Across the Asia Pacific region, office rents and capital values are continuing to rise.

 

 

According to a new research from global real estate firm Jones Lang LaSalle, the Asia Pacific office leasing market was supported in 2Q11 by continuous corporate recruiting and rising accommodation requirements. The aggregate net take-up across key Tier I markets remained identical to the previous quarter, but it increased by 28% year over year and is still at record levels. propertyfinder qatar

 

In 2Q11, vacancies decreased in several cities, while office rentals increased in most markets outside of North Asia, albeit at a slower rate. During the quarter, 15 of the 27 featured office markets saw net effective rents rise, while the others stable or experienced tiny residual reductions. The average quarter-on-quarter increase in rental growth across the region was 2.4 percent, which was similar to the previous quarter. Quarterly rental increases averaged 2.5 percent in the first quarter of 2011.

 

In 2Q11, rents in Beijing and Jakarta increased the most q-o-q (+15.2 percent q-o-q and +14.6 percent q-o-q, respectively), as vacancy levels in both markets declined significantly. Growth in net effective rentals in Hong Kong and Singapore declined to 6.6 percent q-o-q and 1.7 percent q-o-q, respectively, due to slower financial institution expansion and the emergence of some returning space among the main financial centers. MNCs and domestic corporations produced significant spatial demand, resulting in a 4.6 percent increase in rents in Shanghai. With rental increase of over 30% in the 12 months leading up to the end of 2Q11, Hong Kong and Jakarta led the way.

 

After the recent crisis, net effective rentals in Tokyo declined by 0.4 percent as gross rents continued to fall while rent-free periods remained steady. Rents have either stabilized (e.g., Taipei) or are continuing to fall in a few other markets where tenant demand is still weak (e.g. Seoul, Kuala Lumpur, Bangkok). During the quarter, average rents in Australia and New Zealand witnessed mild positive and negative change. With a 5.0 percent increase, Perth saw the highest quarterly increase.

 

Although investment activity slowed in the second quarter of 2011, capital values in most major markets outside of North Asia and a few South East Asian locations remained steady or increased. Capital values in Beijing and Jakarta increased the most from one quarter to the next, by 17.1% and 14.7 percent, respectively. With quarterly growth ranging from 4.6 percent to 9.1 percent, Hong Kong, Shanghai, and Bangalore were next.

 

The average quarterly increase in capital values in the region slowed to 2.4 percent, down from 3.1 percent in 1Q11. Hong Kong outperformed on a year-over-year basis once again, with capital values rising 44 percent on the back of strong buying activity, mostly by domestic investors.

 

We expect leasing demand to remain strong this year, however vacancies are expected to rise in several markets over the next few quarters as a result of increased availability. Growth of up to 45 percent is predicted across the region for the full year, with the biggest growth anticipated to be observed in supply limited areas such as Hong Kong, Beijing, and Jakarta, in line with strong fundamentals. Rents in Tokyo are expected to stabilize through the end of 2011, with an annual fall of up to 5% as businesses look to cut costs. A few more laggards are expected to suffer no growth or modest residual rental losses as well.

 

On the back of rental growth and investor confidence, capital values are predicted to rise by up to 45 percent in practically all countries outside of North Asia in 2011. Hong Kong, Jakarta, and China's Tier I cities are among the markets predicted to develop the most.