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Knight Frank forecasts Manila to see the strongest prime office rental growth in Asia Pacific

28 September 2017

 

Knight Frank, the independent global property consultancy, launches the fourth edition of Global Cities: The 2018 Report. The report looks into the continuous trends in real estate across 40 Global Cities, equipping occupiers and investors with insights for future real estate decisions. As part of the report, Knight Frank ran three-year forecasts for 15 prime office markets in Asia Pacific.

Highlights of the forecasts:

  • 13 of the 15 markets are expected to see rental growth over the three years (from the end of 2017), with only two markets expected to see rents soften over the period.

  • Manila is forecast to see the strongest growth in prime office rents in Asia Pacific region, with nearly 20% over the next three years. Strong occupier demand from the offshoring and outsourcing market is expected to be the key factor in pushing rental levels upwards.

  • Brisbane which in 2017 has seen some rental growth return to the market following four years of rental contraction is forecast to see the second highest rental growth.

  • Similarly, Singapore a market that has seen office rentals softening since Q2 2015 is also expected to turn the corner as demand starts to exceed supply.

  • Hong Kong is forecast to continue to see robust rental growth on the back of an anticipated continuation of the influx of Chinese mainland tenants.

  • Beijing and Shanghai, despite healthy demand are forecast to see some rental softening as the huge pipelines of supply in both cities come to the market.

Calvin Yeo, Executive Director and Head of Office Advisory, Knight Frank Singapore, comments, “For Singapore, while rental recovery continues to be sustained by flight-to-quality movement, we are seeing the supply from looming vacancies in the older buildings exerting an overall check on rents.”

Nicholas Holt, Asia Pacific Head of Research, Knight Frank, says, “Rental growth prospects across the major cities in Asia Pacific look positive over the next three years, reflecting solid regional growth prospects translating into strong demand from a number of sectors. Occupiers in technology, media and telecommunications are especially likely to drive demand in many of the gateway cities – while we also expect to see more Chinese tenants active in the major markets.

“Beijing and Shanghai, the two largest office markets in the Chinese mainland, are likely to see rents soften over the next three years given the significant supply pipelines, offering more options to occupiers looking to renew or relocate.”

 

Prime Rents Forecast: 2017 (year-end) to 2020 (year-end)

Ranking

City

Forecast: 2017 year-end to 2020 year-end

(% growth)

1

Manila

19.1%

2

Brisbane

16.5%

3

Singapore

15.8%

4

Bangkok

11.4%

5

Hong Kong

10.0%

6

Bengaluru

8.7%

7

Seoul

8.1%

8

Mumbai

7.7%

9

Melbourne

7.4%

10

Sydney

5.8%

11

New Delhi

4.6%

12

Kuala Lumpur

2.5%

13

Tokyo

1.8%

14

Shanghai

-0.2%

15

Beijing

-0.3%

Source: Knight Frank, Sumitomo Mitsui Trust Research Institute

 

END

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