by Cheryl Tay
Office leasing activity remained steady across the region, backed by declining Grade A vacancies, while rental rates modestly increased in most markets, according to Cushman & Wakefield's (C&W) latest Asia Pacific Office Marketbeat for Q1 2012.
Average Grade A vacancy rates for all 29 markets slid to 10.0 percent in Q1 2012. On the contrary, Grade A rents increased in most markets, thanks to strong property fundamentals.
"Bangalore and Jakarta posted double-digit gains, while Beijing recorded yet a higher record nearly in line with Tokyo's rents albeit moderated growth as compared to the past two quarters," said Sigrid Zialcita, Asia Pacific Managing Director for Research at C&W.
Although office investment started a bit slowly, it is expected to pick up over the year with some deals worth US$11.6 billion (S$14.6 billion) being closed in Q1, a notable 30 percent smaller compared to the same period over the last two years.
"Rents are steady but growing in most of the 29 markets tracked by C&W in Asia Pacific. Cushman and Wakefield anticipates the pace for property performance to pick up and get back to higher growth track coupled with several positive economic initiatives for next year," added C&W.
Moving forward, the regional economy is expected to expand continuously throughout 2012 and achieve higher growth next year. "The case for modest optimism is solid, given strong domestic demand, favourable financial conditions and ample room for policy easing."
In the retail sector, the majority of the notable retail lease transactions were recorded in the growth markets.
Additionally, there was positive momentum which continued to drive retail development in most markets.
"The region remains a hotbed of construction activity, with over 70 million square feet (msf) of retail projects that are greater than 100,000 sq ft under way through the first quarter."
However, retail investment activity was marked with caution and slow progress. Investment properties sold in Q1 slipped to US$4.7 million (S$5.91 million), from last year's US$5.4 million (S$6.79 million).
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