Commercial & Industrial Property News Update

Asia Pacific - Office Market To Face Further Downward Pressure

October 18, 2012

With a decline in prime office rents in Hong Kong and Singapore over the third quarter, the regional market should brace for further downward pressure, said DTZ.

The Asia Pacific office market is expected to see further declines in the short term, following the Q3 decline of prime office rents in Hong Kong and Singapore. This was revealed by DTZ in its latest issue of Property Times Asia Pacific Offices.

The report said that prime office rents in Hong Kong softened due to a trend of tenants moving out from the CBD to non-core districts. However, it noted that the market had already seen its largest office rental decline in H1 2012.

On the other hand, Singapore's prime rent decline was lower than anticipated as the market retains solid levels of occupancy. Further mitigating the fall was healthy leasing demand during the quarter, driven mainly by non-financial companies such as social media, legal, energy and pharmaceuticals.

DTZ said the global economic slowdown continues to dampen regional outlook, especially for countries closely connected to China. There are positive initiatives on the horizon, including the QE3 in the US, but whether the economic stimulus will help bolster demand for office space in Asia remains to be seen.

"This is reflected in our short-term outlook for the region’s office markets, with downgrades made to some of our previous year-end forecasts," said Kate Barrow, Head of Asia Pacific Forecasting at DTZ.

"We have also made some upgrades to our forecasts. This reflects the resilience of some office markets in the face of global decline. A case in point is Singapore, where demand from non-financial companies has picked up the slack left by weaker demand from the financial services sector," added Barrow.

Tags: Commercial real estate, Business space, Income properties

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