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Hua Hin Today
Volume 9 issue 3 January 2012
Volume 9 Issue 3 January 2012
13
Mixed outlook
for office markets in Asia Pacific
P
reliminary data from Jones Lang LaSalle shows that grade A office rents will fall in Hong Kong and Singapore in the fourth quarter (Q4) of 2011 and will grow more slowly elsewhere in Asia Pacific. Jones Lang LaSalle’s market leasing experts predict that Hong Kong and Singapore are entering a rental level correction phase, with anticipated percentage falls in average grade A rents in the final quarter of the year of five to six percent in Hong Kong and around four percent in Singapore (to US$1,643 per sqm and US$786 per sqm per annum respectively). Some office markets are expected to experience continued rental increases in Q4, albeit at a slower rate than previously, including Beijing (circa five per cent to US$814 per sqm per annum) and Sydney (four to five per cent to US$470 per sqm per annum). In the middle ground Jones Lang LaSalle expects to see a number of markets where rents will remain largely static quarter on quarter, including Melbourne, Mumbai, Delhi, Seoul and Tokyo. Jeremy Sheldon, managing director, Markets Asia Pacific at Jones Lang LaSalle said: “Overall rental growth is expected to soften this quarter. The stand out trend across many key markets is a softening of demand from occupiers, as firms are applying caution in light of economic difficulties in the United States and the Euro-zone. We expect corporates in Asia Pacific to remain cautious for the remainder of this year and into next as they wait to see how the region will be impacted by what is happening elsewhere. We do expect to see continuing demand in certain markets where there is a strong domestic focus – China, Japan and India and emerging markets in South East Asia – however the more transparent markets are where occupiers are far more cautious.” Hong Kong There is clear delineation between Central and other sub markets. Leasing activity in the banking and finance sector has slowed considerably and Jones Lang LaSalle expects to see some firms in this sector looking to downsize in 2012, though not to the same degree as in 2008 and 2009. The firm is seeing some very moderate expansion amongst law firms and
some other businesses that are choosing to relocate to lower cost buildings. Rental growth is not expected in Q4 2011 as a result of low vacancy rates and the decentralisation trend. Singapore Jones Lang LaSalle is witnessing a weakening in net new demand, and secondary supply that is being returned to the market is being absorbed quite slowly. Although some surplus space has become available from major financial institutions, there have been no major headcount reductions in any of the key business sectors. China In Shanghai landlords continue to have higher rental expectations in light of the low vacancy rate and limited new supply. Tenants, particularly multi-national corporations, have recently been more cost conscious due to growing concerns about a slowdown in China’s economy. In Beijing rents have continued to rise at a slower pace than their rapid increase over the past 12 plus months. Leasing demand remains strong on the back of expanding space requirements from existing tenants and more new setups, though some landlords are being more flexible with leasing terms in specific cases. Bangkok The recovery process in the Bangkok office market was interrupted by the recent flooding, As companies were focusing primarily on business continuity plans in order to deal with possible impacts of the flooding, the market saw a marked slowdown in leasing activity between October and mid-November. However, as central Bangkok where most of the office buildings are located has been safe from the
disaster, leasing activity has resumed as the flood has receded. Australia In Sydney there is continued rental growth driven by tightening premium supply coupled with activity by larger users upgrading and/or relocating to the CBD. Decision making is becoming more protracted but relocation decisions are still being made by tenants with definitive needs. There is sustained demand in the 4,000 to 10,000 sq. m and sub 500 sq. m range, but we are also seeing a slight increase in sub-lease space. In Melbourne there is cautious demand and tenants are exploring the suitability of using alternative workplace strategies to reduce their occupied footprint. Development activity is continuing, but there is very limited speculative supply. Japan Landlords in central Tokyo have seen good demand for new developments in the aftermath of the earthquake and given low vacancy rates, rents are unlikely to fall further. However, the market is not expected to support any rental increases over the next one to two quarters given the impact on demand of the strong yen, uncertainty in the Euro-zone economies and a possible global economic slowdown. Korea There is healthy demand from domestic firms but multi-national corporations are becoming noticeably more cautious. Many recently completed buildings in Seoul have high vacancy rates, which is putting pressure on rents in the Central Business District. Any economic downturn is likely to exacerbate the current over-supply situation and delay rental recovery (especially in the CBD where most foreign financial institutions are located). India In both Mumbai and Delhi there is sluggish new demand, and rents are not likely to increase over the quarter due to ample supply. In Mumbai some tenants are deferring decisions regarding relocation to the Secondary Business District as a result of perceived uncertain economic conditions.
Winners of South East Asia
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Property Awards announced
inner s of the inaugural South East Asia Property Awards 2011 were announced at a glittering Gala Dinner and presentation ceremony attended by over 300 industry leaders and guests at Singapore’s Hotel Fort Canning.
Terry Blackburn, CEO of Ensign Media. “Amazingly, we received over 1,500 nominations and from those over 300 entries. These figures are a testament to breadth and variety of quality developments in the region and the enthusiasm to recognize the companies behind “The South East Asia region has some of the worlds’ most innovative them. They are also a reflection of the growing strength of the and interesting property developments, designed by architects and industry in South East Asia.” Ensign Media, publisher of Property built by developers whose reputations are known globally”, said Report South East Asia Magazine, launched the first ever South East Asia Property Awards to recognise the crème de la crème of the region’s residential real estate industry. The panel of judges headed up by Leong Chi Meng, Managing Director (SEA), CBRE Global Investors spent several weeks scrutinizing all entries and engaged in hours of discussion to decide on the winning properties in order to ensure that they were all deserving of their status. BDO Advisory supervised the entire judging procedure in order to guarantee the fairness, transparency and credibility of the South East Asia Property Awards. For more details about the awards visit www. southeastasiapropertyawards.com