Asia pacific office market overview 3Q 2012

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Colliers International Research has just released the Asia Pac Office Market Overview 3Q 2012. The report provides real estate office market trends in Asia Pac region. The office sector in the Asia Pacific region continued to be challenging in 3Q 2012 with a slowing economic growth and the unresolved European debt crisis; market participants are holding positive views on market outlook but confidence is not as strong as the previous quarter. Looking ahead, the prospective trend of office rents in most cities will remain positive in the next 12 months, despite a substantial supply projected to enter the market in individual cities.

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<ul><li>1.Asia PacificOffice Market Overview3Q 2012Accelerating success.</li></ul><p>2. table of contentsasia pacific office market overview | 3q 2012Regional Overview 3Greater China 4-6Beijing, China.....................................................................................................................................4Chengdu, China..................................................................................................................................4Guangzhou, China..............................................................................................................................5Shanghai, China.................................................................................................................................5Hong Kong SAR, China......................................................................................................................6Taipei, Taiwan....................................................................................................................................6North Asia7Seoul, South Korea............................................................................................................................ 7Tokyo, Japan...................................................................................................................................... 7Southeast Asia 8-11Jakarta, Indonesia..............................................................................................................................8Kuala Lumpur, Malaysia.....................................................................................................................8Karachi, Pakistan...............................................................................................................................9Manila, Philippines.............................................................................................................................9Singapore......................................................................................................................................... 10Bangkok, Thailand............................................................................................................................ 10Hanoi, Vietnam.................................................................................................................................. 11Ho Chi Minh City, Vietnam................................................................................................................ 11India 12-13Bengaluru (Bangalore).................................................................................................................... 12Chennai............................................................................................................................................ 12Mumbai............................................................................................................................................. 13New Delhi......................................................................................................................................... 13Australasia14-17Adelaide, Australia........................................................................................................................... 14Brisbane, Australia.......................................................................................................................... 14Canberra, Australia.......................................................................................................................... 15Melbourne, Australia........................................................................................................................ 15Perth, Australia................................................................................................................................ 16Sydney, Australia............................................................................................................................. 16Auckland, New Zealand....................................................................................................................17Wellington, New Zealand..................................................................................................................17Prime Office Supply, Rents and Net Take-up 18-19Trends &amp; Forecasts20-21Definition &amp; Terminology22-23Contacts24-25 3. regional overviewEconomic OverviewThe office sector in the Asia Pacific region continued to be challenging in 3Q 2012 witha slowing economic growth and the unresolved European debt crisis. Although overallmarket sentiment was weakening, it remained positive in 3Q 2012. Following two roundsof quantitative easing (QE1 and QE2), the US Federal Reserve announced a third round(QE3) on 13 September 2012. With the US Federal Reserve instigating the third round ofbond purchases, commodity prices have been pushed up and this has spilled over to realestate costs and pricing.Based on the findings of Colliers Asia Office Leasing Survey for 3Q 2012, market participantsare holding positive views on market outlook but confidence is not as strong as the previousquarter.Leasing MarketThe overall level of new office leasing inquiries decreased in 3Q 2012. However vacancyrates and rentals remained strong throughout the quarter due to the limited supply of officespace. Firms in the IT/communication and Finance industries continued to be the majorsource of leasing demand in 3Q 2012.Most cities in Australia and China continued to exhibit positive rental growth. The averagerent increased 2.3% QoQ during 3Q 2012. Individual markets like Guangzhou, Hanoi, HoChi Minh City, New Delhi and Singapore on the other hand, are expected to face growingdownward pressure for the coming months despite the solid demand for Grade A officespace. The Colliers Asia Office leasing Survey for 3Q 2012 found that most tenants areseeking expansion however the pace will be less aggressive.Sales MarketOn the sales front, average transacted office prices edged up by 2.1% QoQ. The office marketbecame more active compared to the first half of 2012. This is mainly due to high qualityprojects receiving encouraging sales performance in the last quarter, especially in Auckland,Sydney, Perth and Brisbane which all saw an increase in sales activities. Institutions andforeign investors remained active to source quality office developments in prime locations.Market OutlookMarket sentiment remained positive in 3Q 2012 and market players are holding an optimisticview on the market outlook. Therefore looking ahead, the prospective trend of office rents inmost cities will remain positive in the next 12 months, despite a substantial supply projectedto enter the market in individual cities.With the expectation of the low interest rate trend to continue and the Chinese governmentto continue stimulate growth, investment in office real estate in the region is expected toremain strong.Colliers International |p. 3 4. asia pacific office market overview | 3Q 2012 CHINA BEIJING OFFICE SUPPLY, TAKE-UP &amp;Beijing VACANCY RATE Supply remained tight in Beijings Grade A office property market during 3Q12, with the 1.00 25.0%total stock resting at 5.17 million sq m, due to a lack of new completions for the third 0.80 20.0%consecutive quarter. Overall, demand remained strong throughout the quarter. However, due to the limited Vacancy Rate15.0%Million sq m 0.60 0.40 10.0%letting space available on the market, leasing transaction volume continued to decrease. 0.20 5.0% Net absorption of the Grade A office property market in 3Q12 totalled 1,888 sq m, down 85.6% QoQ and the overall average vacancy rate edged down by 0.04 percentage points 0.00 0.0%2009 2010 20112012 F 2013 Fto 3.51%.SupplyTake-up Vacancy Rate Rentals continued with its upward trend during this quarter, with the average net effective rent growing by 7.47% QoQ to RMB325.1 per sq m per month. The expansion of rental growth, was mostly a result of the epidemic of reduced or even withdrawal of rent free BEIJING OFFICE CAPITAL AND RENTAL VALUESperiods provided by most landlords. 800.00 80,000 Office investment market activity increased in 3Q 2012. A domestic B2B enterprise 700.00 70,000 600.00 60,000 acquired a 57,000 sq m Grade A office building in the Wangjing area for owner-occupancy. 500.00 50,000 Moreover, a private equity investor acquired four blocks of Grade A office buildings or Capital ValuesRentals 400.00 40,000 a total of 26,000 sq m for investment purpose. 300.00 30,000 200.00 20,000 major transactions 100.00 10,000 0.00 0Building Lease (L) / Tenant / PurchaserArea 1Q 2009 2Q 2009 3Q 2009 4Q 20091Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 20113Q 2013 F2Q 20113Q 20114Q 20111Q 2012 2Q 2012 3Q 20124Q 2012 F1Q 2013 F2Q 2013 F4Q 2013 F1Q 2014 F2Q 2014 F Sale (S) (sq ft) Parkview Green LRoche71,000 Rentals (RMB / sq m / Month) Capital Values (RMB / sq m) Gateway PlazaL Nanyang Commercial Bank NCB 48,400 Oriental Plaza LCheung Kong Graduate School32,300of Business SK Tower L Black &amp; Veatch16,100 Tengda buildingL China State Construction16,100 CHENGDU OFFICE SUPPLY, TAKE-UP &amp;chengdu VACANCY RATE Raffles City, the Grade A office building comprising 74,024 sq m, was introduced in 0.50 50.0% September, thus boosting the total stock of Grade A office space in Chengdu to 718,922 sq m. 0.40 40.0% The average rent decreased 0.38% QoQ to RMB137.28 per sq m per month. The overall Vacancy Rate 0.30 30.0% vacancy rate edged 3.75% QoQ, to 24.42% in 3Q 2012.Million sq m 0.20 20.0% The average vacancy rate of the Grade A office buildings remained steady, signifying 0.10 10.0% the solid demand for Grade A office space. 0.00 0.0%2009 201020112012 F 2013 F In view of the current supply cycle and the continued slowdown of economic environment,SupplyTake-up Vacancy Rate the local office market is expected to face growing downward pressure over the coming months. CHENGDU OFFICE CAPITAL AND RENTAL VALUESmajor transactions 225.00 22,500 Building Lease (L) /Tenant / Purchaser Area 200.00 20,000 Sale (S) (sq ft) 175.00 17,500 Western TowerL Ganzi Shangshan Water 12,900 150.00 15,000 Capital Values 125.00 12,500 Aerospace Technology Plaza LStarbucks Coffee 10,800Rentals 100.00 10,00075.00 7,500 Square One L Kasikorn Bank of Thailand7,50050.00 5,000Square One L Jintai International Investment9,70025.00 2,500 0.00 0China Overseas International L Chengdu Runfu Properties12,200 1Q 2009 2Q 2009 3Q 2009 4Q 20091Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 20112Q 20113Q 20114Q 20111Q 2012 2Q 2012 3Q 20124Q 2012 F1Q 2013 F2Q 2013 F3Q 2013 F4Q 2013 F1Q 2014 F2Q 2014 F Centre China Overseas International L Yusen Agriculture9,900 Rentals (RMB / sq m / Month) Capital Values (RMB / sq m) Centrep. 4| Colliers International 5. asia pacific office market overview | 3Q 2012CHINA GUANGZHOU OFFICE SUPPLY, TAKE-UP &amp; guangzhou VACANCY RATE Evergrande Center and Poly V Plaza in Pearl River New City and Lavendome Hui in2.00 40.0%Pazhou, were launched in 3Q 2012, providing a total of 266,627 sq m new stock. Thetotal stock of Grade A office grew to 2.80 million sq m. The overall vacancy rate increased 1.5030.0%1.6 percentage points to 22.2% in 3Q 2012.Vacancy RateMillion sq m 1.0020.0% The average rental recorded RMB157.6 per sq m per month, down 2.3% Q-o-Q, due to 0.5010.0%the weak demand and large supply. Enterprises from IT/communication, pharmaceuticalsand professional services were the major source of leasing demand in 3Q 2012.0.00 0.0%20092010 2011 2012 F 2013 F SupplyTake-up Vacancy Rate High quality projects such as R&amp;F Yingkai Plaza and Bravo Plaza received encouragingsales performance. The achievable price of R&amp;F Yingkai Plaza reached about RMB50,000per sq m in 3Q 2012. The average sales price of Guangzhou Grade A office further edgedup by 1.61% QoQ to RMB32,586 per sq m. GUANGZHOU OFFICE CAPITAL AND RENTAL VALUES 36,000 180.00major transactions 160.0032,000 28,000 140.00BuildingLease (L) / Tenant / PurchaserArea 120.0024,000 Sale (S) (sq ft)Capital Values 100.0020,000Rentals 80.00 16,000 International Financial L Alcatel Lucent16,000 60.00 12,000 40.00 8,000Center (IFC) 20.00 4,000China International CenterL Guangzhou City Telecom23,500 00.00Centra PlazaLQianhai Life Insurance 13,600 1Q 2009 2Q 2009 3Q 2009 4Q 20091Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 20112Q 20113Q 20114Q 20111Q 2012 2Q 2012 3Q 20124Q 2012 F1Q 2013 F2Q 2013 F3Q 2013 F4Q 2013 F1Q 2014 F2Q 2014 FLeatop PlazaL Lukadilong Clothes 5,400Rentals (RMB / sq m / Month) Capital Values (RMB / sq m)R&amp;F Yingkai Plaza S ANGLEE51,700 SHANGHAI OFFICE SUPPLY, TAKE-UP &amp; shanghai VACANCY RATE Shanghai remained the worlds sixth-most competitive financial center in 2012, according 1.2020.0%to Xinhua-Dow Jones International Financial Centers Development Index released inAugust 2012. 0.9015.0% Five new projects were launched in 3Q 2012, adding a total of approximately 330,256Vacancy RateMillion sq m 0.6010.0%sq m new supply to Shanghais Grade A office market. 0.305.0% Average Grade A office rental rates increased 1.2% QoQ to RMB 8.7 per square meter0.002009201020112012 F 2013 F 0.0% per day. SupplyTake-up Vacancy Rate In 3Q 2012, the overall vacancy rate increased from the previous quarters 6.7 to 9.5%.Among the six major central business districts, Jingan recorded the lowest vacancyrates, at 5.3%. Zhuyuan and Changning posted the highest vacancy rates, at 14.9% and SHANGHAI OFFICE CAPITAL AND RENTAL VALUES14.2% respectively.18.0072,00015.0060,000 major transactions12.0048,000BuildingLease (L) / Tenant / PurchaserAreaCapital ValuesRentals 9.0036,000 Sale (S) (sq ft) 6.0024,000International Commerce CenterLAdidas 187,300 3.0012,000Kerry Parkside L Danone Group 76,4000.00 0LAvenue L3M72,000 1Q 2009 2Q 2009 3Q 2009 4Q 20091Q 20103Q 2013 F 2Q 2010 3Q 2010 4Q 2010 1Q 20112Q 20113Q 20114Q 20111Q 2012 2Q 2012 3Q 20124Q 2012 F1Q 2013 F2Q 2013 F4Q 2013 F1Q 2014 F2Q 2014 FJin Mao TowerLMWE China Law Office22,900Rentals (RMB / sq m / Day) Capital Values (RMB / sq m)CITIC Square LNike China16,800 Colliers International |p. 5 6. asia pacific office market overview | 3Q 2012 h o ng ko ngHONG KONG OFFICE SUPPLY, TAKE-UP &amp; hong kongVACANCY RATE In view of uncertain economic outlook, individual large tenants downsized their premises4.50 9.0% but still prefer to stay in the same district. The overall net take up fell 80% QoQ to 111,0004.00 8.0%3.50 7.0%sq ft in 3Q 2012, which reflects the slowdown in leasing activity especially in Central/3.00 6.0% Admiralty.Vacancy RateMillion sq ft2.50 5.0%2.00 4.0% The overall Grade A office rent rebounded in 3Q 2012 after falling for three consecutive1.50 3.0%1.00 2.0% months, rising a solid 1.5% QoQ. Meanwhile, the average Grade A office rent in Cetral/0.50 1.0%Admiralty showed its first quarterly gain since 3Q 2011, rising 0.8% QoQ in 3Q 2012 to0.00 0.0% 2009 201020112012 F2013 FHK$ 98.8 per sq ft.SupplyTake-upVacancy Rate The outlook for the Hong Kong Grade A office market has been brighten up due to thepositive...</p>

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