Asia Pacific Office Market - Colliers ? Asia Pacific Office Market Asia Pacific ... +82 2 6740 2001

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Economic Overview Global growth remained modest during 2Q 2015 due to major markets divergent performances. Squarely focused on domestic developments, the US economy looks to be on firmer ground while the Eurozone seems to be rallying by leveraging lower energy costs and adhering to quantitative easing measures. That said, a stumble in Germanys growth and the ongoing Greek Grexit crisis highlights the turnarounds fragility. Here in Asia, Chinas central government has cut its key lending rate for the fourth time in seven months in the face of an economic slowdown while the Japanese economy has experienced a modest recovery following a slight rebound in consumption. Leasing Market The business outlook amongst occupiers in Asias main markets currently remains very cautious due to the economic outlook and weakening corporate performance. As a result, cost control is continuing to influence corporate decision-making with many global occupiers avoiding ambitious expansion plans and emphasizing cost efficiencies and workplace enhancements. Of the key business sectors, IT and healthcare were the most active in terms of tenant groups seeking space to accommodate increasing headcounts and new service lines. The banking and finance sectors meanwhile are subject to conflicting forces. While large multi-national banks are implementing significant cost reduction strategies, their counterparts in China are actively expanding. Overall, average prime office rents in Asia experienced a 1.2% quarter-on-quarter (QoQ) increase in 2Q 2015. With rental growth of 10.2% QoQ, Jakarta had the highest cost increase within the region due in part to the growing IT industry. At the other end of the scale, new supply of office space in Chengdu have resulted in office rents showing a QoQ decline of 3.4%. Sales Market Activity across Asia has started to pick up with most real estate transactions concentrated on key markets such as Shanghai and Sydney due to lower borrowing costs and weakening currencies. Shanghai has attracted a couple of major office deals during 2Q 2015 and saw office real estate investment volume for the quarter more than triple to US$1.1 billion. Increasingly active in Chinas first-tier cites such as Shanghai, foreign Real Estate Investment Trusts (REITs) have added stability to the market by becoming long-term players. A notable transaction was Mapletrees Greater China Trusts RMB1.88 billion (US$303 million) acquisition of Sandhill Plaza in Pudong, Shanghai. Elsewhere, Sydney is dominating Australias investment volume and accounted for around 50% of all volume sourced largely via groups from the US and Hong Kong. Market Outlook The second half of 2015 is expected to show positive economic growth driven by the US economys robust recovery, lower oil prices, sustained quantitative easing across the Eurozone and Chinas 6-7% economic growth. Dampening this growth will be the risk of geopolitical turbulence. Hong Kong looks likely to witness modest rental growth due to limited new office space supply while major mainland markets such as Shanghai, Guangzhou and Chengdu may experience downward pressures in rents following the addition of substantial office space throughout the rest of this year. On the sales front, yields are likely to compress further during the remainder of 2015. This is particularly true in key Asia Pacific markets such as Shanghai, Tokyo and Sydney. Asia Pacific Office Market Asia Pacific | Office 2Q 2015 http://www.linkedin.com/company/colliers-international?trk=hb_tab_compy_id_5227https://www.facebook.com/colliersglobal?rf=105632526137251https://twitter.com/ColliersIntlOur Presence in Asia Pacific 1 Mumbai Bengaluru Karachi Kuala Lumpur Singapore Ho Chi Minh City Yangon Chennai Wellington Auckland Sydney Brisbane Canberra Perth Adelaide Melbourne Almaty Jakarta Delhi NCR Manila Taipei Tokyo Beijing Hong Kong Shanghai Chengdu Hanoi Bangkok Note : Rents, vacancy rate forecasts and new supply forecasts are referring to prime quality office premises in CBD except India. In India, rents are referring to prime quality office premises in CBD while new supply and vacancy rate forecasts are referring to the prime quality space in the whole city. Supply Forecast 2015 (Million sq ft) Legend : Supply Forecast 2016 (Million sq ft) Prime Office Rents in CBD, 2Q 2015 (US$ / sq ft / annum) Forecast Direction 2015 Vacancy Rate Forecast 2015 Forecast Direction 2015 Forecast Direction 2016 Forecast Direction 2016 Astana Guang zhou Shenzhen $52.5 6.9% 1.62 1.51 $43.1 10.0% 0.46 2.06 $66.5 2.0% 0.00 0.32 $33.5 20.0% 10.25 5.15 $14.1 43.0% 0.63 0.86 $33.0 15.0% 8.00 5.50 $10.3 13.0% 12.98 7.08 $93.0 12.3% 0.26 0.59 $19.6 52.0% 10.35 4.31 $35.1 26.0% 0.54 0.43 $9.1 19.0% 3.47 2.90 $22.2 12.1% 2.33 0.19 $84.1 4.6% 0.53 3.58 $41.4 19.4% 1.36 0.33 $41.4 10.3% 6.49 6.10 $57.4 6.8% 4.67 3.64 $53.9 11.9% 7.99 6.59 $82.2 6.0% 5.02 6.60 $26.9 17.0% 1.82 0.36 $120.0 4.8% 1.33 1.04 $29.7 5.0% 0.41 0.52 $25.7 4.3% 0.00 0.00 $44.5 9.0% 1.00 1.50 $43.9 13.3% 0.66 1.41 $27.3 12.5% 0.21 0.03 $40.2 7.7% 1.37 1.04 $30.3 9.0% 0.00 0.00 $22.5 2.0% 0.00 0.00 $25.8 0.9% 0.30 0.52 $28.2 17.8% 4.97 7.24 $39.2 12.9% 9.70 26.56 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 Mark Lampard +65 6531 8601 mark.lampard@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 6740 2001 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 Kuala Lumpur Mark Lampard +65 6223 2323 mark.lampard@colliers.com *Based in Singapore 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 Huan Le +84 4 3941 3277 huan.le@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/ColliersIntlAsia Pacific Office Markets_New 2015-05-07Inside Page_Map 2Q2015 - 2-Yr Forecast