In the Asia Pacific region, 15 of the 20 prime office markets tracked by Knight Frank experienced rental increases during second quarter 2017, and only two declined. This resulted in a quarter-on-quarter gain of 1.2 percent for the firm’s Asia Pacific Prime Office Rental Index, which was up 0.6 percent year-on-year at the end of the second quarter.
Knight Frank in part attributes the positive momentum in the region to the economic growth of China, ASEAN-5 (Indonesia, Malaysia, Philippines, Thailand, Vietnam) and Japan, which the firm indicates “performed considerably better than expected” during first half 2017. In addition, growth projections for emerging and developing Asia have been revised upward by the International Monetary Fund. Knight Frank also notes geopolitical risks in the region have been curbed, to some degree, by an uptick in global trade and domestic demand. Combined, these factors have provided a “strong foundation” for prime Asia Pacific office markets, according to Knight Frank.
During the next 12 months (second half 2017 and first half 2018), Knight Frank forecasts prime rents to either increase or remain the same in 15 of the 20 tracked cities, the same as the firm’s prior forecast at the end of first quarter 2017. Specifically, Knight Frank expects an increase in prime office rents in the Australian CBD’s of Brisbane, Melbourne and Sydney. In China, Guangzhou’s CBD is also expected to see rent growth. Other cities anticipated to experience prime rent increases are Bangkok (CBD); Bengaluru, India (CBD); Hong Kong (Central); various submarkets in Manila; Mumbai (BKC); Seoul (CBD, GBD, YBD); and Taipei (Downtown).
Knight Frank indicates prime office rents during the next 12 months should hold steady in Shanghai’s submarkets of Puxi and Pudong. And no change is expected for Cambodia’s Phnom Penh (City Center), India’s New Delhi (Connaught Place) or Singapore (Raffles Place, Marina Bay).
The firm forecasts declines in prime office rents during the next 12 months, however, for various submarkets in Beijing; Jakarta (CBD); Kuala Lumpur (City Center); Perth, Australia (CBD); and Tokyo (Central 5 Wards).
