According to latest data from JLL, emerging markets in Southeast Asia continue to shine especially in the office market. Rents and capital values in local currency terms rose across major Southeast Asian markets in the second quarter of 2014. The strongest quarterly gains in the office segment were in Manila and Singapore.
In Singapore, limited new completions lifted landlords’ confidence, resulting in rents rising 4.6 percent this quarter, pushing Singapore to the third spot in Asia-Pacific after Hong Kong and Beijing, according to the JLL Office Index.
Small space occupiers, particularly those from the e-commerce and fast moving consumer group segment, continued to dominate the Singapore market.
Dr, Chua Yang Liang, Head of Research for Southeast Asia, said: “The short term tight supply has given landlords the confidence to push up rents.
“However with the impending supply coming in 2016, this growth is likely to be clipped by about end 2015. The upside will come from the growth in e-commerce, IT support and FMCG sectors that could continue to grow on the back of heightened consumption in Asia with increasing affluence.”
The quarterly gain of 1.5 percent in the Philippines was helped by the lower office cost compared to other cities in Asia-Pacific. Manila office is ranked 21 out of 27 cities in Asia-Pacific according to JLL’s Office Index. This supported the continual growth in offshoring and outsourcing, alongside financial, IT and logistics demand.
Capital values were supported by a stronger leasing market. This was especially so in the Philippines, which saw yields compressing further as capital values expanded faster at 3 percent.
In Singapore, yields expanded on the risk of higher interest rates, as rental growth far exceeded capital value gains.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
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