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Figure 18Asia-Pacific office vacancy rates%35302520151050HanoiKuala LumpurMumbaiGuangzhouNew DelhiHo Chi Minh CityBangaloreBangkokSingaporeSydneyTokyoSeoulQ4 2010 Q4 2011JakartaBrisbaneMelbourneBeijingShanghaiPerthHong KongOffice vacancyrates havefallen below5% in Shanghaiand Beijing,puttingupwardpressureon rentsSource: Knight Frank ResearchSome moderation in economic growth isexpected in Asia-Pacific in 2012, albeit itshould remain the fastest expanding regionof the global economy. The IMF anticipatesthat GDP growth in China will ease from 9.2%in 2011 to 8.2% in 2012; likewise, growth inIndia is forecast to fall from 7.4% to 7.0%.Demand for office space in the region wasaffected by global economic concerns towardsthe end of 2011, particularly in cities mostclosely integrated with international financialmarkets. Hong Kong and Singapore becameShanghaitwo of the first major global office markets tosee rents reach their peak in the current cycle,and recorded falls in prime rents in the finalquarter of the year.The major office markets of mainland Chinaperformed strongly in 2011, in sharp contrastto the residential property sector, which sawprices decrease as a result of governmentmoves aimed at cooling the market. Primeoffice rents rose rapidly in Shanghai andBeijing, and vacancy rates fell below 5% inboth cities, driven by strong demand andlimited development completions. The Beijingmarket recorded exceptionally strong rentalgrowth in 2011, with prime rents rising by46%. Beijing and Shanghai are both forecastto see continued rental growth in 2012.The rapid growth of China’s retail market andthe rising spending power of its consumershave continued to attract investors anddevelopers. A notable example is theSingaporean mall owner CapitaMalls Asia,which has quickly expanded its operations inChina, and now has interests in more than 50shopping centres in the country. Internationalretailers continue to grow their presence inChina; during 2011, IKEA opened its secondlargeststore in the world in Shanghai, USclothing retailers Hollister and AmericanEagle Outfitters launched their first shops inmainland China, while luxury retailers Diorand Marni opened new flagship stores inBeijing.Following two years of exceptional growth,prime office rents peaked in the Central districtof Hong Kong in the second half of 2011, andrental falls were recorded in the final fourmonths of the year. Hong Kong’s exposure toglobal economic headwinds has engenderedincreased occupier caution, and a growingnumber of tenants have sought to reduce theiroperating costs by moving to less expensive29