The Asia-Pacific office rental market increased by between 0.8 per cent and 1 per cent in the first quarter compared with the same period last year, according to surveys by global property agencies.
The CBRE Asia Pacific Office Rental Index rose by just under 1 percentage point quarter on quarter, with rental growth around the region strongest in top-quality buildings in core locations.Office vacancy fell by 24 basis points to 9 per cent.
Vacant space that was filled mainly involved small and medium-sized deals. Several markets will see some upward pressure on vacancy as there is a sizable volume of new supply in the pipeline, said CBRE.
Occupier demand is expected to steadily improve, barring any setbacks such as a further slowdown in the Chinese economy or weakening of the economic recovery in Japan. Rental growth is expected to pick up further, before slowing in the fourth quarter as oversupply pressure builds.
Meanwhile, Jones Lang Lasalle (Thailand) said the Asia-Pacific office market had picked up by 0.8 per cent in the first quarter compared with the final quarter of last year.While expansion demand in the region remained subdued, net effective rents grew in more than half of all tier-one markets.
Leading the region, Singapore saw quarterly rental growth of 4.5 per cent on the back of low and falling vacancy, while Japan also saw its market strengthen with a quarterly increase of 2 per cent in Tokyo.
In Bangkok’s central business district, rents in the first quarter saw a 1.3-per-cent increase over the fourth quarter of 2013, and an 8.5-per-cent increase over the first quarter of 2013 levels despite continued political turmoil.
“Whilst rental growth is likely to be limited in most markets in the short term, we expect single-digit growth for the full calendar year, with Singapore and Tokyo likely to see the biggest increases as vacancy remains low. Markets in Hong Kong and Beijing should continue in their recovery, but we predict that Jakarta rental growth will be sharply lower than last year as corporates remain cautious,” said Jones Lang Lasalle.
Research by international real-estate company Knight Frank points to growth in Jakarta as well as in Bangkok, despite uncertainty due to unrest in the latter city.
Overall, Knight Frank’s Asia Pacific Prime Office Rental Index edged up 0.8 per cent and only six markets saw rental declines over the period, as net absorption bounced back, increasing 19 per cent on the previous quarter to give a strong end to the year.
The index now sits 3.1 per cent above its pre-crisis peak of 2008, and 13 of the 19 prime office markets tracked saw prime rents increase or remain steady in the last three months of 2013.
The region-wide vacancy rate increased slightly to 12 per cent on the back of significant construction completions.