Knight Frank’s Asia Pacific prime office index rose 0.9% during the second quarter of 2019 after declining in the first three months of the year.
Tokyo boasted the greatest rental gains in Q2 2019, rising 6.9% quarter-on-quarter due to the limited supply of prime office space.
Prime office rental cycle (source: Knight Frank)
Greater China’s main markets saw the sharpest quarterly falls in Asia Pacific, with Beijing, Shanghai and Hong Kong recording declines of 1.6%, 1.1% and 1%, respectively, in Q2 2019.
“With no end in sight over the trade tensions between the world’s two dominant economies, the looming prospect of a hard Brexit and the ongoing concerns in Hong Kong, we expect the rest of 2019 to remain challenging for Asia-Pacific office markets,” said Nicholas Holt, head of research for Asia-Pacific at Knight Frank.
Melbourne performed well with prime rents jumping 3.7%, while most other markets in the index remained flat or posted marginal gains.
Taking a 12-month view, Melbourne takes the lead again with a 16% increase in prime office rents over the year to Q2 2019.
Tokyo, Bangkok, and Singapore all posted prime office rental gains of more than 10% between Q2 2018 and Q2 2019.
Additionally, Jakarta prime office rents fell 10.8% during the 12 months to Q2 2019, while Beijing saw a 3.2% decline.
Knight Frank forecasts prime rents in most office markets will hold steady or increase over the next 12 months, but expects declines across Beijing, Shanghai, Hong Kong, Kuala Lumpur and Manila.