What are the expectations for Asia Pacific office market in 2017?

ASİA PACİFİC 3
JLL has released its Asia Pacific Office Markets Sentiment Survey: 2017 report which represents brokers’ expectations for office leasing performance in 2017. JLL asked its office leasing experts in 17 cities across the region for their expectations for office rents and opinions on key drivers of rents in their respective markets.

According to the report, strong activity in the technology, professional services and pharmaceutical sectors will drive Asia Pacific’s office market in 2017.Growth in these sectors, coupled with building activity in new high-quality developments, will support rental growth in much of the region.

Over the next 12 months, JLL expects rents in 13 cities out of the 17 tracked to either remain steady or increase. In a sign of things to come, a number of cities have recently experienced strong quarter-on-quarter growth. Demand from high-growth sectors as well as quality developments in new and existing APAC commercial centres are likely to result in a robust rental property market in 2017.

RENTS EXPECTED TO INCREASE ;

AUCKLAND: US$2.80 RENT/PSF/MONTH Q4 2016
Demand continues to outstrip supply, with new developments filling up quickly. Technology, media and creative companies seek character space that support changing work styles, however supply is low.

BANGALORE : US$1.30 RENT/PSF/MONTH Q4 2016
Large campus developments attract new tenants from peripheral business districts. Existing CBD tenants head for early renewals and secure leases for longer lock-in periods.

BANGKOK : US$1.60 RENT/PSF/MONTH Q4 2016
Robust demand from e-commerce, call centre and IT firms for new space. Companies seeking to expand office footprint face hindrance as vacancy rates in existing prime office buildings near all-time low.

MELBOURNE :US$1.70 RENT/PSF/MONTH Q4 2016
Spike in demand for prime CBD office space drives vacancies down. New developments attract strong pre-commitments with new wave of
stock coming through in 2020.

MUMBAI : US$3.70 RENT/PSF/MONTH Q4 2016
Pre-commitments in peripheral locations likely to be high. Rents in premium grade buildings to be driven higher by demand and low vacancy. High activity from established and new foreign businesses.

NEW DELHI :US$2.20 RENT/PSF/MONTH Q4 2016
Rental growth expected to be driven by new quality developments commanding premium over market rates. Decreased supply in Gurgaon
catering to growth in micro markets like Noida.

OSAKA:US$2.50 RENT/PSF/MONTH Q4 2016
Grade A vacancies lower because of limited supply, but easing demand slowing rent growth. Limited space hindering expansion plans.

SYDNEY : US$3.50 RENT/PSF/MONTH Q4 2016
Competitive market for Grade A and B office space in CBD due to office withdrawals, tenant displacements and increasing demand from the technology sector.

RENTS EXPECTED TO DECREASE ;

BEIJING : US$7.60 RENT/PSF/MONTH Q4 2016
Overall vacancy rate expected to increase amid softening demand and high supply in the pipeline. Sophisticated landlords seek quality tenants even for smaller rentable area.

JAKARTA : US$2.20 RENT/PSF/MONTH Q4 2016
A large number of newly completed developments reaching the market, causing supply to outweigh demand. Office upgrade or relocation to newer buildings a high consideration for tenants.

SHANGHAI : US$6.20 RENT/PSF/MONTH Q4 2016
Vacancy rate is expected to increase in 2017 due to a large amount of new supply in both CBD and decentralised market. Given the recent drop in leasing activities, more landlords will be willing to offer incentives to tenants

SINGAPORE : US$4.70 RENT/PSF/MONTH Q4 2016
Rents under pressure from weak demand and high supply. Increased pre-commitment activity in new developments with demand coming from tenants in older buildings.

RENTS EXPECTED TO REMAIN STABLE ;

HO CHI MINH CITY : US$3.60 RENT/PSF/MONTH Q4 2016
A hot market due to shortage of Grade A office space. FMCG, IT, insurance and financial industries will drive demand for quality space in coming quarters.

HONG KONG : US$14.50 RENT/PSF/MONTH Q4 2016
High activity in prime office space driven by Chinese financial services looking for operations in Hong Kong. Knock on effect with MNCs looking at alternatives in other submarkets.

MANILA : US$1.80 RENT/PSF/MONTH Q4 2016
Strong office demand from offshoring and outsourcing sectors. Construction activity remains high with tenants quickly filling up space in major cities within metro Manila.

SEOUL : US$3.80 RENT/PSF/MONTH Q4 2016
Public companies moving to outer administrative districts will lead to decentralisation. Cost saving a key driver for MNCs looking to restructure, consolidate or merge real estate.

TOKYO : US$6.10 RENT/PSF/MONTH Q4 2016
Significant construction activity of Grade A office space to impact wider market from 2018 with more than 1 million sqm of space entering the market.

Source: JLL

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