Office demand in Asia-Pacific to grow in 2013
| KUALA LUMPUR: Asia’s economic growth will raise demand for office space in 2013. |
| According to Nicholas Holt, Knight Frank head of research Asia-Pacific, a stronger regionally connected Chinese economy and the effects from Japan’s stimulus measures are likely to boost activity across the region with domestic occupiers leading demand for prime office space. |
| Knight Frank’s latest Asia-Pacific Prime Office Index shows that the index rose 1.7% during the first quarter of the year (1Q13) compared with 2% growth in the preceding quarter. This translated into a 5.6% increase over the last 12 months. |
| Office vacancy rate in the region increased marginally to 12% as positive net absorption across most markets was met with significant new supply of office space. Rents are expected to soften in only three of the 19 markets monitored over the next 12 months, said Holt. |
| Tokyo led the way in rental growth as Grade A office rents increased over 1Q13 by nearly 16%. Although this is still 39% below its 1Q08 peak, Holt expects to see prime, centrally office space outperform the wider Tokyo market. |
| “The new stimulus measures introduced by the Bank of Japan are likely to lead to a short increase in growth over the next two years, spurring demand for office space and increasing the prospects of further prime rental growth.” |
| Despite a drop in China’s growth levels in 1Q13, the shift towards more domestic demand in the country is likely to lead to more stable, albeit lower, growth rates over the coming years. The Beijing office market remains tight, although it has likely passed its mid-term peak. The Shanghai market is likely to continue to become more tenant friendly as the city anticipates nearly 2.5 million sq m of new supply over the next three years. |
| In Southeast Asia, prime office rental fell for the seventh consecutive quarter in Singapore while the Vietnamese market has likely hit rock bottom after a fourth year of declining prime rents, said Holt. |
| The Kuala Lumpur prime office market remained steady with a possible boost in demand following the recently concluded general election coupled by a significant new supply of office space. Jakarta continues to see strong prime office rental growth across the whole region while Bangkok rents showed a steady growth of 2.6%. |
| “Increasing Asean integration over the coming years is set to boost domestic economies and office markets in the regions,” Holt said. |
| In India, rental markets in the major cities slowed down in the quarter under review after a very strong 4Q12 with prime rents likely to stagnate over the next 12 months. |
| Australian office markets however, remained fairly subdued with rents moving sideways as the two-speed economy continues to rely heavily on the resources sector. |
| Despite the ongoing difficulties in Europe, the pick-up in the US growth increases the possibility of more expansion from US corporations following long periods of uncertainty. Nevertheless, Knight Frank expects the fastest growing segments to likely be Asian occupiers expanding both domestically and around the region. |
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This article first appeared in The Edge Financial Daily, on May 17, 2013. source:http://www.theedgemalaysia.com/property/239185-office-demand-in-asia-pacific-to-grow-in-2013.html |