Asia-Pacific office market to improve in 2010

HONG KONG: Sales activity and leasing demands in Asia-Pacific are expected to improve in 2010, according to Colliers International.

The market picked up additional momentum in 4Q2009, benefiting from continued low-interest rates, economic stimulus measures of various governments, increasingly positive hiring expectations and an increasingly buoyant market sentiment encouraged by stock price rises.

“Office occupiers remained largely cautious about any significant capital expenditure. The ongoing demand was attributed to office consolidation and relocations. In general, the pace of growth in expansionary floor area requirements has yet to catch up with the sales market,” said George McKay, managing director, Corporate Services of Colliers International, Asia Pacific Region.

“However, a few centres such as Hong Kong and Chengdu, where new supply remained relatively tight in core areas, registered improved office rental performance. Overall, the pace of rental consolidation in the region narrowed further. The overall rental decrease in the region was less than 1% quarter-on-quarter (q-o-q),” he added.

Though the region’s office leasing market is predicted to recover further this year, it is subjected to the level of volatility in global and regional equity markets. With an anticipated catch-up of occupational demand in tandem with the better economic environment in 2010, average rentals in the regions are expected to return to positive growth in the latter part of the year following quarters of decline in 2009.

However, cautioned Colliers, the prevailing supply cycle in some centres may put a damper on material rental growth over the near term.

Private investor with a strong equity position continued to be the key group of buyers in the office sales market. Colliers cited Beijing Huarong Infrastructure Investment Co as example; the company acquired an 87.5% stake in Beijing Capital Times Square for 2.71 billion yuan (RM1.37 billion).