After a five year boom, Asia's major financial capitals are far from immune from the kind of property downturns recently seen in New York and London, analysts claim.
But while banks lay off tens of thousands in the US, in Asia they are more likely to step back from ambitious expansion plans. As a result, property markets are more likely to slip rather than slide, according to Macquarie Securities.
The company predicts that rents will probably fall by 25% by the end of 2009 in the Central District of Hong Kong as cheaper new offices come onto the market across the harbour.
The Kowloon East District has a 15% vacancy rate now, and the volume of office space in the area is expected to jump 40% in two years.
'There's a lot of supply coming onto the market,' said Richard Pyvis, chairman of CLSA Capital Partners, which runs private equity property funds.
There is doubt about the 118 storey International Commerce Centre being built by Sun Hung Kai Properties. Morgan Stanley, Credit Suisse and Deutsche Bank have agreed to move in but they could choose not to take up options for more space or even try to sell some.
The situation is similar in Singapore. A new office project called the Marina Bay Financial Centre is under construction, spurred by the creation of 50,000 jobs since 2004 as hedge funds and banks took advantage of incentives to expand.
A loss of a fifth of those new jobs would cause monthly office rents to fall 47% and capital values to drop 34% by 2012, according to Regina Lim, a UBS analyst.
Wilson Kwong, general manager of the management firm for Marina Bay, said two-thirds of the space in the project's first phase had been preleased, but he conceded that some tenants might choose to sublet space if they could not fill it.
In Tokyo, a cut in bank lending to the property sector has already slammed the brakes on rents and capital values for office buildings.
Yoji Otani, a Credit Suisse analyst, said that Morgan Stanley and Goldman Sachs will probably scale back their property investments in Tokyo. As they switch to being commercial banks they are expected to sell high-risk assets like properties and to unlock equity in real estate funds to meet capital-adequacy requirements.