by Cheryl Tay
Prime office rents in Hong Kong and Singapore dropped in Q3 and further downward pressure is expected in the coming months, according to DTZ's latest Property Times Asia Pacific Offices report.
Despite this, leasing demand is still healthy in Singapore, driven by non-financial companies, such as those in the social media, legal, energy and pharmaceutical sectors. This is in contrast to Hong Kong, where tenants are moving out of the CBD to non-core districts.
Additionally, Hong Kong has already witnessed its biggest office rental decline H1 2012. On the other hand, the Q3 drop in Singapore was lower than anticipated due to solid occupancy.
Moving forward, the global economic slowdown continues to dampen regional outlook, especially for countries closely connected to China. Although there are positive signs, including the QE3 in the US, it remains to be seen whether the economic stimulus will help bolster demand for office space in Asia, added the report.
"This is reflected in our short term outlook for the region's office markets, with downgrades made to some of our previous year-end forecasts," said Kate Barrow, Head of Asia Pacific Forecasting at DTZ.
"We have also made some upgrades to our forecasts. This reflects the resilience of some office markets in the face of global decline. A case in point is Singapore, where demand from non-financial companies has picked up the slack left by weaker demand from the financial services sector," added Barrow.
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