Going into the second half of 2014, office rental around Asia continues on the up and up, though analysts are cautious about the effect of the slowing Chinese economy on the rest of the region, according to a recent report.
On the back of rising economic sentiment and tightening supply, prime markets in Hong Kong, Singapore, Tokyo and Bangkok saw solid rental growth in both price and volume, according to the Q2 Asia Pacific Prime Office Rental Index by Knight Frank.
- Leading the region was Phnom Penh, which recorded the greatest quarter-on-quarter rent growth of 18.6 percent.
- Singapore entered into its 4th consecutive quarter of rental growth, due to strong leasing demand (with numerous large rental transactions) and a limited availability of office space in the central business district. The land-strapped island is expected to see a further 10 percent rental growth by the end of the year.
- Hong Kong, the most expensive city in the region for office rental, saw moderate 2.9 percent quarter-on-quarter price growth as optimism in the financial services sector improves with the recent announcement of the trade link-up of the Hong Kong and Shanghai Stock Exchanges.
- In Bangkok, despite the largest addition of new office space in ten quarters, net absorption rate rose by 24.3 percent from last quarter and vacancy rates continued to fall.
- In India, real estate sentiment is high following the election of Prime Minister Modi, with more than 75 percent of developers who believe that leasing volumes will surge by the end of the year, according to Knight Frank’s Q2 2014 Real Estate Sentiment Index.
- The market in China’s leading cities, however, did not fare as well – A surge in new supply depressed rents in Shanghai, while the economic slowdown continued to affect Beijing’s market.
Overall, although 16 out of 20 markets across Asia are expected to see constant or increased rent in the remainder of the year, everything hinges on performance in the Chinese market, the highest risk factor in the region, Knight Frank analysts reported.
Meanwhile, global investors have been putting their money into office spaces around Asia, according to a report from Cushman and Wakefield. In the second quarter of 2014, investors bought a recordUS$6.16 billion worth of office space in the region, more than doubling the amount they spent in the same quarter last year, the Wall Street Journal reports.
South Korea, Australia and China were especially popular investment destinations, with foreign investors accounting for almost 70 percent of purchases in South Korea in the second quarter. The surge in funding inflow comes as low interest rates in the U.S., Europe and Japan are pushing investors to seek higher returns elsewhere.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email firstname.lastname@example.org or visit www.dezshira.com.
Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.
Expanding Your China Business to India and Vietnam
In this issue of Asia Briefing Magazine, we discuss why China is no longer the only solution for export-driven businesses, and how the evolution of trade in Asia is determining that locations such as Vietnam and India represent competitive alternatives. With that in mind, we examine the common purposes as well as the pros and cons of the various market entry vehicles available for foreign investors interested in Vietnam and India. We also examine the advantages of using Hong Kong and Singapore as corporate bases to reach out to Asia’s emerging markets. Finally, we comment on how the proposed Trans-Pacific Partnership will affect both China-based and Vietnam-based manufacturers.
Work Visa and Permit Procedures Across Asia
In this edition of Asia Briefing Magazine, we outline the specific documents required for foreign nationals working in China, India, Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam, as well as highlight the relevant application processes in each of these countries.