Asia Office Rental Growth Surge Upwards - Up 1.7% QoQ in 1Q 2011

May 20, 2011 - PRLog -- The overall office demand in Asia remained positive in 1Q 2011, thanks to abundant liquidity, according to the Asia Pacific Office Market Overview recently released by Colliers International.  

Despite an increase in new supply of three to four times in individual centres this year, the office rentals in Asia remained firm and registered a growth of 1.7% QoQ in 1Q 2011.  The market was supported by positive business confidence and an encouraging pre-commitment rate for a number of new developments.

“With the availability of new supply, companies took advantage of the current market conditions to expand their overall requirements and upgrade their offices for quality developments,” said Mark Lampard, Managing Director, Corporate Solutions of Colliers International, Asia Pacific.  A benchmark example was BNP Paribas in Singapore who doubled its occupation at Ocean Financial Centre from 70,000 sq ft to about 140,000 sq ft in the first quarter.

Similarly, strong demand was observed in the office sales market in Asia.  This was attributed to the sustained low cost of borrowing in 1Q 2011 and the promising potential of capital appreciation due to the continued rental catch-up.  Individual centres such as Hong Kong and Taipei even registered new highs of their office values.

According to research by Colliers International, Asia may experience further growth in rentals and capital values in 2011.

“In centres with major developments due for completion this year, tenants will see the opportunity for corporate relocation and upgrading over the near to medium term,” adds Lampard.

The situation in Bangkok is showing tentative signs of improvement in the latter half of 1Q 2011 with a slight increase of 0.4% in occupancy rates in the CBD QoQ. While rentals rates remained stable there are indications that recovery could be taking place in the longer term.

According to Patima Jeerapaet, Managing Director of Colliers International Thailand there has been an increase in activity for the office leasing department at the company over the past few months. "With no new supply in the first quarter of the year a pick up in demand is being registered in occupancy levels", he said. However Mr Patima stated that the rest of the year will see an influx of about 100,000 sq m of new supply and this is likely to absorb the further expected uptick in demand for 2011 stated Mr Patima.

The main promise appears to be 2012 and 2013 with little new supply expected and a further increase in office space requirements on the back of continued modest economic growth. Antony Picon, Associate Director of Colliers in Thailand pointed to the pent up demand that could be released in the coming years. "Tenants held back from expanding last year due to global and domestic uncertainties but once these have subsided they are likely to make a move", he said. Mr Picon added that in the end companies cannot hold back plans forever and will become more risk tolerant. " With only a 2% increase in overall supply expected in the next few years coinciding in future expansion by tenants and a record breaking increase in newly registered companies, we forecast strengthening occupancy which in turn will lead to a upward momentum in rental rates", he added.

# # #

Colliers International Thailand - Experienced Real Estate Property Consultants in Thailand- was established through combining the resources of the global real estate services firm Colliers International, and Pasupat Realty Co.Ltd.