Looking Ahead, We Expect Demand Drivers To Remain Strong In Most Office Markets In Asia

Category: Finance, Real Estate.

Asia s office markets surged ahead in the first quarter of 2007 with most cities recording increases in prime office rents. In Tokyo, a shortage of prime office space and robust tenant demand continued to drive rents north, further reinforcing the strong position held by Tokyo s landlords during the review period.

Expansion in the financial services sector provided much of the impetus for upward momentum in the core districts of the region s leading international business hubs- Tokyo, Hong Kong and Singapore. Average prime market rents, inclusive of common area management fees, 750 per tsubo, reached JPY 56( US$ 151 per. sq. ft. ) per month, an increase of 7% q- o- q and 27% y- o- y. The Grade A vacancy rate continued to tighten, falling by 7 of a percentage point to 7% . Four Grade A office buildings, totalling 3 million sq. ft. of net leasable space, opened at full occupancy during the quarter. Singapore s office leasing market remained active in the first quarter of 2007 in spite of the tight supply situation, and vacated pocket space was quickly taken- up. Although the SIF Building( 59, 000 sq. ft. ) was completed early this quarter, it provided little respite to the tight availability situation. Expansion in the financial sector continued to dominate leasing deals.

As a result, prime office rent rose to an average S$ 60( US$ 62) per sq. ft. per month, an increase of 11% q- o- q and 56% y- o- y. The CBD has witnessed rapid rental growth as a result of persistent demand, especially from the banking and hedge fund sectors. Demand for prestigious office space in Hong Kong s CBD continued to remain strong, with limited stock available in premium Grade A buildings. For example, during the period under review a hedge fund committed to 5, 000 sq. ft. in Two IFC at an effective rent of HK$ 170( US$ 28) per sq. ft. per month( lettable) . In Shanghai, average office rent continued to trend north, increasing 5% q- o- q to RMB 209 per sq. m. (US$ 45 per sq. ft. ) per month. Mainland China s first- tier cities will see supply peak in 2007, but all three of these major metropolitan areas saw sustained strong demand, with a collective 4 million sq. ft. of net absorption in Beijing, Shanghai and Guangzhou recorded in the first quarter. As no new supply came on stream during the quarter, available space was rapidly absorbed and there was significant pre- commitment activity.

Relocation or expansion by MNCs continued to drive office leasing transactions in Guangzhou, with the IT and banking industries dominating the active Grade A office market. The citywide vacancy rate tightened 1 percentage points q- o- q, to 6% . Teem Tower opened during the quarter, positioned as a premium Grade A facility. Elsewhere in Southeast Asia, the BPO/ call centre sector in the Philippines is expected to continue to drive growth in the Metro Manila office market. Tenants include Siemens, which rented three floors totaling 73, 200 sq. ft. as its South China headquarters, and Adidas( 24, 400 sq. ft. ). In the Makati CBD, strong demand and limited supply have led to further rental increases, prompting many contact centre companies to leave Makati for alternative CBDs such as Eastwood and Alabang in search of cheaper space. Meanwhile, Ho Chi Minh City s office market continued to grapple with pent- up demand in the first quarter of 2007 as occupancy levels remained at a record high of 97% across all grades, 430 sq, despite the 634. ft. of new non- Grade A office space that entered the market.

The office markets in Jakarta and Kuala Lumpur were robust, with both cities recording positive growth in rentals. The prime office market in Bangkok remained sluggish due to Thailand s ongoing political instability and the uncertainty over policies regarding foreign investors. Looking ahead, we expect demand drivers to remain strong in most office markets in Asia. Demand was weak as many companies adopted" wait and see" attitude. Corporate occupiers requiring more space as the regional business environment improves will have to pre- commit to prime buildings in the pipeline or pay a higher premium in order to stay in prestigious locations. The trend towards decentralisation will continue in a number of cities as companies seeking lower- cost alternatives and larger floor plates move to non- core or emerging business districts or business parks.

Read more...

For A More Rural, You Can Check, Suburban Feel Out The Homes For Sale In The Clackamas Area - Finance and Real Estate:

Are you looking for real estate in Portland, Oregon?

This Investment Strategy Is Land Investment And Is One Of The Smartest Things Anyone Can Do To Increase Their Net Worth And Financial Freedom - Finance and Real Estate Articles:

Thinking about retirement is natural for all employees. There are TV shows, stocks, investment seminars, bonds, mutual funds and what have you.

The Area Where Barton Hills Is Currently Located Holds Some Of Austin S Oldest Historical Features - Belinda Alfrey about Finance and Real Estate:

Tucked away off the bustling restaurant row on Barton Springs road, and just west of Lamar Boulevard, lies a conglomerate of little neighborhoods that make up Austin s Barton Hills community.