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Rents and Net Absorption Increase on Improved Demand

By on Feb 17, 2014 in Research

Asia Pacific Office MarketView Q4, 2013

Office for rent in Asia

Asia Pacific Office MarketView Q4 2013

Demand for office space in Asia Pacific strengthened in Q4 2013 with net absorption totaling 8.6 million sq. ft. The H2 2013 figure of 15.2 million sq.ft. was an improvement on the H1 2013 total of 14.1 million sq. ft. which was the lowest half-yearly total recorded since the market began to recover from the global financial crisis in Q1 2010. Most markets recorded an uptick in demand with more leasing enquiries and transactions recorded in China, Japan and Singapore.

The CBRE Asia Pacific Office Rental Index recorded a slight increase of 0.24% q-o-q in Q4 2013 as demand improved in a number of key markets. Grade A rental growth during the quarter was driven by the strong performance by several Southeast Asian markets including Jakarta and Ho Chi Minh City. Singapore recorded its first rental increase – a jump of 2.1% q-o-q – since Q1 2012 as many tenants went into expansion mode.

Overall vacancy in Asia Pacific declined from 10% in H1 2013 to 9.3% in H2 2013. Vacancy was down in 16 markets, up in eight and stable in one. In Asia, vacancy continued to decline in Q4 2013, falling to 9.1%, as all markets with the exception of Beijing, Hong Kong and Guangzhou recorded a decline in vacancy. Vacancy in the Pacific continued to increase due to the steady flow of sublease space in Australian markets.

The gradual improvement in office demand is expected to continue into 2014 in line with stronger regional and global economic growth. However, overall rents in Asia Pacific are expected to continue to display little movement in the opening quarters of 2014. Rental growth in the likes of Tokyo, Singapore, Auckland and some Southeast Asian markets will be offset by declines elsewhere, particularly in Shanghai, most Australian cities and some submarkets in India.

This is an extract from Asia Pacific Office MarketView Q4 2013, click to download the full report at Asia Pacific Office MarketView.

Chris Hardy has extensive research experience. Chris specializes in property research internationally writing for CBRE specifically about global issues and trends.

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