Asia Pacific second quarter office rental growth down to 0.4%

Industry players eye further slowdown amidst rising interest rates.

According to Colliers International’s Asia Pacific Office Market Overview 2Q 2011, the average office rental in the region slowed distinctively from 1.7% quarter-on-quarter (QoQ) in 1Q 2011 to 0.4% in 2Q 2011. In the office leasing market, individual cities in South Asia registered notable rental declines in 2Q 2011, however Beijing, Hong Kong and Singapore continued to perform in the region.

On the sales front, buying momentum varied across numerous sub-regions during 2Q 2011. In China, the volume of sales transactions in Beijing was relatively quiet compared to 1Q 2011, while the other cities saw firm demand but limited quality stock available for sale. In the Australasian sub-region, the volume of the investment sales market was generally quiet. Hong Kong on the other hand, bucked the trend with a double-digit increase in sales volume during 2Q 2011, thanks to the active strata-title sales in non-core markets, Coliers International said in its report.

Amidst rising interest rate in the region, the overall office market momentum is anticipated to stage further slowdown, and individual markets with the prevailing tight credit conditions may experience a more significant slowdown in the volume of office sales transactions. Despite these challenges, the outlook for opportunities in Asia Pacific continues to be positive.

“As financial institutions in the region tighten their reins on lending, market sentiment is expected to temper and transaction volume reduced. However, many firms believe in the potential of Asia and continue to implement expansion and upgrading plans,” said Mark Lampard, Managing Director of Corporate Solutions, Asia Pacific at Colliers International.