23 November 2012
Following a marginal drop of 0.1% quarter-on-quarter (QoQ) in 2Q 2012, the average office rent in the Asia Pacific region rebounded, edging up by 2.3% QoQ in 3Q 2012 according to Colliers International’s Asia Pacific Office Market Overview 3Q 2012.
Earlier in the quarter, amidst the unresolved European debt crisis, overall office market sentiment was initially weakening with new office leasing inquiries on a decrease in 3Q 2012. The market however, received a boost with the implementation of the third round of quantitative easing (QE3) in September 2012 which drove up commodity prices, causing positive spillover impact to real estate costs and pricing.
In addition, due to the limited supply of office space, vacancy rate and rents in the region remained strong. The major source of leasing demand continued to come from firms in the IT/communication and finance industries.
During 3Q 2012, most cities in Australia and China continued to exhibit positive rental growth. The average office rent in the Asia Pacific region registered a resilient increase of 2.3% QoQ.
Similarly, office sales performance in the region in 3Q 2012 was stronger than the previous three-month period. Mark Lampard, Managing Director of Corporate Solutions, Asia Pacific at Colliers International is of the opinion that many institutions and foreign investors looking for quality office developments in prime locations are fueling demand in the market. “Our data indicates that average office prices edged up by 2.1% QoQ in 3Q, compared with a mere 0.4% in 2Q,” he said. “The increase in office sales can be attributed to the encouraging sales performance of high quality projects. In particular, Auckland, Sydney, Perth and Brisbane saw an increase in sales activities.”
Looking ahead, market players are generally optimistic in the Asia Pacific office market. The prospective trend of office rent in most cities in the region is expected to remain positive over the next twelve months. Meanwhile, in anticipation of unchanged fundamentals such as the sustained low interest rate environment and China economic growth stimulated by the Chinese government, office investment in Asia Pacific will likely see a strong pipeline.