By Andrew Batt:
Prime office rental rates in Jakarta jumped more than 78 percent last year, and have more than doubled in the last three years according to new research from Knight Frank.
The company’s Asia Pacific Prime Office Index grew 2.0 percent during the fourth quarter of 2012, up from 0.8 percent in the previous quarter and showed a 6.4 percent increase over the last 12 months. Ten of the eighteen cities saw positive rental growth over the quarter with Jakarta leading the way, seeing premium Grade A rents increasing by 14.3 percent quarter-on-quarter and 78.2 percent year-on-year.
Prime office rates in Bangkok rose 4.2 percent year-on-year and 0.9 percent quarter-on-quarter. Knight Frank expects prime office rates in the Thai capital will rise this year.
Banking and financial institutions continued to cut costs in the last quarter of 2012, impacting the major financial centres of Hong Kong, Singapore, Shanghai, Seoul and Tokyo. This has been reflected in softening rents in the first four of these markets, while the latter, Tokyo, has seen strong demand in the central 3 wards, as corporates have continued to trend towards centralisation.
The vacancy rate across the region increased marginally to 11 percent on the back of negative net absorption in a number of markets, and new supply coming to the market. Notably Beijing saw its vacancy rates increase for the first time since Q4 2009 as the market approaches its mid-term peak.
Australia saw rental levels remain steady, with sentiment in the leasing markets remaining relatively subdued. Incentive levels remain high, edging up in Sydney, as effective rents remain significantly lower than headline figures.
In India, rents remained stable in Delhi and Bangalore, while Mumbai saw a significant fourth quarter rental increase of 4.5 percent as net absorption in all three markets bounced back from a subdued Q3.
Across the region, certain sectors have remained very active over the quarter. The legal sector has seen an increase in foreign law firm activity, most notably in Singapore and Seoul, where increasing liberalisation has presented expansion opportunities.
The report noted that 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.
Andrew Batt, International Group Editor of PropertyGuru, wrote this story. To contact him about this or other stories email andrew@allproperty.com.sg
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