Asia Pacific fourth quarter accelerated office rent up 1.5%

Consumers' expectation of continued rental catch-up bolstered booming investment demand.

According to Colliers International’s Asia Pacific Office Market Overview, the office markets in Asia continued to forge ahead with positive occupational and investment demand growth during 4Q 2010. This was underpinned by the sustained inflow of capital and continued strengthening of business confidence.

“Office occupiers have been prompted to consolidate and upgrade their premises sooner rather than later, primarily due to the anticipated rental upswings over the near to medium term,” said Mark Lampard, Managing Director, Corporate Solutions of Colliers International, Asia Pacific in a report.

In 4Q 2010, Asia registered an accelerated rental growth of 1.5% QoQ in 4Q 2010, thanks largely to the performance in the Greater China region, with Hong Kong and Beijing actually sharing the limelight. “Hong Kong was buoyed by the sustained expansionary demand in the financial sector amid the continued supply squeeze in the CBD,” said Mark. “Meanwhile, Beijing saw demand growth, supported by both domestic and multinational corporations from a wide range of businesses, from manufacturing, technology to financial industries.”

On the sales front, investors, comprising mainly domestic buyers, continued to favour quality assets in their home markets in 4Q 2010. Investment demand for prime quality office remained buoyant. “Despite the recent rate hikes in a number of centres such as Seoul, Bangkok and lately Mainland China, investment demand continued on the back of sustained rental catch-up during the period,” said Mark.

In anticipation of a further pick-up in demand over the next 12 months, the office market in Asia will move ahead on its recovery track. The overall absorption rate is predicted to increase.