2023-04-25-莱坊-Asia_Pacific_Office_Highlights_Q4_2022_37页_3mb

Asia-Pacific Q4 2022 Office Highlights Summary

Asia-Pacific Overview

• Q4 2022 Rental Index Performance:

  • Quarter-on-Quarter (QoQ): The Asia-Pacific Prime Office Rental Index declined by 1.0%.
  • Year-on-Year (YoY): The index grew by 0.8%.
  • Market Trends: 16 out of 23 tracked cities recorded stable or increasing rents.
  • Vacancy Trends: Average vacancy rate expanded by 0.8%.

• 2023 Outlook: Cautious expectations prevail due to macroeconomic headwinds, with a likely continuation of subdued rental growth and increased vacancy rates.

  • Businesses are prioritising spending on necessities over office leasing.
  • Landlords are adjusting expectations to maintain competitive rents.
  • The trend toward highly amenitised and sustainable buildings is expected to gain momentum, favoring tenants.

APAC Prime Office Rental Index

• The index continued its decline, falling by 0.9% QoQ.
• This is the second consecutive quarter of decline since Q2 2022.
• The YoY growth remains at 0.8%, indicating a gradual recovery in some markets.
• The overall market shows a slowdown in rental growth, with demand softening and supply increasing.

APAC Prime Office Vacancy Rate

• Q4 2022: Vacancy rates rose due to increased supply and weak leasing demand.
• 10-Year Historical Context: The vacancy rate has been on an upward trend, reflecting ongoing challenges.
• 2023 Outlook: Vacancy rates are expected to remain stable or rise slightly, especially with the presence of shadow spaces and economic uncertainty.

APAC Prime Rental Rates

• Rental growth has slowed in many markets, with some entering a negative trajectory.
• Q4 2022 vs Q4 2019: Rental rates in most markets have stagnated or decreased compared to 2019 levels.
• Market Balance: Tenants are in a stronger position with more control over the market, particularly in highly amenitised and sustainable buildings.

APAC Office Pipeline Supply

• Office inventory increased by 0.3% QoQ, reaching 174.5 million sqm of Grade A stock.
• Proportion of Upcoming Supply: A significant portion of upcoming supply is expected to be Grade A in 2023–2025.
• Supply Trends: The increase in supply is expected to keep vacancy rates steady or slightly rising, especially in markets with weak demand.

APAC 2023 Office Outlook

12-Month Rental Outlook

• Decreasing: Guangzhou, Shenzhen, Hong Kong SAR
• Unchanged: Auckland, Tokyo, Beijing, Phnom Penh, Jakarta
• Increasing: Brisbane, Melbourne, Perth, Sydney, Shanghai, Taipei, Seoul, Bengaluru, Mumbai, Delhi-NCR, Singapore

Market Trends

• Cautious Sentiments: Office markets are expected to remain cautious in 2023.
• Leasing Activity: Leasing activity remains dormant, leading to negative net absorption in some cities.
• Tenant Advantage: Tenants are in a stronger position, with more flexibility and focus on cost efficiency.
• Supply and Demand Dynamics: A balance between supply and demand is expected in some markets, while others may see increased vacancy rates.

Key Markets Analysis

Oceania

• Australia:
  • Q4 2022 saw stable rents and low vacancy rates.
  • Brisbane and Melbourne recorded 1.1% and 0.7% QoQ rent growth, respectively.
  • Auckland: Recorded 4.9% QoQ rent growth, with stable vacancy rates.
  • Economic Outlook: Fundamentals remain resilient, despite global economic slowdowns.

Southeast Asia

• Rental Growth: Most markets saw positive rental growth, with Bangkok at 3.3% QoQ and Singapore at 5.5% YoY.
• Vacancy Rates: Slightly lower vacancy rates due to a lack of completions.
• 2023 Outlook: Rental growth is expected to slow, with modest future supply.
• Economic Factors: The reopening of the Chinese Mainland is seen as a silver lining, but Covid-19 cases remain a concern.

East Asia

• Greater China:
  • Office rents continued their downward trend in Q4, with only Taipei showing 0.5% QoQ growth.
  • Hong Kong SAR: Rent decelerated by 4.8% QoQ, with increased vacancy rates due to tenants moving to affordable decentralised areas.
  • Shanghai and Guangzhou: Rent declined, with increased vacancy rates.
  • Economic Outlook: The Chinese Mainland’s reopening is anticipated to bring market recovery, but uncertainty remains.

South Asia

• India:
  • Leasing activity remained stable due to strong domestic fundamentals and minimal exposure to international trade.
  • Bengaluru led with 11% YoY rental growth, a slight slowdown from 12% in Q3.
  • Mumbai Metropolitan Region (MMR) and Delhi-NCR also saw rental growth, with stable or declining vacancy rates.
  • 2023 Outlook: Stable economic outlook supports the Indian market, with potential outsourcing from the West to the IT sector.

Key Takeaways

• Macro Trends:

  • The global economic slowdown and monetary policy tightening have impacted office markets.
  • Unemployment rates are low, but leasing activity is subdued due to business caution.

• Rental and Vacancy Dynamics:

  • Rental growth is slowing, and vacancy rates are increasing in many markets.
  • Tenant advantage is expected to persist in 2023 due to flexible strategies and focus on sustainability.

• Supply and Demand:

  • Office supply is increasing, particularly in Grade A buildings.
  • Future supply pipelines are expected to keep vacancy rates stable or rising.

• Regional Variations:

  • Southeast Asia and South Asia show more positive trends compared to East Asia and Oceania.
  • Singapore and Bengaluru are leading in rental growth, while Hong Kong and Shenzhen are underperforming.

• Market Balance:

  • Tenants are in a stronger position in most markets, with landlords adjusting expectations.
  • Balanced markets are expected in some regions, especially in India.

• ESG and Sustainability:

  • The trend toward sustainable and amenitised buildings is gaining momentum.
  • Businesses are increasingly adopting ESG goals, which influence office demand and rental strategies.

Conclusion

The Asia-Pacific office market in Q4 2022 showed mixed performance, with rental growth slowing and vacancy rates rising in many cities. While some markets like Bengaluru, Singapore, and Sydney recorded positive growth, others like Hong Kong, Shenzhen, and Guangzhou experienced declines. Cautious expectations for 2023 suggest that tenants will continue to dominate the market, with landlords adapting to lower demand and increased supply. The focus on sustainability and ESG goals is expected to shape future market dynamics and drive demand in the coming year.