Office rents in the APAC region fell in Asia Pacific for the fourth consecutive quarter as prices continue to fall and are down 1.6% quarter-on-quarter.
Technology companies are still shedding employees but financial and professional services firms are taking up this slack in leasing activity.
Knight Frank says demand was supported by a flight-to-quality trend.
“Landlords in major office markets across the world are managing the effects of both an economic slowdown as well as a return-to-office that has stalled, particularly in the US,” said Tim Armstrong Global Head of Occupier Strategy and Solutions.
“Markets in Asia-Pacific have clearly outperformed with higher office utilisation rates compared to other regions, and demand is holding up better supported by a flight-to-quality trend.
“With the region’s development cycle expected to extend into 2024, the expansion of options will give occupiers leverage to secure favourable leasing terms in the current window, extending the flight-to-quality trend which will amplify the gap between best-in-class and lower-rated assets.”
Perth tops rental growth in the region
Rents fell faster in Q2 2023, with the annual decline in the region now hitting 3.1%. Night Frank says this is mainly due to low demand in mainland China.
In total, 15 out of the 23 cities reported steady or increasing rents, but that is down from 16 cities in Q1.
The 12-month outlook suggested Brisbane, Perth, Sydney, Shanghai, Taipei, Bangkok and Singapore would all see rentals increasing.
Much of Australia’s resurgence is being fuelled by the commodities boom, especially in Brisbane and Perth – with Perth recording the highest YoY rental growth in Asia-Pacific.
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