According to the latest Asia Pacific Prime Office Rental Index released by Knight Frank, the index increased 1.3% in the first quarter of 2015, and now sits 5.3% above its pre-crisis (Q2 2008) peak.
Rental growth was experienced in 13 of the 19 markets tracked, with three recording no rental movement and three recording rental declines Northeast Asian powerhouses – Seoul and Tokyo – show similar headline growth figures for Q1 2015, but have significantly differing market characteristics and drivers
Although vacancy is tightening in many markets, the Asia-Pacific regional vacancy rate increased on the back of rising inventories in Greater China’s tier-one cities. In Hong Kong, the prime office rent increased 3.2% in the first quarter of 2015.
David Ji, Director, Head of Research & Consultancy of Greater China at Knight Frank says, “Grade-A office rents on Hong Kong Island are expected to increase steadily throughout the year if limited supply and low vacancy situations continue. Rents in decentralised areas are likely to stabilise with sufficient new office supply in the pipeline.”
Nicholas Holt, Head of Research for Asia Pacific at Knight Frank, says, “In Tokyo, the structure of traditional Japanese leases (which prevents significant rental hikes), has held back rental growth to only 1.9% in a very tight market with little vacancy.”
Over the next 12 months, Knight Frank expect rents in 14 cities out of the 19 tracked to either remain steady or increase, which is in line with their previous forecasts.
