The global economy has seen recent headwinds from the smoldering eurozone debt crisis, slowing growth in China’s economy and the forecasted American fiscal cliff. Yet, the overall office real estate is expected to be moderately positive, according to the Global Office 2013 Outlook recently released by Colliers International.

While many large office occupiers have taken a wait-and-see attitude toward the global economy, others are taking up leases for the much-needed space to accommodate expanding operations. Quality office buildings in major cities in the world are seeing consistent demand from both occupiers and investors.

In terms of office occupancy costs, two markets in Asia ranked among the top five most expensive in the world as of mid-2012. Class A office net rent in Hong Kong continued to top the world, with that in Tokyo taking the third spot.

Meanwhile, individual markets in Asia recorded the lowest capitalisation rates. Capitalisation rate in Taipei was the lowest worldwide at 2.5%, followed by Hong Kong (2.67%) at the second spot and Singapore (3.9%) at the fourth spot as of June 2012.

According to Global Office 2013 Outlook, the following illustrates the current trend and 2013 forecast for key office markets in the Asia region:  


Shanghai registered growth in the average Class A office rent, despite rising vacancy due to launch of five new projects in the downtown area. As the average gross yield in Shanghai’s Class A office sector declined to 5.8% in 3Q 2012, the limited number of recent land transactions reflected that developers remain cautious about investment for further commercial development. 

Meanwhile, overseas and domestic enterprises continued to show interest in Beijing, another key office market in China, as they establish or expand their offices.  This is despite that the leasing market appeared lacklustre, compared to the extremely active year of 2011. 

In 2013, the Class A office sector in Beijing is expected to stay positive with negotiations between landlords and tenants becoming more elastic in the near term and see sustained active investment.

Hong Kong

After a notable fall in the first half of 2012, Hong Kong’s office rents have seen signs of stabilisation in 3Q 2012, which is due largely to the solid demand from a range of medium-sized financial companies and mainland enterprises.  Due to the third round of quantitative easing in the US, inflationary pressure is expected to push up real estate values in Hong Kong where the local currency is pegged to the US dollar. The average office vacancy rate is expected to hover around at the historical average of 5% by end 2012 and remain low in 2013, except in Central/Admiralty where falling demand for top-tier office premises is anticipated to cause increasing vacancy in the district.


As economic growth slowed due to uncertainties in domestic policy, cumulative impact of monetary tightening and slackening of external demand, India experienced contradicting trends in different markets. In Delhi, Class A rents increased by 2% to 7% over the previous quarter in popular locations such as Connaught Place and Nehru Place, while Jasola and Saket registered 4% to 10% drops. Looking ahead, the rents of Class A office space are expected to be stable in almost all Delhi and Mumbai submarkets.


Seoul registered increasing rents and decreasing office vacancy rates to 6.97% in the first half of 2012. Particularly, office spaces in the Class A+ office buildings were almost fully occupied, with an average vacancy rate of just 0.11%. Low supply, increased rents and a slight decrease in vacancy point to moderate improvement in the Seoul market in 2013. However, new supply will keep strong growth in rent or occupancy in check.


Singapore Class A office rents in the CBD fell in 2012, as the global economic environment weighed down the market’s leasing activity.  Given that there will be a steady lineup of new office buildings to be completed over the next four years, a substantial amount of secondary space could be released into the market upon lease expiration, as existing tenants move to new premises.  Singapore’s CBD Class A office rents are expected to continue to decline through 2013, and the comparatively-lower office rents will improve the market’s competitive edge as a regional hub for business.


In Tokyo, 2012 marked the second-biggest year for new office construction since 2003. As occupiers take advantage of oversupply by upgrading their office’s quality, the Class A office market sees frequent tenant relocations, as well as a reduction in overall rents. On the sales front, more than half of the total transaction volume in Japan is made up of office property sales. Looking forward, Class A office rents in Tokyo are anticipated to see stabilising signs and increase moderately in 2013.