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Rental growth accelerates by 1.8% across Asia Pacific’s office market in Q3
SINGAPORE, NOVEMBER 10th, 2010 – A new survey on regional office rents released by Jones Lang LaSalle today reports that stronger economic conditions and business confidence in the region has resulted in a pickup in office leasing demand during 3Q10. Vacancies have stabilised or started to trend down in many markets, and rents are now moving to the upturn phase of the cycle. Of the 26 featured office markets, 12 saw an increase in net effective rents during the quarter, while for the remainder rents stabilised or recorded small residual declines of up to 4%. This compares with the previous quarter when 10 markets recorded an increase in rents and the largest fall in rents was 6%.
Alastair Hughes, chief executive officer for Jones Lang LaSalle in Asia Pacific says, “rental growth in the region is beginning to accelerate in many markets and we saw a quarter on quarter increase of 1.8% in Q3. This represents a significant up swing on the 0.3% increase seen in the previous two quarters. We expect that landlords in the region will have greater bargaining power as vacancy levels reduce.”
Jane Murray, head of research for Jones Lang LaSalle in Asia Pacific says, “Beijing and Singapore recorded the largest quarter-on-quarter rental growth in 3Q10, both increasing by 10.9%. Demand from MNCs, state owned enterprises and other domestic corporates underpinned expansion demand in Beijing while Singapore saw a resumption of expansion plans and new MNC set-ups. Net effective rentals in Hong Kong grew by 8.6% q-o-q on the back of a tight supply situation and solid demand by the financial sector.”
“In a few markets such as Seoul, Taipei, Kuala Lumpur and Bangkok, rents declined further on the back of weak tenant demand. In Tokyo, gross rentals declined marginally while net effective rentals increased by 3.7% q-o-q as landlords began to withdraw rental incentives amid falling vacancies. Average rents in Australia and New Zealand saw moderate movements, both positive and negative during the quarter,” she adds.
Over the next few quarters, we expect leasing demand to remain solid and vacancies to generally trend down. The regional office market has favoured tenants over much of the last two years but is now moving to an environment in which landlords have more bargaining power. More markets are expected to move to the upturn phase of the rental cycle in coming months.
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