DTZ Property Times Asia Pacific Q2 2010
Office markets strengthen further
- Occupied space in Asia Pacific increased significantly in Q2 2010 as companies resumed expansion plans and upgraded to better quality space on the back of strong economic growth.
- In line with resurgent demand, prime rents increased across much of the region (Figure 1). Elsewhere in Asia Pacific, rents have either bottomed out or are close to bottoming out. Notable exceptions include Tokyo, Brisbane and Shanghai, where rents continue to fall due to weak demand and increasing vacancy.
- We forecast that the best performing rental growth markets in 2010 will be Chengdu (13.4% growth), Hong Kong (11.8% growth) and Guangzhou (9.7% growth). These three markets are characterised by strong demand and a shortage of prime space. We forecast negative rental growth for only a handful of markets in 2010.
- Office markets in India and China dominate the recovery, with net absorption showing robust growth in both primary and secondary markets. The rebound in demand has been particularly strong in the primary markets of Beijing, Delhi, Mumbai and Hong Kong and in the secondary markets of Chengdu and Dalian.
- Vacancy continued to decline in Q2, albeit from a high level. However, the substantial development pipeline, namely in China and India, gives us cause for concern, especially in less mature markets where future new supply represents a considerable proportion of existing stock - as much as 67% in Delhi.
Figure 1
Source: DTZ