According to the latest Asia-Pacific Prime Office Report released by Knight Frank, despite a marginal increase in the index, activity continued to slow, with the record performance of Indonesia’s capital skewing the index upwards.
Highlights for Q3 2013:
• The Knight Frank Asia-Pacific Prime Office Index returned to positive growth in Q3 2013, increasing by 0.5%.
• Despite this, only eight of the 19 prime office markets tracked saw prime rents increase in Q3 2013.
• Jakarta’s premium Grade-A office market recorded a 28% increase in Q3 2013, the highest quarterly growth on record.
• Over the next three to six months, prime office market performance is likely to reflect some of the uncertainty surrounding the region’s economy
Knight Frank’s Asia-Pacific Prime Office Index returned to positive growth in Q3 2013, increasing by 0.5% over the quarter, following a 0.1% drop in Q2 2013. The index now stands 2.3% above its Q2 2008 peak.
‘Grade-A office rents in the CBD of Hong Kong are expected to experience slight drops of 0-5% next year, those in decentralised areas of the city are set to remain stable’, Thomas Lam, Director and Head of Research & Consultancy of Greater China at Knight Frank says.
Mainland China saw rents continue to stagnate or decline marginally, although prospects for rental growth have increased slightly as the economy grew at its quickest pace this year between July and September.
In Tokyo, prime office rents moderated slightly for the second successive quarter, although on an annual basis they are up 25.2%. Prime Grade-A rents are still 40% below their peak of Q1 2008.
Effective rents continued to decline across all major city CBDs in Australia, as the muted economy continues to be impacted by the slowdown in the resources sector.
Jakarta continued to see the largest rental growth by far within the region, with the premium Grade-A office market seeing rents jump 28%. Although rents are expected to continue to rise going forward, we expect this to moderate, given new supply and a slowdown in the economy.
Elsewhere in Southeast Asia, Singapore’s prime office market saw rental growth over the quarter, as leasing activity picked up after a quiet first half of the year. In Kuala Lumpur, the market remained fairly flat, with both rents and vacancy rates remaining unchanged. Bangkok’s prime office rents continued to edge upwards, as the vacancy rate for Grade-A buildings fell for the sixth successive quarter.
