Skip Ribbon Commands
Skip to main content

News Releases


Mixed Rental Growth Outlook for Major Asia Pacific Office Markets

Jones Lang LaSalle Fourth Quarter Asia Pacific Office Rental Market Update

Preliminary data from Jones Lang LaSalle shows that grade Aoffice rents will fall in Hong Kong and Singapore in the fourth quarter (Q4) of 2011 and will grow more slowly elsewhere in Asia Pacific.

Jones Lang LaSalle’s market leasing experts predict that Hong Kong and Singapore are entering a rental level correction phase, with anticipated percentage falls in average grade A rents in the final quarter of the yearof five to six percent in Hong Kong and around four percent in Singapore (to US$1,643 per sq. m and US$786 per sq. m per annum respectively).

Some office markets are expected to experience continued rental increases in Q4, albeit at a slower rate than previously, including Beijing (circa five percent to US$814 per sq. m per annum) and Sydney (four to five percent to US$470 per sq. m per annum). In the middle ground Jones Lang LaSalle expects to see a number of markets where rents will remain largely static quarter on quarter, including Melbourne, Mumbai, Delhi, Seoul and Tokyo.

Jeremy Sheldon, Managing Director, Markets Asia Pacific at Jones Lang LaSalle said: “Overall rental growth is expected to soften this quarter. The stand out trend across many key markets is a softening of demand from occupiers, as firms are applying caution in light of economic difficulties in the United States and the Euro-zone. We expect corporates in Asia Pacific to remain cautious for the remainder of this year and into next as they wait to see how the region will be impacted by what is happening elsewhere.  We do expect to see continuing demand in certain markets where there is a strong domestic focus – China, Japan and India and emerging markets in South East Asia – however the more transparent markets are where occupiers are far more cautious.”

• Hong Kong: there is clear delineation between Central and other sub markets. Leasing activity in the banking and finance sector has slowed considerably and we do expect to see some firms in this sector looking to downsize in 2012, though not to the same degree as in 2008 and 2009. We are seeing some very moderate expansion amongst law firms and some other businesses that are choosing to relocate to lower cost buildings. We do not expect to see rental growth in Q4 2011 as a result of low vacancy rates and the decentralisation trend.

• Singapore: we are witnessing a weakening in net new demand, and secondary supply that is being returned to the market is being absorbed quite slowly. Although we are seeing some surplus spacebecome available from major financial institutions, we have not seen any major headcount reductions in any of the key business sectors.

• China: in Shanghai landlords continue to have higher rental expectations in light of the low vacancy rate and limited new supply. Tenants, particularly multi-national corporations, have recently been more cost conscious due to growing concerns about a slowdown in China's economy. In Beijing rents have continued to rise at a slower pace than their rapid increase over the past 12 plus months.  Leasing demand remains strong on the back of expanding space requirements from existing tenants and more new set-ups, though some landlords are being more flexible with leasing terms in specific cases.

• Australia: in Sydney there is continued rental growth driven by tightening premium supply coupled with activity by larger users upgrading and/or relocating to the CBD. Decision making is becoming more protracted but relocation decisions are still being made by tenants with definitive needs. There is sustained demand in the 4,000 to 10,000 sq.m and sub500 sq.m range, but we are also seeing a slight increase in sub-lease space.  In Melbourne there is cautious demand and tenants are exploring the suitability of using alternative workplace strategies to reduce their occupied footprint.Development activity is continuing, but there is very limited speculative supply.

• Japan: Landlords in central Tokyo have seen good demand for new developments in the aftermath of the earthquake and given low vacancy rates, rents are unlikely to fall further. However, the market is not expected to support any rental increases over the next one to two quarters given the impact on demand of the strong yen, uncertainty in the Euro-zone economies and a possible global economic slowdown.

• Korea: There is healthy demand from domestic firms but multi-national corporations are becoming noticeably more cautious. Many recently completed buildings in Seoul have high vacancy rates, which is putting pressure on rents in the Central Business District. Any economic downturn is likely to exacerbate the current over-supply situation and delay rental recovery (especially in the CBD where most foreign financial institutions are located).

• India:  In both Mumbai and Delhi there is sluggish new demand, and rents are not likely to increase over the quarter due to ample supply. In Mumbai some tenants are deferring decisions regarding relocation to the Secondary Business District as a result of perceived uncertain economic conditions. 

– ends –