PRIME office rents in Asia grew by 1.2 percent in the second quarter from the previous three months, with Shanghai and Sydney accounting for the most real estate transactions while a supply glut in Chengdu, China led to declining office rentals.
According to a report released by global real estate research firm Colliers International, Jakarta posted the biggest rental growth within the region of 10.2 percent driven by its growing IT industry.
Meanwhile, office rentals in Chengdu dipped by 3.4 percent as new office spaces came into the market.
The report noted that real estate sales in the Asia Pacific region had started to pick in the second quarter.
“Activity across Asia has started to pick up, with most real estate transactions concentrated on key markets such as Shanghai and Sydney due to lower borrowing costs and weakening currencies,” the report said.
Shanghai attracted a number of major office deals in the second quarter, resulting in office real estate investment volume more than tripling to $1.1 billion.
One of the notable transactions recorded in Shanghai in the second quarter was the acquisition of Sandhill Plaza in Pudong valued at $303 million.
For the second half of the year, Colliers is optimistic that the global economy will soon recover from factors that weighed on growth in the first half.
“The second half of 2015 is expected to show positive economic growth driven by the US economy’s robust recovery, lower oil prices, sustained quantitative easing across the euro zone and China’s 6-7 percent economic growth. Dampening this growth will be the risk of geopolitical turbulence,” the report said.
It also said that Hong Kong is most likely to witness modest rental growth due to limited office space supply while larger markets such as Shanghai, Guangzhou and Chengdu may experience downward pressures in rent because of the addition of substantial office space throughout the rest of the year.
“On the sales front, yields are likely to compress further during the remainder of 2015. This is particularly true in key Asia Pacific markets such as Shanghai, Tokyo and Sydney,” the report said.