Asia Pacific, led by markets which include Jakarta, Hong Kong and Singapore, continued to experience robust growth in the office real estate market in the first quarter of 2011, according to Jones Lang LaSalle (JLL).
“The global comparison shows how the traditional Asian centres have outpaced the world in their recovery. At the same time, we can see a strong re-emergence of ASEAN as a force in Asia, with Jakarta now topping the table in both rental and capital growth as it reaps the benefits of the recovery. These are exciting times for Asia Pacific office markets,” said Jeremy Sheldon, Head of Markets in Asia Pacific at JLL.
Of the 26 Asia Pacific office markets, 16 witnessed growth in net effective rents during Q1, while for the remainder, rents steadied or registered minimal residual decreases. Total rental growth eased slightly as a result of weakness in Japan, with a 2.5 percent average quarter-on-quarter increase across the region. In the last quarter of 2010, quarterly rental growth averaged 2.7 percent.
Jakarta reported the biggest quarterly rental growth, with a 9.5 percent increase in average office rent in Q1 this year.
“Recent leasing activity has further demonstrated the breadth of the recovery in the Jakarta office market, with pre-commitment levels for new developments at robust levels ensuring that the overall absorption in 2011 will almost certainly be a record,” said Todd Lauchlan, Country Head for Jones Lang LaSalle Indonesia.
Hong Kong’s office rents followed with 9.2 percent growth, primarily attributed to a tight supply condition and strong demand by the financial sector. Singapore’s office rents increased 7.9 percent quarter-on-quarter, due to a temporary shortage of space.
Rents in Beijing and Shanghai rose six to seven percent, with results mainly driven by robust spatial demand from MNCs and domestic corporates. In the year to end-Q1 2011, Hong Kong registered the strongest rental performance, with 36 percent growth.
“The pace of recovery in Asia Pacific, and the influence of China, is demonstrated by the rental growth being experienced by Hong Kong as companies worldwide strive to locate themselves at the centre of the action. As a result, Hong Kong is now one of the most expensive markets in the world. Continued strong demand combined with a shortage of office stock has pushed Central Hong Kong rents up–although they are still 10-15 percent below the last peak prior to the global financial crisis,” Mr. Sheldon added.
In Tokyo, net effective rentals declined 1.5 percent as gross rents continued to drop, while rent-free periods remained unmoved following the recent major disasters.
In a few other markets where tenant demand remained weak, rents have either steadied (Taipei) or declined (Seoul, Bangkok).
“Markets across the region continue to be dominated by local investors, with typically the biggest deals being bought by Asian buyers. We continue to see are interest from global investors keen to participate in the growth in Asia Pacific,” said Stuart Crow, Head of Asia Pacific Capital Markets.
“The result is both rising capital values in most of the markets. Transaction volumes are currently on target to meet our estimated US$100 billion of deals this year having reached US$27 billion in the first quarter.”
Source: Commercial Guru
