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  • 8/2/2019 Asia Pacific Market Briefs

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    ASIA PACIFICMARKETBRIEFSA CushmAn & WAkefield ReseARCh PubliCAtion

    mAY 2011An oVeRVieW of the AsiA PACifiC offiCe mARket

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    ASIA PACIFIC MARKETBRIEFS

    It is expected that the area will become more populated aterthe completion o residential and retail projects in the next ewquarters.

    PERTHAter staying in the negative territory orthree years, absorption in Perth pickedup in 2010. Currently, the vacancy rate isat 9.5%. Another 1.5 million square eet(ms) is expected or delivery in 2011and 2012. I the past average absorption

    o about 0.7 ms per year is continued, vacancy rate may stabilize.Te sales environment seems dicult with no sales aboveAUD$45 million and ew transactions in the AUD$8-AUD$30million range in the past six months.

    SYDNEYSydney rebounded this quarter onan 8.2% vacancy actor, a positiveresult ater two and a hal years oincreasing vacancy. As the economicoutlook is positive, it is expected thatleasing activity will increase especially

    or companies looking to hire more sta and expand to largerpremises. With ew construction projects in the pipeline, vacancyrate is likely to continue to all.

    CHINA

    CHENGDUTere is strong leasing interest inChengdus market largely due to new andurnished completions o Grade A ocebuildings. Rental rates have increased andvacancies have declined. Despite positiveabsorption this quarter, with more new

    supply (about 21.85 ms) coming on stream, it is expected thatthe vacancy rate will rise and rental rates will decline slightly.

    BEIJINGIncreased tenant demand caused rentsto rise signicantly by 10% comparedto the previous quarter. Tis uptrendis expected to continue, especially withlow supply in core markets through2012. Tere is 15ms o supply in the

    pipeline. O that total, 5.5 ms will be delivered in 2011 and 0.4ms is already pre-leased. Domestic tenants are accounting ora larger share o the absorption and they have been competingwith MNCs or space regardless o higher rents. Te tight marketin CBD area may result in tenants looking or alternatives indowntown submarkets where choices are abundant and rentalsmore avourable.

    REGIONAL

    APACTe Asia Pacic region continuedto grow amid an uncertain global

    environment. At the same time, dueto ast growth coupled with improvedlabour market conditions and risingoil prices, infation has become a main

    concern or many countries across the region. Nevertheless,improved economic conditions have translated to risingoccupancies in many oce markets in the region. Higher rentsare observed, with notable increases in Beijing, Hong Kong andSingapore. Investment activity, however, has eased comparedto the same period last year. Overall, the economic outlookremains positive, albeit expansion will be slower than in 2010.Occupancies and rents this year and next are expected to remain

    high.

    SELECT COUNTRIES

    AUSTRALIA

    BRISBANEVacancy rate is still high at 9.4% andBrisbane struggled with an oversupplyo inventory accumulated over thepast two years. wo natural disasters,a food and a cyclone, also aected theoverall economy. However, two large

    sales closed at the end o 2010 provided a much-needed boost

    to the oce market in Brisbane. Tere are new projects beingannounced and tenants may be seeking opportunities to upgradeto newer acilities thus creating some pick up in the absorption.

    CANBERRACanberra recorded a vacancy rate o13.4%. Tere is continuous supply inthe coming years until till 2013 and thevacancy level is expected to remain high.Tus, some tenants may be lookinginto relocation and upgrading to newer

    premises. Nevertheless, absorption is likely to continue at average

    levels i there are no changes in Government policies; the maincatalyst or absorption perormance in Canberra.

    MELBOURNECompared to the previous quarterwhere there were a couple o largesales or more than AUD$100 millionand many in the AUD$25-AUD$100million range, Melbourne witnessedewer sale transactions this quarter.

    With a wide variety o sectors contributing to the oce market,Melbournes vacancy continued to decline rom 6.7% to 6.3%

    this quarter. Consequently, eective rents remained high and aregradually increasing. O the new construction in the pipeline,almost hal is located in the up and coming Docklands precinct.

    Note: (1) All vacancy and rent changes are quarter-on-quarter basis

    Y--Y cag 12-

    Vacacy+1.2%

    R+3.6% Vacacy

    +3.9%R-3.1%

    Y--Y cag 12-

    Y--Y cag 12-

    Vacacy-17.3%R

    +3.6%

    Y--Y cag 12-

    Vacacy

    +4.8%R0.0%

    Y--Y cag 12-

    Vacacy-6.1%R+17.5%

    Vacacy-3.6%R

    -4.0%

    Y--Y cag 12-

    Vacacy+24.0%

    R+18.0%

    Y--Y cag 12-

    Vacacy-62.5%R

    +31.9%

    Y--Y cag 12-

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    ASIA PACIFIC MARKETBRIEFS

    SHANGHAIenant activity is buoyant in Shanghai.Although a huge amounto new supply was added to the marketthis quarter, vacancy rose only slightly rom6.1% in Q4 2010 to 6.9% this quarter.Average net eective rents have also risen.

    Both domestic and oreign companies have also been actively takingup space, with omson group purchasing one foor in Shanghai WorldFinancial Center and another domestic company buying up two foors.Going orward, occupier demand is set to strengthen urther, withrental rates poised or more growth.

    HONG KONGTe oce market in Hong Kong remainedred-hot; with low vacancy rate and high

    rentals. Tis is largely due to strong demandrom corporate organic growth and newset-ups. Coupled with limited supply atonly 0.7ms over the next three years, the

    rental growth is expected to be around 25-30% this year. Facing atight market, tenants have started looking at other alternatives such asmoving back-oce departments to lower-rent locations and increasingthe seating density. Positive investor interest is also sustained with totalsales transactions risen by 6.5% quarter-on-quarter at over 1,000 deals.

    INDONESIA

    JAKARTA

    Leasing activity in the rst quarter increased,due to rms expanding and the need toupgrade existing premises. On the back oan improved economy and positive outlook,this trend is set to continue. Higher take-upwill help to absorb the new supply o about

    4.1 ms due or delivery in 2011. Rental rates are projected to remainstable.

    INDIA

    AHMEDABADAhmedabad has seen buoyant demand

    or oce space. Rentals are on the riseand positive absorption is expected. Whiletelecom and banking sectors remainedthe main drivers, there are gradually moreenquiries rom other sectors such as I and

    auto ancillary sector. Vacancy level stands at about 8 -9%.

    BANGALORE

    Persistent demand coupled withconservative supply resulted in rentals onthe uptrend or Bangalore. O the 6.5 msadditional supply on stream in 2011, 35%is already pre-committed. With positiveabsorption expected or the balance o the

    year, the vacancy rate is expected to decline.

    CHENNAIRentals remain relatively stable drivenby local demand and lower supply thisquarter. Te upcoming supply would beabout 5.73 ms, with more distribution innon CBD locations. Te lesser supply inthe CBD location may exert pressure on

    rentals. Rental escalation is also expected in non CBD locations dueto perpetuating demand.

    HYDERABADWith better overall economy, there wasincreased demand or space especially romthe I/Ies sector looking at expansionand accommodating headcount growth.Although 2.1 ms was added to the market

    this quarter, majority o the space wasalready pre-committed. With buoyant demand and limited Grade Aspace, landlords and developers have started to revise their rates andit is anticipated that rentals would be on the uptrend.

    KOLKATA

    Te Kolkata oce market saw in general,appreciation in rental values o allsubmarkets except or Rajarhat whichremained stable due to high vacancylevels. Tis quarter saw 0.9 ms o supplyadded. Over 40% was pre-committed and

    the demand came mainly rom the I/Ies sector. Te improvedabsorption will lead to a slight decline in vacancy rates and rentalsare expected to be slightly higher across all submarkets.

    MUMBAIWith uncertainty on the transition romSotware echnology Park o India toSpecial Economic Zone, most developersremained cautious and rerained romincreasing rentals. Nevertheless, demandwas broad-based this quarter, with

    transactions not only rom I/Ies but also Logistics, Healthcare

    and Automobile sectors. Te market will witness a large supply inthe next ew quarters and rentals are expected to remain stable.

    NCR

    Rentals appreciated across most othe submarkets. Tis quarter saw newcompletions o 1.05 ms. About 4.7 msis expected in the next two quarters andvacancy rates might be marginally higher.In spite o the high level o vacancy and

    massive under development projects in the pipeline, Gurgaon

    continues to record rental appreciation as evident or the largestshare o demand during the quarter.

    Vacacy

    0.0%R

    +18.3%

    Y--Y cag 12-

    Vacacy-14.6%

    R+3.3%

    Y--Y cag 12-

    Vacacy+12.5%R+6.1%

    Y--Y cag 12-

    Vacacy

    -11.4%R+5.3%

    Y--Y cag 12-

    Vacacy+25.0%

    R0.0%

    Y--Y cag 12-

    Vacacy+3.0%R+10.2%

    Y--Y cag 12-

    Vacacy-42.3%

    R-2.1%

    Y--Y cag 12-

    Vacacy+5.3%

    R+12.3%

    Y--Y cag 12-

    Y--Y cag 12-

    Vacacy-28.1%

    R+19.2%

    Vacacy

    -19.6%

    R+9.1%

    Y--Y cag 12-

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    ASIA PACIFIC MARKETBRIEFS

    SOUTH KOREA

    SEOULOverall vacancy rate in Seoul rose to 7.3%rom 6.7% last quarter

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