Asia-Pacific prime office rent up 2.3% in Q3

The Asia Pacific region saw prime office rents increase 2.3 percent quarter-on-quarter and 6.4 percent year-on-year during the third quarter of 2018, revealed a Knight Frank report.

This comes as 18 of the 20 cities tracked by Knight Frank reported stable or increased rental growth.

In Australia, Melbourne saw rents increase 2.6 percent quarter-on-quarter as rapid employment and population growth continues to drive the city’s high level of absorption. Sydney rents rose 2.5 percent, while rents in Brisbane and Perth climbed 0.7 percent and 0.2 percent respectively.

While Australia’s economic condition is supportive of the major office markets, Knight Frank expects the pace of rental growth in Melbourne and Sydney to gradually slow.

Rents in Kuala Lumpur slid 0.2 percent quarter-on-quarter, decelerating from the 0.8 percent drop registered previously, as the commodity sector began to see signs of life on the back of the growing co-working sector and sustained oil price growth.

Rents in Manila grew 0.8 percent quarter-on-quarter as the US-China trade dispute dented sentiment for US multinationals, which accounted for a large tenant demographic for the booming BPO industry there. Singapore, on the other hand, saw rents increase 1.1 percent quarter-on-quarter as the city-state’s limited office supply outlook favoured landlords.

After a firm showing during the previous quarter, rents in Bengaluru returned to a normalised steady state, rising 0.4 percent quarter-on-quarter. Rents in Mumbai climbed 3.9 percent on sustained demand from traditional finance and IT sectors as well as co-working operations.

Prime office rents in Tokyo and Hong Kong rose 5.6 percent and 2.7 percent quarter-on-quarter, while rents in Shanghai remained firm.

“While we are starting to feel the impact of the trade tensions flow through the Asia-Pacific office markets, sound economic conditions are expected to support office demand and drive steady rental growth across the region,” said Nicholas Holt, Knight Frank head of research for Asia-Pacific.

Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg