Asia-Pacific office rents on the rise

Asia-Pacific office rents on the riseImproved vacancy rates across the Asia-Pacific region have spurred a widespread rental recovery, according to Knight Frank’s Asia-Pacific Prime Office Rental Index for Q3 2014.The Rental Index shows that vacancy rates fell or remained steady in 15 of the 19 Asia-Pacific markets tracked, resulting in a 0.2 per cent drop in the vacancy rate across the region. The figure is the lowest since Q4 2008.Prime office rental growth was recorded in nine of the markets tracked, while six experienced a rental decline and four recorded no rental movement.Overall, the Rental Index increased 1.2 per cent during the quarter following a drop in the previous quarter, with central Tokyo leading the charge. Rents in grade-A office space in central Tokyo increased by 6.4 per cent during the quarter as vacancy rates fell to 5 per cent.Knight Frank predicts that strong rental growth in the Japanese capital will continue into 2015 as vacancy rates continue to decline in the face of buoyant demand.Among the other major Asian capitals to have performed strongly are Singapore and Bangkok. Singapore recorded rental growth of 1.2 per cent in the quarter – its fifth consecutive quarter of positive growth – with the trend expected to continue in the foreseeable future. And confidence is high in the Bangkok office market, with low vacancies, limited new supply and steady demand contributing to rental growth of 2.1 per cent during the quarter.In South-East Asia, rental growth has slowed in Jakarta from the impressive figures witnessed in previous years, with Knight Frank indicating that the significant pipeline of supply is likely to moderate rental growth prospects in the coming year. Kuala Lumpur displayed moderate growth of only 0.2 per cent in Q3 2014.Australia’s capital cities were among those in the region to have experienced a slowing in rental growth, with Perth (-1.4 per cent) and Brisbane (-0.4 per cent) both recording falls. Melbourne (stable) and Sydney (0.5 per cent), however, continued to witness recoveries in their leasing markets.To download a copy of the report go to: http://www.knightfrank.com.au/research/results.aspx?typeid=research&divisions=2&isocodes=AU&view=grid#sthash.8GX3vIPQ.dpbs