2015 3Q Colliers Asia Pacific Office Market

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  • Economic Overview After a series of easing monetary policy moves, the slowdown in Chinas economy seems to be starting to stabilize in the first half of 2015. However, downside risks such as the heightened volatility in the stock markets, strong capital outflows and overcapacity in some sectors have put pressure on the economic growth, derailing authorities efforts to rebalance the Chinese economy towards consumption and services. As a consequence, the World Banks has trimmed Chinas growth forecast to 6.9% this year, below the governments target of 7%. Meanwhile, in the US, the Federal Reserve had decided not to raise its key interest rate at its October meeting. This decision has been seen as to ease pressure on financial markets across emerging markets on the short term, but at the same time, it has been prolonging uncertainty regarding the timing of the Feds first rate hike.

    Leasing Market Hiring environment turned slightly more conservative than the first half of this year with the majority of employers in China, Hong Kong and Singapore intending to keep headcount steady in the second half of 2015. According to the latest Hudson report, technology and IT sectors continues to be the most active tenant sector in the region. Other notable sectors include professional services and manufacturing while financial corporates are also expanding selectively with most multinational corporates still cautious. Of the major markets, Hong Kong achieved the strongest quarter-on-quarter (QoQ) growth of 3.9% supported by demand from mainland Chinese financial firms for office premises in Central. This is being followed by Bangkok (2.2% QoQ) and Bengaluru (1.8% QoQ). Rents fell by in Yangon (-2.5% QoQ), Chengdu (-2.2% QoQ) and Shenzhen (-2.0% QoQ) as landlords started lowering rents in view of the large impending supply. Grade A office completions are expected to grow around 100 million sq ft in 2016, with around 70% of the total in China and India.

    Sales Market Despite the slower economic growth in China, office real estate investment in Asia came in at US$4.4 billion in 3Q 2015, up 54.3% year-on-year (YoY) from US$2.9 billion the same times last year. Sentiment is improving for core assets in Chinas first-tier cities with Shanghai most in demand accounting for 51% of transactions including a couple of en-bloc transactions with the focus primarily on office properties. Investors who previously ventured into the secondary and tertiary markets have focused their radar back to Shanghai as the market tends to be the most liquid and transparent in China. In addition the market offer more stock for sale compared to Beijing with more than 600,000 sq m office supply coming on stream in 2015 and another 790 million sq m by the end of 2016. Cross-border investors continue to be very active with outbound investors showing an unwavering preference for Grade A offices in the core business districts of gateway cities, such as New York, London, Sydney and Melbourne.

    Market Outlook While remaining the worlds growth leader in terms of economic growth, Asia Pacific is expected to grow slightly less in 2016. According to the International Monetary Fund, growth in the Asia Pacific markets is expected to hold steady at 5.6% for the full year and to ease slightly to 5.5% in 2016. While growth in India picked up being supported by a healthy monsoon and new investments assuming concrete progress on reform, slowing growth in several large economies, including China, Indonesia and Japan was a counterweight. Going forward, domestic demand and ongoing low oil prices should continue to drive growth in the region over the medium term. However, economic dynamics in Asia will mostly be determined by developments in China. At the same time, we may see increased market turbulence before year end should the US Fed decide to finally move on interest rates.

    Asia Pacific

    Office Market

    Asia Pacific | Office

    3Q 2015

    http://www.linkedin.com/company/colliers-international?trk=hb_tab_compy_id_5227https://www.facebook.com/colliersglobal?rf=105632526137251https://twitter.com/ColliersIntl

  • Our Presence in Asia Pacific

    1

    Mumbai

    Bengaluru

    Karachi

    Kuala Lumpur

    Singapore

    Ho Chi Minh City

    Yangon

    Chennai

    Wellington

    Auckland Sydney

    Brisbane

    Canberra Perth Adelaide

    Melbourne

    Almaty

    Jakarta

    Delhi NCR

    Manila

    Taipei

    Tokyo

    Seoul

    Beijing

    Hong Kong

    Shanghai Chengdu

    Hanoi

    Bangkok

    Note : Rents, vacancy rate forecasts and new supply forecasts are referring to prime quality office premises in CBD except India.

    In India, rents are referring to prime quality office premises in CBD while new supply and vacancy rate forecasts are referring to the

    prime quality space in the whole city.

    Supply Forecast 2015

    (Million sq ft)

    Legend :

    Supply Forecast 2016

    (Million sq ft)

    Prime Office Rents in CBD, 3Q 2015 (US$ / sq ft / annum)

    Forecast Direction 2015

    Vacancy Rate Forecast 2015

    Forecast Direction 2015

    Forecast Direction 2016

    Forecast Direction 2016

    Astana

    Supply Forecast 2017

    (Million sq ft)

    $67.1

    7.0%

    0.00

    0.17

    0.65

    $13.8

    43.0%

    0.63

    0.86

    1.24 $31.9

    15.0%

    8.00

    5.50

    5.46

    $10.2

    13.0%

    12.98

    7.08

    7.99

    $8.8

    19.0%

    3.47

    2.90

    2.97

    $77.9

    4.4%

    0.53

    3.58

    0.15

    $37.0

    11.0%

    6.49

    6.10

    5.94

    $58.0

    7.1%

    4.67

    6.77

    4.99

    $27.0

    20.0%

    3.72

    6.54

    4.69

    $18.4

    45.0%

    6.80

    4.31

    3.38

    $52.8

    9.7%

    6.65

    8.50

    6.67

    $23.1

    9.9%

    4.02

    4.99

    5.71 $84.0

    5.0%

    5.02

    6.60

    3.45

    $25.1

    17.7%

    1.61

    0.58

    1.07

    $28.2

    5.0%

    0.41

    0.52

    0.32

    $39.9

    15.4%

    0.00

    2.01

    0.00

    $37.4

    19.5%

    1.35

    0.33

    0.00

    $37.1

    7.3%

    1.46

    1.00

    0.27

    $24.3

    1.2%

    0.05

    0.52

    0.46

    $48.7

    6.0%

    1.93

    1.49

    1.88

    $24.6

    13.0%

    0.21

    0.03

    0.00

    $18.9

    12.3%

    2.33

    0.19

    0.27

    Forecast Direction 2017

    Forecast Direction 2017

    $27.4

    9.0%

    0.00

    0.00

    0.00

    $83.1

    12.3%

    1.19

    0.59

    0.68

    $25.1

    4.1%

    0.00

    0.00

    0.00

    Guangzhou Shenzhen

    $37.7

    12.9%

    10.24

    25.58

    7.66

    $124.7

    3.3%

    1.33

    1.04

    2.54

    $21.3

    1.6%

    0.00

    0.00

    0.27

    $35.1

    26.0%

    0.54

    0.43

    7.21

    $44.1

    9.0%

    1.00

    1.50

    3.68

    $32.5

    20.0%

    10.25

    5.15

    6.60

    $43.5

    13.0%

    0.11

    2.41

    5.39

  • Copyright 2015 Colliers International.

    The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to

    ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult

    their professional advisors prior to acting on any of the material contained in this report.

    $2.3 billion in

    annual revenue

    502 offices in 67 countries on 6 continents

    United States:

    Canada:

    Latin America:

    Asia:

    ANZ:

    EMEA:

    Authors:

    Simon Lo

    Executive Director | Asia

    +852 2822 0511

    simon.lo@colliers.com

    Jessy Chung

    Assistant Manager

    +852 2822 0643

    jessy.chung@colliers.com

    140

    31

    24

    39

    160

    108

    $1.70 billion square feet

    under management

    16,300 Professional

    and staff

    ASIA

    Sam Harvey-Jones

    +852 2822 0509

    sam.harvey-jones@colliers.com

    NORTH ASIA

    Mainland China

    Beijing

    Kelvin Chow

    +86 10 8518 1633 ext.113

    kelvin.chow@colliers.com

    Shanghai

    Michael Wu

    +86 21 6141 3638

    michael.wu@colliers.com

    Guangzhou

    Eric Lam

    +86 20 3819 3988

    eric.lam@colliers.com

    Shenzhen

    Ken Kan

    +86 755 8825 8648

    ken.kan@colliers.com

    Chengdu

    Bonnie Chiu

    +86 28 8658 6288 ext.810

    bonnie.chiu@colliers.com

    Hong Kong, HKSAR

    Hong Kong

    Wendy Lau

    +852 2822 0550

    wendy.lau@colliers.com

    (E-141423)

    Kowloon

    Fiona Ngan

    +852 2117 3301

    fiona.ngan@colliers.com

    (E-197789)

    Japan

    Tokyo

    Katsuji Tokita

    +81 3 5563 2117

    katsuji.tokita@colliers.com

    South Korea

    Seoul

    Jay Yun

    +82 2 3775 7351

    jay.yun@Colliers.com

    Taiwan

    Taipei

    Amanda Yang

    +886 2 8101 1120

    amanda.yang@colliers.com

    SOUTH EAST ASIA

    Indonesia

    Jakarta

    Bagus Adikusumo

    +62 21 521 1400 ext.506

    bagus.adikusumo@colliers.com

    Malaysia

    Sam Harvey-Jones

    +852 2822 0509

    sam.harvey-jones@colliers.com

    *Based in Hong Kong

    Kuala Lumpur

    Research data provided by

    C H Williams Talhar & Wong

    Sdn Bhd

    URL : http://www.wtw.com.my

    Foo Gee Jen

    +603 2616 8888

    fgj@wtw.com.my

    Philippines

    Manila

    Jie Espinosa

    +632 888 9988 ext.4016

    jie.espinosa@colliers.com

    Singapore

    Singapore

    Calvin Yeo

    +65 6531 8671

    calvin.yeo@colliers.com

    Thailand

    Bangkok

    Nattawan Radomyos

    +66 2 656 7000

    nattawan.radomyos@colliers.com

    Vietnam

    Ho Chi Minh City

    Nhung Quan

    +84 8 3827 5665

    nhung.quan@colliers.com

    Hanoi

    Tri Nhan Nguyen

    +84 8 3827 5665

    trinhan.nguyen@colliers.com

    Myanmar

    Yangon

    Tony Picon

    +95 931 491 678

    antony.picon@colliers.com

    SOUTH ASIA

    India

    George McKay

    +91 22 4050 4553

    george.mckay@colliers.com

    Vikas Kalia

    +91 12 4456 7531

    vikas.kalia@colliers.com

    Bengaluru

    Goutam Chakraborty

    +91 80 4079 5500

    goutam.chakraborty@colliers.com

    Chennai

    Shaju Thomas

    +91 44 2836 1064

    shaju.thomas@colliers.com

    Gurgaon

    Vikas Kalia

    +91 12 4456 7531

    vikas.kalia@colliers.com

    Kolkata

    Swapan Dutta

    +91 12 4437 5807

    swapan.dutta@colliers.com

    Mumbai

    Nishith Agarwal

    +91 22 4050 4556

    nishith.agarwal@colliers.com

    New Delhi

    Vikas Kalia

    +91 12 4456 7531

    vikas.kalia@colliers.com

    Pune

    Rishav Vij

    +91 20 4120 6438

    rishav.vij@colliers.com

    Pakistan

    Karachi

    S. Fazal Ahmad

    +92 21 3561 2550 2

    fazal.ahmad@colliers.com

    Lahore, Faisalabad

    Naveed Khan

    +92 42 3662 3312 8 (Lahore)

    +92 41 2540 501 4 (Faisalabad)

    Naveed.khan@colliers.com

    Kazakhstan

    Almaty

    Bayan Kuatova

    +7 727 311 54 43

    bayan.kuatova@colliers.com

    AUSTRALIA

    Melbourne

    Simon Hunt

    +61 3 9612 8818

    simon.hunt@colliers.com

    NEW ZEALAND

    Auckland

    Rob Bird

    +64 9 356 8803

    rob.bird@colliers.com

    Wellington

    Jim Pinson

    +64 4 470 3917

    jim.pinson@colliers.com

    For further details, please contact:

    http://www.linkedin.com/company/colliers-international?trk=hb_tab_compy_id_5227https://www.facebook.com/colliersglobal?rf=105632526137251https://twitter.com/ColliersIntl