Knight Frank’s Asia Pacific office index on the rise
The Knight Frank Asia Pacific prime office index rose 2.0% in Q4 2012, up 0.08% from the previous quarter, according to the latest commercial research report by the global property consultancy firm.
In 2012, the firms Asia Pacific prime office index saw an increase of 6.4%, with ten of the thirteen cities seeing positive rental growth throughout last year.
Jakarta saw the strongest growth in rents in the market, increasing by 14.3% on a quarter-on-quarter basis and 78.2% year-on-year.
According to the report, the continued concern surrounding the state of the world economy influenced Asia Pacific’s office occupier markets in Q4 2012, but pointed to a settling of fluctuation with more leasing activity predicted throughout 2013.
Office markets in Singapore, Hong Kong, Shanghai and Seoul saw a softening of rents in Q4 2012, as banking and financial institutions continued to cut costs, while Tokyo saw strong demand in the central three wards, as corporates continued a trend towards centralisation.
Across the region, vacancy rates marginally increased to 11%; attributed to new supply coming onto market and negative net absorption in a number of sectors. Notably, Beijing’s vacancy rate increased for the first time since Q4 2009, with the market approaching its mid-term peak.
Nicholas Holt, research director of Asia-Pacific at Knight Frank, believes that there will be a continued dampening effect on office rents in key Asia Pacific cities; with recovery marked towards the end of the year as US fiscal policy positively affects European and Asia Pacific office markets.
Mr Holt said: “Significant new supply, cost attentive corporates and expansion delays due to global uncertainty will continue to have a dampening impact on office rental levels in some of the key gateway cities of Asia Pacific.
“However, as the US “kicks the can down the road” to avoid the fiscal cliff, the threat of a crisis in the Eurozone recedes, and Chinese growth speeds up again, corporates in the Asia Pacific region are likely to gradually become more bullish in their expansion plans as the economy moves into a new cycle.”