Asia MarketView Q4 2009

Asian commercial real estate markets witnessed a steady recovery of demand in the fourth quarter along with further improvement in the regional macro economic environment. This helped rentals stabilise and several markets recorded two consecutive quarters of rental increments, signaling the end of the downward cycle. However, most corporates remained cost-conscious and continued to adopt decentralisation and consolidation strategies to contain real estate costs.

The period saw multinationals and financial institutions in selected Asian cities display a renewed willingness to expand. Overall office rents in Asia fell 1.8% in the fourth quarter, a slower rate of decline as compared to the 3.1% fall recorded in the previous quarter. Prime retail rents in most cities remained stable, with key markets either recording an uptick or slower rate of decline. The industrial property sector stabilised further with industrial rents in most Asian cities ending their decline and recording minor escalation. Prices for luxury homes continued to edge up in Beijing, Shanghai, Guangzhou and Hong Kong at increments ranging from 6% to 10% q-o-q, while prices in other markets remained largely stable.