It is a matter of time before landlords of prime office space across the Asia-Pacific region raise their rents as demand returns with the increased economic activity.
Tenants in the tech industry are also snapping up premium quality space in central business districts since rents are still low.
Knight Frank in a report indicates that the 12-month outlook of office space points to rising office rentals in several cities, including Brisbane, Sydney, Melbourne, Perth, Beijing, Shanghai, Hong Kong, Seoul, Bengaluru, Singapore and Ho Chi Minh City.
They are decreasing in Kuala Lumpur, Bangkok, Manila, Auckland, Shenzhen, Tokyo and Jakarta, and are expected to remain neutral in Guangzhou, Delhi-National Capital Region or NCR, Mumbai, Taipei and Phnom Penh.
Jakarta leads the office market recovery at a 2% quarter-on-quarter (q-o-q) growth, followed by Singapore at 1%. Its Asia Pacific Prime Office Rental index was up 0.8% q-o-q for the first quarter of 2022 (1Q22) versus 0.3% in the preceding quarter.
This shows that economic recovery across Asia Pacific is sustained amid rising inflation and the Russian invasion of Ukraine weighing down on market sentiment. The overall index was up 0.2% year-on-year (y-o-y).
It says vacancy remains elevated at 13.1%, similar to 4Q21. This should start to reduce further with the economic recovery. Of the 23 cities tracked by the index, more cities recorded stable or increased rentals this past quarter. Shanghai recorded the highest y-o-y rise, while Bengaluru q-o-q.