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Singapore to lead 2019 office rental growth in the Asia-Pacific: M&G Real Estate

By Charlene Chin

/ EdgeProp |

February 22, 2019 2:11 PM SGT

Singapore is expected to record the highest office rental growth in 2019, outperforming other countries in the Asia-Pacific (APAC), according to M&G Real Estate in its Asia Real Estate Market Outlook report.

Singapore’s office market will take the lead due to “healthy demand”, as well as tight supply over the next two years, as it positions itself as a business hub for foreign corporates seeking to set up an APAC head office, the report states.

In both Singapore and Australia, the growth in the financial and business services sector has driven demand for office space in prime CBD buildings, the report notes.

In Japan, Osaka and Nagoya are expected to show “relatively strong” office rental growth over the next 12 months, it says. Prime office market in Osaka is forecasted to have limited supply in the next two to three years. Meanwhile in Tokyo, the prime office market is expected to see negative rental growth due to a significant increase in supply in the next two years.

Fringe office sub-markets in Kowloon East, Hong Kong, and North Sydney, Australia, could see an uplift in rents for the medium term, as rents in the CBD are expected to hover at peak levels. Increasingly, a “hub and spoke model” - where firms have a main headquarters in the CBD and an office in lower-cost markets - is more prevalent in Hong Kong and Sydney.

In the retail segment, high street retail rental is forecasted to grow in the range of 1.5% to 2.5% in key APAC cities, such as Hong Kong, Seoul and Sydney. Prominently, Sydney’s high street retail is likely to benefit from the revitalisation of the CBD, linked to the completion of a new pedestrian zone and light-rail line, highlights the report.

However, in Australia, the overall outlook is challenging - regional shopping centres will face headwind, caused by a shift of retail sales from physical stores to online, a trend which is expected to persist in the medium term.

M&G Real Estate expects rental growth in regional shopping centres to moderate further in 2019.

Tags:

office rental growth 2019 Singapore

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