Apac prime office rents seeing sustained recovery: Knight Frank

by Albert02

Apac prime office rents seeing sustained recovery: Knight Frank

Apac prime office rents seeing sustained recovery: Knight Frank. Almost all of the cities tracked by Knight Frank’s Asia-Pacific Prime Office Rental Index saw stable or increased rents in the first quarter of 2022, resulting in a 0.2 percent increase in the index year on year.

Shanghai had the highest year-on-year increase of the 21 cities that recorded increases in Q1, at 4.2 percent. Shenzhen, on the other hand, continued to fall, falling 4.5% year on year.

The index increased by 0.8% quarter on quarter after increasing by 0.3% the previous quarter. Only 13 of the 23 cities tracked by the index experienced stable or increased rents in the fourth quarter of last year.

Singapore rents rose 1.9 percent year on year and 1.2 percent quarter on quarter. 

Meanwhile, Hong Kong grew by 1.1 percent year on year and 0.6 percent quarter on quarter.

Rent in Ho Chi Minh City, a new entrant to the index, increased by 0.7 percent year on year. It was flat on a yearly basis.

“Optimism at the start of the year was tempered by multiple Covid-19 resurgences, which resulted in Hong Kong and several Tier-1 Chinese mainland markets re-tightening movement restrictions,” said Tim Armstrong, Knight Frank’s global head of occupier strategy and solutions. There is also an high optimism for the upcoming development Lentor Modern in 2H2022.

The region’s economic recovery has also been hampered by the Russia-Ukraine conflict, which has resulted in an increase in energy prices and inflationary pressures.

“As a result, growth forecasts for the region may be lower than previously projected,” he said.

Hong Kong maintained its lead in occupancy costs in Q1 with US$186 per square foot (psf) per year.

Singapore came in second at S$105 per square foot per year, with Tokyo coming in third at US$101.20 per square foot per year.

Christine Li, head of research at Knight Frank Asia-Pacific, says: “There are still conflicting signals, particularly in developing countries where demand for office space remains volatile. Because economic recovery is so dependent on foreign direct investment, the macroeconomic environment is more volatile than ever.”

Separately, vacancy in the region remained elevated at 13.1%, the same as in Q4.

According to Knight Frank, this should continue to fall as more Asia-Pacific markets open their economies and tenants in the tech industry continue to seize opportunities for premium quality spaces in central business districts at low rents.

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