Office space rents in Asia Pacific’s core markets such as Singapore and Sydney were on an upward trend in the third quarter of 2018. According to Cushman & Wakefield’s Q3 2018 Asia Pacific Office MarketBeats, rentals in Grade A office buildings have gone up due to healthy demand and limited supply in a number of cities including Singapore and Ho Chi Minh City.
Let’s take a closer look at the office leasing trends in some of the cities from our MarketBeats reports.
Prime gross effective rents, at AU $995 per square meters per annum, have grown 8.5% year-on-year while B Grade gross effective rents have increased 7% year-on-year to AU $780 per sqm per annum. Demand was led by the information, media, and technology sector, followed by finance and insurance, and professional services.
A resurgence of demand by tenants in the financial sector drove leasing activity during the quarter. During Q3 2018, Grade A CBD rent rose by 2.7% to S$10.00 per square feet per month amidst a lack of supply. Rents are projected to continue escalating as the tight supply situation will persist for three more years until an expected supply influx of 1.8 million square feet in 2022.
Firms in the financial sector accounted for a 22% share of leasing transactions in Q3. However, due to the recent massive wave of defaults by P2P enterprises, the Beijing Regional Management Committee is requiring landlords to be more stringent in qualification reviews of financial company tenants. We expect demand from finance companies to gradually slow.
Overall vacancy rates in Seoul are expected to tighten gradually with no new grade A building supply expected in Q4 2018. Average asking rent for grade A buildings in Seoul rose 4.4% year-on-year in Q3 to 29,069KRW/sq.m.
HO CHI MINH CITY
Average asking rents are on an upward trend due to limited available space offered by buildings in prime locations. In Q3 2018, average rent rose 2.4% quarter-on-quarter; year-on-year, it increased by significant 15.2%.
Average rentals in USD terms decreased by 14.7% on a year-on-year basis to reach US$19.90 per sqm per month. Rentals are expected to remain under pressure until at least the end of year.
To get the full insights on the region’s office market in the third quarter, visit our MarketBeats portal.