increase respectively, as vacancies dropped dramatically in both markets.

Meanwhile, Singapore moderated to 6.6 percent quarter-on-quarter, while Hong Kong experienced a 1.7 percent growth. These were mainly attributed to slower expansion of financial institutions and as some returning space emerged.

Multinational corporations (MNCs) and domestic businesses drove the 4.6 percent rent growth in Shanghai, while Jakarta and Hong Kong had the best rental performance at 30 percent growth.

"Investors continue to be attracted to the region's growth prospects. Despite continued uncertainty in the global economy, the Asia Pacific real estate markets have remained resilient in the past six months," said Stuart Crow, Head of Asia Pacific Capital Markets for JLL.

"Pricing growth and transaction volumes are starting to stabilise which is not necessarily a bad thing, after the huge volatility in the past three to four years."

To contact the journalist, you may send your message to editor@propertyguru.com.sg