Asia Pacific Office Market Overview 1Q 2012

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<p>AsiA PAcific Office Market Overview1Q 2012</p> <p>Accelerating success.</p> <p>table Of cOntentsAsiA PAcific office mArket overview | 1Q 2012</p> <p>regional overview Greater china</p> <p>3 4-6</p> <p>Beijing, China ....................................................................................................................................4 Chengdu, China .................................................................................................................................4 Guangzhou, China .............................................................................................................................5 Shanghai, China ................................................................................................................................5 Hong Kong SAR, China .....................................................................................................................6 Taipei, Taiwan ...................................................................................................................................6</p> <p>North Asia</p> <p>7</p> <p>Seoul, South Korea ........................................................................................................................... 7 Tokyo, Japan ..................................................................................................................................... 7</p> <p>southeast Asia</p> <p>8-11</p> <p>Jakarta, Indonesia.............................................................................................................................8 Kuala Lumpur, Malaysia ....................................................................................................................8 Karachi, Pakistan...............................................................................................................................9 Manila, Philippines ............................................................................................................................9 Singapore ........................................................................................................................................ 10 Bangkok, Thailand ........................................................................................................................... 10 Hanoi, Vietnam ................................................................................................................................. 11 Ho Chi Minh City, Vietnam ............................................................................................................... 11</p> <p>india</p> <p>12-13</p> <p>Bengaluru (Bangalore) ................................................................................................................... 12 Chennai ........................................................................................................................................... 12 Mumbai ............................................................................................................................................ 13 New Delhi ........................................................................................................................................ 13</p> <p>Australasia</p> <p>14-17</p> <p>Adelaide, Australia .......................................................................................................................... 14 Brisbane, Australia ......................................................................................................................... 14 Canberra, Australia ......................................................................................................................... 15 Melbourne, Australia ....................................................................................................................... 15 Perth, Australia ............................................................................................................................... 16 Sydney, Australia ............................................................................................................................ 16 Auckland, New Zealand ...................................................................................................................17 Wellington, New Zealand .................................................................................................................17</p> <p>Prime office supply and rentals trends &amp; forecasts Definition &amp; terminology contacts</p> <p>18-19 20-21 22-23 24-25</p> <p>regiOnal OverviewecoNomic overviewDespite the continued challenges in the external environment, a number of macro-variables in the region, including capital flows and domestic consumption, suggested that the economy showed signs of improvements in 1Q 2012 compared to the preceding six months. In addition, the prevailing monetary policies adopted by a number of central banks remained accommodative. For example, the Reserve Bank of India has cut its repo rate by 50 basis points to 8.00% in mid-April 2012. Meanwhile, China lowered its banks reserve requirement ratio again in 1Q 2012 in an attempt to create a soft landing for its economy.</p> <p>leAsiNG mArketOn the leasing front of the office market in the region, a number of corporate occupiers continued to proceed with their relocation and consolidation plans, particularly in individual centres where brand-new developments are available for occupation. Similar to the last two quarters, tenants engaging in IT, technology and electronics were found to be the most active in looking for office space during 1Q 2012. Office rents in most centres were either stable or increased mildly during 1Q 2012 although Hong Kong and Singapore showed 4 - 5% QoQ downward adjustments due to softening leasing demand attributed primarily to the banking and finance industries. China continued to see a steady growth of 1 - 2% QoQ. Beijing stood out the most with rents increasing by 6% QoQ because of the continued tight supply situation. Rents in Australasia remained solid, thanks to the strong investment expenditure by the Government in the resources sector. Overall, the average office rent grew slightly by 0.2% QoQ in 1Q 2012.</p> <p>sAles mArketOn the sales front, the average transacted office prices increased further by 1.8% QoQ, signifying continuous lowering of the overall investment yields during 1Q 2012. In China, local companies with strong balance sheets continued to be the key players, snapping up quality office developments for either owner occupation or long-term investment. In Australasia, there was sustained buying activity attributed to real estate funds in 1Q 2012. For example, Dexus Wholesale Property Fund (DWPF) acquired the Riverside Plaza office property at 452 Flinders Street, Melbourne for a net purchase price of US$186 million.</p> <p>mArket outlookGiven the recent upgrade of the global economic growth expectations for 2012 and 2013 by the International Monetary Fund, leasing demand for offices in the region continues to look positive. Notwithstanding the potential for negative shock arising from the lingering European debt issues, it is our view that investment appetite for office real estate in the region will remain strong. Investors will certainly focus more on office real estate amid the tightening measures implemented by various governments on individual residential markets. However, the availability of credit for office real estate financing remains one of the key hurdles for buyers who require a certain level of gearing in order to achieve their targets of return on equity.</p> <p>colliers iNterNAtioNAl |</p> <p>P. 3</p> <p>asia pacific office market overview | 1Q 2012</p> <p>cHiNABEIJING OFFICE SUPPLY, TAKE-UP &amp; VACANCY RATE1.00 0.80 Million sq m 0.60 0.40 0.20 0.00 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Vacancy Rate</p> <p>Beijing There was no new supply in Beijings Grade A office property market in 1Q 2012. However, the two projects located in the CBD and Wangjing submarkets were upgraded. This led to a small adjustment in the total Grade A office stock, which measured 5.17 million sq m as of the end of 1Q 2012. The leasing market in 1Q 2012 turned out to be somewhat lacklustre, attributing to seasonality factors and the current high occupational cost. However, the overall vacancy rate continued to decline by 1.0 percentage point QoQ to 3.8% due to the absence of new supply. Significant transactions included the lease of 9,000 sq m in One Indigo to Daimler and the commitment of China Jianyin Investment Technology to take it up 2,429 sq m in China Overseas International Centre. Only one en bloc sales transaction was booked in 1Q 2012 a domestic buyer acquired 60,000 sq m at China Electronics Plaza Tower B for a total consideration of approximately RMB1.6 billion. Due to the limited quality of new supply coming in the next two years and the sustained positive demand fundamental; effective rentals increased 5.8% QoQ to RMB290.28 per sq m per month in 1Q 2012.mAjor trANsActioNs BuilDiNG China Electronics Plaza Tower B Zhongguancun Building One Indigo IFC China Overseas International Centre leAse (l) / sAle (s) S L L L L teNANt / PurcHAser A domestic buyer Panasonic Daimler Yida Real Estate China Jianyin Investment Technology AreA (sq ft) 645,800 26,900 96,900 16,100 26,100</p> <p>2009</p> <p>2010Supply</p> <p>2011Take-up</p> <p>2012 F</p> <p>2013 F</p> <p>Vacancy Rate</p> <p>BEIJING OFFICE CAPITAL AND RENTAL VALUES700.00 600.00 500.00 Rentals 400.00 300.00 200.00 100.00 0.00 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Capital Values</p> <p>1Q 2009 2Q 2009 3Q 2009 4Q 2009 1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 2012 2Q 2012 F 3Q 2012 F 4Q 2012 F 1Q 2013 F 2Q 2013 F 3Q 2013 F 4Q 2013 FRentals (RMB / sq m / Month) Capital Values (RMB / sq m)</p> <p>CHENGDU OFFICE SUPPLY, TAKE-UP &amp; VACANCY RATE0.50 0.40 0.30 0.20 0.10 0.00 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Vacancy Rate</p> <p>chengdu The general performance of the old office buildings was flat, while the new projects maintained strong activity and active transactions in 1Q 2012. The average rent of the Grade A office market grew 0.73% QoQ to RMB142.86 per sq m per month in 1Q 2012. Vacancy rates fell slightly to 15.51%. A total of 27,000 sq m at Square One, a brand new quality office in the prime location, was launched for lease in 1Q 2012. With positive responses from prospective tenants, a total of 16% of the promotional areas have been committed. Thanks to the typical high season, there was a total of 29,350 sq m of office space taken up in 1Q 2012, representing an increase of 40.81% compared with 4Q 2011. However, in anticipation of the prevailing uncertainty on the global economic recovery, increasing downward pressure on the market is expected during the coming months in 2012.</p> <p>Million sq m</p> <p>2009</p> <p>2010Supply</p> <p>2011Take-up</p> <p>2012 F</p> <p>2013 F</p> <p>Vacancy Rate</p> <p>CHENGDU OFFICE CAPITAL AND RENTAL VALUES225.00 200.00 175.00 150.00 Rentals 125.00 100.00 75.00 50.00 25.00 0.00 1Q 2009 2Q 2009 3Q 2009 4Q 2009 1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 2012 2Q 2012 F 3Q 2012 F 4Q 2012 F 1Q 2013 F 2Q 2013 F 3Q 2013 F 4Q 2013 F 22,500 20,000 17,500 Capital Values 15,000 12,500 10,000 7,500 5,000 2,500 0</p> <p>mAjor trANsActioNs BuilDiNG Shangri-la Centre Yanlord Landmark Yanlord Landmark Yanlord Landmark Aerospace Technology Plaza leAse (l) / sAle (s) L L L L L teNANt / PurcHAser Nissan Evonik Du Pont Bayer OCBC Bank AreA (sq ft) 9,700 4,300 3,200 11,800 24,800</p> <p>Rentals (RMB / sq m / Month)</p> <p>Capital Values (RMB / sq m)</p> <p>P. 4</p> <p>| colliers iNterNAtioNAl</p> <p>asia pacific office market overview | 1Q 2012</p> <p>cHiNAGUANGZHOU OFFICE SUPPLY, TAKE-UP &amp; VACANCY RATE2.00 40.0%</p> <p>guangzhou Leatop Plaza and G.T. Land (Tower A) in Pearl River New City were completed in 1Q 2012, adding 184,000 sq m of new office space. The total Grade A office stock reached 2.39 million sq m. Due to the completion of new stock, the overall vacancy rate rose by 1% QoQ to 20.4% in this quarter. With stable demand for offices, the average office rental increased 1.9% QoQ to RMB161.8 per sq m per month. In Tianhe, the average rental rate edged up further to RMB172.0 per sq m per month during 1Q 2012. One of the major transactions was the lease of 2,211 sq m at G.T. Land (Tower A) to Focus Media. Two Grade A office projects in Pearl River New City - R&amp;F Yingkai Plaza and Grand International Plaza were launched for sale in 1Q 2012. Asking prices in the range between RMB35,000 to RMB40,000 per sq m were new highs for new offices in the city. Overall, the average sale prices increased 2.6% QoQ to RMB31,284 per sq m in 1Q 2012.36,000 32,000 28,000 Capital Values 24,000 20,000 16,000 12,000 8,000 4,000 0</p> <p>1.50 Million sq m</p> <p>30.0% Vacancy Rate</p> <p>1.00</p> <p>20.0%</p> <p>0.50</p> <p>10.0%</p> <p>0.00</p> <p>2009</p> <p>2010Supply</p> <p>2011Take-up</p> <p>2012 F</p> <p>2013 F</p> <p>0.0%</p> <p>Vacancy Rate</p> <p>GUANGZHOU OFFICE CAPITAL AND RENTAL VALUES180.00 160.00 140.00 120.00 Rentals 100.00 80.00 60.00 40.00 20.00 1Q 2009 2Q 2009 3Q 2009 4Q 2009 1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 2012 2Q 2012 F 3Q 2012 F 4Q 2012 F 1Q 2013 F 2Q 2013 F 3Q 2013 F 4Q 2013 F 0.00</p> <p> Looking ahead, there will be another 691,401 sq m of new space coming on line in the next couple of quarters of 2012. The majority of the new supply will be located in the Tianhe district; particularly in the Pearl River New City. Due to the completion of new stock, the vacancy rate will see upward pressure in the near to medium term.mAjor trANsActioNs BuilDiNG G.T.Land Phase I-A G.T.Land Phase I-A R&amp;F Center Poly Center Guangzhou IFC Onelink Hui leAse (l) / sAle (s) L L L L L L teNANt / PurcHAser Regus Consultancy (Guangzhou) Focus Media Bao Steel Group Huaqiang Guarantee Co.Ltd Investment Company Capital Group Finance (Asia) Co.Ltd AreA (sq ft) 23,800 31,000 12,900 12,600 8,600 5,400</p> <p>Rentals (RMB / sq m / Month)</p> <p>Capital Values (RMB / sq m)</p> <p>SHANGHAI OFFICE SUPPLY, TAKE-UP &amp; VACANCY RATE1.20 20.0%</p> <p>shanghai With stable demand for quality Grade A office space, average rentals edged up slightly from RMB8.2 to 8.3 per square metre per day during 1Q 2012. In particular, new projects including Lavenue in Hong Qiao and Jing An Kerry Centre Tower 3 saw significant pre-leasing activity, with over 50% of these buildings now under offer. Given the solid demand carried forward from 2011 and the large space under offer in a number of new buildings, it has become critical for occupiers to seriously plan ahead for their occupational needs over the medium to long term. It is our projection that Grade A rentals will remain positive in 2012 as demonstrated by the high pre-commitment rate of the new developments.mAjor trANsActioNs BuilDiNG Metro Tower Hong Kong New World Tower Dawning Center Jingan Kerry Center Tower 2 Shanghai Center leAse (l) / sAle (s) L L L L L teNANt / PurcHAser Cummins Invista Chrysler Michael Kors Amcham AreA (sq ft) 26,900 59,200 40,900 10,800 12,900</p> <p>0.90 Million sq m</p> <p>15.0% Vacancy Rate Capit...</p>