Office market in Asia Pacific likely to see more activity in 2013, says Knight Frank
|Monday, 01 April 2013|
Concerns surrounding the world economy continued to have an influence on the office occupier property markets in Asia Pacific in the final months of last year, according to the latest index
The Knight Frank Asia Pacific Prime Office Index rose 2% in the fourth quarter of 2012, up from a 0.8% increase in the previous quarter and the firm says that with some of the constraints holding back international corporates dissipating, a less uncertain outlook is expected to lead to more leasing activity in 2013.
Jakarta saw the strongest quarterly increase of 14.3% as very tight supply was met with robust demand and Beijing and Jakarta have now seen prime office rents double over the last three years.
The index shows that rents decreased in eight of the 18 markets tracked, with the more open markets of Singapore, Hong Kong, Shanghai and Seoul feeling a drop in demand from the banking and finance sectors.
Banking and financial institutions continued to cut costs in the last quarter of 2012, impacting the major financial centres of Hong Kong, Singapore, Shanghai, Seoul and Tokyo. This has been reflected in softening rents in the first four of these markets, while the latter, Tokyo, has seen strong demand in the central three wards, as corporates have continued to trend towards centralisation.
Australia saw rental levels remain steady, with sentiment in the leasing markets remaining relatively subdued. Incentive levels remain high, edging up in Sydney, as effective rents remain significantly lower than headline figures.
In India, rents remained stable in Delhi and Bangalore, while Mumbai saw a significant fourth quarter rental increase of 4.5% as net absorption in all three markets bounced back from a subdued third quarter.
Across the region, certain sectors have remained very active over the quarter. The legal sector has seen an increase in foreign law firm activity, most notably in Singapore and Seoul, where increasing liberalisation has presented expansion opportunities.
‘Significant new supply, cost attentive corporates and expansion delays due to global uncertainty will continue to have a dampening impact on office rental levels in some of the key gateway cities of Asia Pacific,’ said Nicholas Holt, Knight Frank research director for Asia Pacific.
‘However, as the US kicks the can down the road to avoid the fiscal cliff, the threat of a crisis in the Eurozone recedes, and Chinese growth speeds up again, corporates in the Asia Pacific region are likely to gradually become more bullish in their expansion plans as the economy moves into a new cycle,’ he added.
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