Office rental rates for Grade-A space in Bangkok rose 8.5 percent year-on-year at the end of Q1. For the first three months of the year the quarter-on-quarter increase was 1.3 percent.
In its Q1 2014 Office Index report, real estate firm JLL discovered that as companies became more bullish, leasing activity picked up in some markets across Asia-Pacific, with an average rental growth of 0.8 percent quarter-on-quarter compared with 0.2 percent in Q4 2013.
It noted that while expansion demand in the region remained subdued, net effective rents grew in more than half of all tier one markets.
Leading the region, Singapore saw quarterly rental growth of 4.5 percent on the back of low and falling vacancies, while Japan also saw the market strengthen with a quarterly increase of 2.0 percent in Tokyo.
On the back of this improved occupier sentiment, rents also edged up in Beijing (0.2 percent q-o-q) for the first time since Q3 2012, and started to stabilise in Hong Kong Central (0.6 percent q-o-q) and Seoul (2.1 percent q-o-q.
Rents remained flat or recorded small increases in Shanghai, India and emerging Southeast Asia where Jakarta’s growth moderated to 1.0 percent q-o-q despite outperforming the region on an annual basis (up 18.4 percent y-o-y).
Sydney and Melbourne saw effective rental increases of between 1 percent and 3 percent over the quarter, but declines were noted in most other Australian cities with the biggest quarterly fall of 12 percent in the resources city of Perth.
Dr. Jane Murray, Head of Asia Pacific Research at JLL, said: “Given the improvements in the region’s overall leasing activity over the first quarter, we are cautiously optimistic that leasing volumes will continue to grow, anything between 10 and 15 percent for the full year.
“There are, however, some downside risks to this forecast including the on-going unrest in Ukraine and possible impacts relating to the military coup in Thailand and elections in Indonesia.”
Whilst rental growth is likely to be limited in most markets during the short term, JLL expects to see single-digit growth for the full calendar year, with Singapore and Tokyo likely to see the biggest increases as vacancy remains low.
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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If you have a news story or comment for publication about Thailand property or real estate email andrew@propertyguru.com.sg