Asia Pacific prime office markets see uneven recovery: Knight Frank

Global property consultancy firm Knight Frank has released its Asia Pacific Prime Office Rental Index for Q3 2021.

The index saw a 0.3% quarter-on-quarter decrease, and a 3.1% year-on-year decline – a continuation of the deceleration of the rental decline since the beginning of 2021, despite the resurgence of cases in many markets across the region.

Overall vacancy remains unchanged, as improvements in take-up in some markets are cancelled out by negative net absorption in others. The final stretch of 2021 should see continued stabilisation of prime office rents, as COVID restrictions begin loosening over time. Leasing activity is also expected to pick up moderately, and we maintain our expectations that the rate of rental decline will continue to decelerate across the region towards the start of the next year.

Highlights for Q3 2021:

• Of the 23 cities tracked by the index, 14 of 23 cities recorded stable or increased rents this past quarter, as compared to 9 in the previous quarter.
• Hong Kong SAR prime office rents saw the slowest rate of decline since Q2 2019
• Singapore recorded growth for the first time after 6 consecutive quarters of decline

• Bengaluru recorded the highest year-on-year decline in Q3 2021 among the cities tracked

“Market conditions continue to be inconsistent across the region in Q3, reflecting the various government restrictions and lockdowns that are still in place for many countries within Asia-Pacific. What has been encouraging is the green shoots that are emerging in some key markets, where vaccination milestones are being achieved and government restrictions loosened. We continue to be optimistic on the path to recovery but acknowledge it will be uneven across Asia-Pacific and many variables remain to be navigated at a country level,” said Tim Armstrong, head of occupier services and commercial agency, Knight Frank Asia-Pacific.

Christine Li, head of research, Knight Frank Asia-Pacific, said: “We are finally about to see the light at the end of the tunnel as rental markets are certainly seeing restored stability with countries learning to live with COVID. Occupiers are more forward-looking as compared to one to two quarters ago and are able to put in place some growth plans in terms of the trajectory of their headcount and office requirements. Enquiries are at the highest since the breakout of the pandemic. We are cautiously optimistic that rents are going to hit an inflection point in the middle of 2022.”

Asia Pacific Prime Office Rents

To download the full report, please click here.