Prime office rental growth in Bangkok’s central business district rose 4.1 percent year-on-year, and rates are still some of the cheapest in the Asia-Pacific region.
Knight Frank’s Asia-Pacific Prime Office Rental Index report noted that, notwithstanding the largest quarterly net increase in total stock in ten quarters, Bangkok saw a continued decline in its vacancy rate, as net absorption rose 24.3 percent quarter-on-quarter to hit nearly 49,000 sqm.
The report added that although the uncertainty caused by ongoing events is likely to soften demand over the coming months, the lack of new supply is likely to underpin further rental growth in 2014.
Hong Kong saw activity increase slightly over the quarter, with the recently announced connection between the Hong Kong and Shanghai Stock Exchanges improving sentiment in the financial services sector.
Singapore, which witnessed a solid gain in rents, is expected to ride the momentum and deliver a further 10 percent growth by year end amid tight supply and rising market confidence. Rental growth remained strong in Tokyo as domestic firms became more active in centrally located Grade-A office accommodation.
Phnom Penh, included in Knight Frank’s Prime Office Rental Index for the first time this quarter, saw rents grow by an impressive 18.6 percent quarter-on-quarter, the highest in the region, as the vacancy rate in this small office market dropped to 5.5 percent. Due for completion this year and adding a substantial amount of supply, Vattanac Tower will be the first LEED-certified Grade-A office building in the market.
Prime office rents in Kuala Lumpur continued to see moderate growth, with the relatively high vacancy rate and upcoming supply more likely to impact rents in secondary office buildings. In Southeast Asia’s largest economy, Jakarta experienced a slowdown in rental growth as landlords became more realistic in pricing.
In Australia, the growth in incentives decelerated in Q1 2014 across all key cities and there were signs of demand recovery and tenant mobility, particularly in Melbourne and Sydney. Knight Frank expects the leasing market along the east coast to bottom out and see rental improvement by year end. India continued to see little rental movement.
Nicholas Holt, Head of Research for Asia Pacific, said, “While 16 of the 20 markets tracked are projected to see rents remain steady or even increase, we note that much will hinge on China’s economy, which poses the most significant downside risk to our forecasts.”
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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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