Asia Pacific Office Market Overview - Colliers

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ASIA PACIFIC OFFICE MARKET OVERVIEW | JANUARY | 2010CONTENTSRegional Overview .....................................................................3Greater China ..........................................................................4-6Beijing, China ...................................................................................................... 4Chengdu, China ................................................................................................. 4Guangzhou, China ............................................................................................. 5Shanghai, China .................................................................................................. 5Hong Kong SAR, China .................................................................................... 6Taipei, Taiwan ...................................................................................................... 6North Asia ...................................................................................7Seoul, South Korea ............................................................................................ 7Tokyo, Japan ........................................................................................................ 7Southeast Asia ...................................................................... 8-10Jakarta, Indonesia ............................................................................................... 8Kuala Lumpur, Malaysia ..................................................................................... 8Manila, Philippines .............................................................................................. 9Singapore ............................................................................................................ 9Bangkok, Thailand ............................................................................................ 10Ho Chi Minh City, Vietnam ............................................................................ 10India ..................................................................................... 11-12Bangalore .......................................................................................................... 11Chennai ............................................................................................................. 11Mumbai .............................................................................................................. 12New Delhi ........................................................................................................ 12Australasia .......................................................................... 13-16Adelaide, Australia ........................................................................................... 13Canberra, Australia ......................................................................................... 13Melbourne, Australia ....................................................................................... 14Perth, Australia ................................................................................................. 14Sydney, Australia .............................................................................................. 15Auckland, New Zealand ................................................................................. 16Wellington, New Zealand .............................................................................. 16Prime Office Rentals ................................................................17Trends & Forecasts ............................................................. 18-19Definitions & Terminology ................................................. 20-21Contacts .............................................................................. 22-232COLLIERS INTERNATIONAL | REGIONAL RESEARCH
ASIA PACIFIC OFFICE MARKET OVERVIEW | JANUARY | 2010EXECUTIVE SUMMARYREGIONAL OVERVIEWThanks to the sustained low-interest rate environment and a number of economic stimuluspackages introduced by various governments, the region showed further signs of improvementon the economic front during 4Q2009. Hiring expectations were increasingly positive asmore companies in the private sector started replenishing their workforce in anticipationof stronger economic performance in 2010. Market sentiment remained buoyant sincemarket players, in particular vendors and investors, were encouraged by the price rise instock markets and a number of asset classes, including office real estate. Office capitalvalues rose in individual centres during 4Q2009 but rentals were yet to show a similargrowth pattern.Mixed Leasing TrendsAlthough there was an increase in the level of both enquiries and transactional volumeduring 4Q2009, leasing trends in the region remained mixed. Despite the prevailing positivemarket sentiment and the reported growth in hiring expectations in individual companies,office occupiers remained largely cautious about any significant capital expenditure.Although there was demand attributed to office consolidation and relocations, the pace ofgrowth in expansionary floor area requirements was yet to catch up with the sales market.In addition, the supply cycle in 2010 continued to challenge the rental performance ofindividual centres where demand fundamentals were relatively fragile.Overall, the leasing market in the region took another step closer to its cyclical trough.Thanks to the strong rental performance in a few centres, such as Hong Kong and Chengdu,where the supply of new development remained tight, the pace of rental decline narrowedfurther to less than 1% quarter-on-quarter in 4Q2009.Sales MarketSimilar to the situation in 3Q2009, overall sales activity picked up additional momentum in4Q2009, with private investors with a strong equity position continuing to be the key groupof buyers in the marketplace. In Beijing, there was a change in buyers’ profiles from stateowned-enterprisesto local listed developers and real estate investors. For example, BeijingHuarong Infrastructure Investment Co. acquired an 87.5% stake in Beijing Capital TimesSquare for a total consideration of RMB2,708 million (US$397 million). In Shanghai, arange of domestic investors were keen to acquire office premises for their own occupation.Elsewhere in Australasia, Sydney saw the return of core investment funds during 4Q2009,with a major sales transaction being the sale of Aurora Place to the Korean National PensionFund for a total of AU$685 million (US$614 million).Market OutlookLooking ahead, the office leasing market in the region is predicted to move further alongits recovery track during 2010. The prevailing supply cycle in some centres will put adamper on any material rental growth over the near term. However, in anticipation ofthe catch-up of occupational demand in tandem with overall economic growth, averagerentals in the region should return to positive growth in the latter part of 2010. On thesales front, market activity should continue to be underpinned by growing occupationaldemand and, importantly, the sustained buying interest of a number of private investors.In addition, the return of long-term real estate funds to the marketplace is reckoned to bea good endorsement for the overall market in 2010.COLLIERS INTERNATIONAL | REGIONAL RESEARCH 3
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