Jones Lang LaSalle’s Markets experts have shared their expectations for the office leasing markets in Asia Pacific in the second quarter of 2012. In those markets that were experiencing office rental declines in previous quarters, the Markets teams are anticipating a slowdown in the rate of decline, for example a three to four percent fall in Grade A office rents this quarter in Hong Kong compared to an actual 6.3 percent decline in the first quarter. Similarly, in Singapore a fall of three percent is anticipated by the end of the current quarter, compared to an actual 5.2 percent decline in Q1 2012.
Elsewhere in the region it is once again a mixed picture; the Jones Lang LaSalle Markets teams are predicting:
· Some growth in Grade A office rents in Shanghai, Beijing, Jakarta, Manila, Mumbai and Delhi)
· Grade A office rents to remain stable and show little movement in Tokyo, Seoul, Sydney and Melbourne
· Some declines in Singapore and Hong Kong but at a slower pace than previous months; three percent and 3-4 percent respectively. A decline of around two percent is expected in Ho Chi Minh City.
Jeremy Sheldon, Managing Director, Markets Asia Pacific Jones Lang LaSalle commented: “We continue to see the majority of Multi National Corporation’s across Asia Pacific adopt a ‘wait and see’ stance on expansion, given economic uncertainties, which is having a delay effect on their property decisions. This is translating into static rents in some markets, and smaller rental declines in others. We are finding those landlords who can afford to “sit” are doing so, thus holding fairly firm on asking rents. This is resulting in stability in rents for now. Of course each market has very different dynamics, and the one market which stands out again this quarter in terms of the rental growth is Jakarta. The demand for space from companies as a result of the very healthy economic outlook in Indonesia is creating activity in all sectors and locations in Jakarta. For the second half of the year, the economic frailties of the Eurozone and a hard versus soft landing in China will be the determining factor on overall office take-up in the region. However, as inter-regional trade continues to grow and domestic Asian companies perform, we remain positive for the full year.”
Anuj Puri, Chairman and Country Head, Jones Lang LaSalle India, states: “With the Indian financial economy’s cues not being very encouraging, office occupiers continue to defer expansion plans across major Indian cities. The trend of slowdown in growth of office rentals witnessed in Q1 across Mumbai, Delhi and Bangalore continues in Q2. Given the pressure, we expect rentals to remain stable for most micro-markets. Mumbai and Delhi are expected to add significant office supply over the next six quarters, and we have started seeing increasing signs of delayed construction. The next two quarters will decide if the supply side can appropriately accommodate the demand slowdown. However, on a macro scale, the Indian office asset story remains on a positive trajectory as compared to most Asia Pacific office markets.”