Bangkok--17 Nov--Jones Lang LaSalle
A new survey on regional office rents released by Jones Lang LaSalle today reports that stronger economic conditions and business confidence in the region has resulted in a pickup in office leasing demand during 3Q10. Vacancies have stabilised or started to trend down in many markets, and rents are now moving to the upturn phase of the cycle. Of the 26 featured office markets, 12 saw an increase in net effective rents during the quarter, while for the remainder rents stabilised or recorded small residual declines of up to 4%. This compares with the previous quarter when 10 markets recorded an increase in rents and the largest fall in rents was 6%.
Alastair Hughes, Chief Executive Officer for Jones Lang LaSalle in Asia Pacific says, “Rental growth in the region is beginning to accelerate in many markets and we saw a quarter on quarter increase of 1.8% in Q3. This represents a significant up swing on the 0.3% increase seen in the previous two quarters. We expect that landlords in the region will have greater bargaining power as vacancy levels reduce.”
Dr Jane Murray, Head of Research for Jones Lang LaSalle in Asia Pacific says, “Beijing and Singapore recorded the largest quarter-on-quarter rental growth in 3Q10, both increasing by 10.9%. Demand from MNCs, state owned enterprises and other domestic corporates underpinned expansion demand in Beijing while Singapore saw a resumption of expansion plans and new MNC set-ups. Net effective rentals in Hong Kong grew by 8.6% q-o-q on the back of a tight supply situation and solid demand by the financial sector.”
“In a few markets such as Seoul, Taipei, Kuala Lumpur and Bangkok, rents declined further on the back of weak tenant demand. In Tokyo, gross rentals declined marginally while net effective rentals increased by 3.7% q-o-q as landlords began to withdraw rental incentives amid falling vacancies. Average rents in Australia and New Zealand saw moderate movements, both positive and negative during the quarter,” she adds.
In Bangkok, despite new lettings and expansions, the recovery in office demand remained subtle. This, coupled with strong competition for tenants, has put a downward pressure on rents. However, thanks to limited new supply, the average net effective rent of Grade A office office space in Bangkok’s Central Business District (CBD) dropped only marginally by 2.2% over the third quarter of 2010.
Over the next few quarters, Jones Lang LaSalle expects leasing demand to remain solid and vacancies to generally trend down. The regional office market has favoured tenants over much of the last two years but is now moving to an environment in which landlords have more bargaining power. More markets are expected to move to the upturn phase of the rental cycle in coming months.
City 3Q10 Average Grade A Rent Quarterly Change
(USD psm pa) (Local Currency)
Hong Kong(Central) 1,448 8.60%
Tokyo(CBD) 712 3.70%
Mumbai (SBD BKC) 686 2.20%
Singapore(Raffles Place) 671 10.90%
Shanghai (Overall) 558 5.10%
Ho Chi Minh City (CBD) 554 -3.90%
Seoul(CBD) 544 -1.10%
Beijing(CBD) 492 10.90%
Delhi(SBD) 487 0.00%
Perth(CBD) 461 -0.40%
Taipei(Xinyi) 461 -0.20%
Sydney (CBD) 369 0.30%
Brisbane (CBD) 348 -3.40%
Osaka(CBD 2-kus) 318 -1.70%
Guangzhou(Overall) 299 1.60%
Melbourne (CBD) 286 1.60%
Canberra(CBD) 270 -0.20%
Auckland(CBD) 237 -0.90%
Adelaide(CBD) 229 1.60%
Wellington(CBD) 213 -1.00%
Kuala Lumpur(City Centre) 184 -0.90%
Bangkok(CBD) 178 -2.20%
Manila(Makati CBD) 171 0.50%
Bangalore(SBD) 130 0.00%
Chennai (SBD) 124 0.00%
Jakarta(CBD) 122 0.60%
Source: Jones Lang LaSalle
Notes:
All rents are net effective on a net lettable area basis
psm pa — per square metre per annum
Quarterly change - 3Q10 vs 2Q10
CBD - Central Business District; SBD - Secondary Business District
About Jones Lang LaSalle
Jones Lang LaSalle is a professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2009 global revenue of USD2.5 billion, Jones Lang LaSalle serves clients in 60 countries from 750 locations worldwide, including 180 corporate offices.
In Thailand, Jones Lang LaSalle has 20 years of experience and today is the country’s largest international property services firm with 1,000 employees.
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