A CUSHMAN & WAKEFIELD QUARTERLY RESEARCH PUBLICATION OFFICE OVERVIEW OCT-DEC/ 0 DATA INTO ACTION
OFFICE OVERVIEW A CUSHMAN & WAKEFIELD QUARTERLY RESEARCH PUBLICATION 0 OCCUPIER CONDITIONS APAC OCCUPIER OVERVIEW INDIA Chongqing Shenyang Tianjin KOREA * TAIWAN Coworking gains momentum, growing corporate demand for swing space options Higher new supply in 0, tenant relocations are gathering pace, rentals are likely to grow in H 0 as vacancies start to decline Weaker demand, flat to moderating rents, freeze on new office approvals will not correct supply glut over the next - years TOKYO Strong pre-leasing demand, asking rents are softening while vacancies decline, supply surge to continue beyond 00, competition among landlords will intensify VIETNAM MALAYSIA Robust growth in demand, annual absorption is up by 0% in 0 Continued interest in decentralized markets and large volumes of new supply are attracting occupiers and investors SINGAPORE Service sector employment growth and government initiatives to boost several cities in 0 INDONESIA SEOUL Rising vacancies, relocations and consolidations to continue in 0, coworking operators are rapidly expanding Rentals solid in tier cities, a mixed picture will continue in tier markets AUSTRALIA * - Kowloon - Tenant Favorable - Central - Landlord Favorable Tenant Favorable Landlord Favorable Neutral NEW ZEALAND Strong PRC demand and limited availability pushed Greater Central rents to a global record high Time to look east for bigger requirements as evidenced by increasing pre-leasing activity at upcoming/newly completed Grade A office developments in both East and Kowloon East Meanwhile, coworking space operators are scaling up to capture market share amid growing demand from corporates Majority of new supply is already pre-leased, office vacancies are falling to multi-decade lows in and, strong rental growth is expected in 0 Flight to quality drives relocations in, occupier market to gain traction in 0 JAKARTA Largest ever annual supply in 0, further rental correction is likely, relocations will continue SINGAPORE Coworking operators are expanding amidst growing competition Leasing demand strengthening, rental growth to accelerate in 0 AUSTRALIA HONG KONG MANILA Office rents continue to rally on the back of stable demand and higher rents in newer properties; vacancies are moving up, highest ever new supply in 0 CHINA PHILIPPINES KUALA LUMPUR Space constraints continue in and, pre-leasing is on the rise; rents in tighter markets are up by more than % in 0 THAILAND JAPAN GREATER CHINA INDIA Demand is diversifying, but the tech sector is still strong. Banking, financial and professional services are gaining prominence TAIPEI BANGKOK Limited new supply in CBD, rental growth will continue in 0, supply constraints will ease starting in H 0 HO CHI MINH CITY Extremely low vacancies in Ho Chi Minh City, double digit rental growth expected in 0
OFFICE OVERVIEW A CUSHMAN & WAKEFIELD QUARTERLY RESEARCH PUBLICATION KEY TAKEAWAYS Upswing continues Several Asian economies have exceeded expectations in the fourth quarter, ending the year on a high note. Growth in China was faster than expected during and for the full year, the country accelerated for the first time since 0. Strong growth in exports, consumption, the service sector and resilient property markets have fueled the economy to grow.%, defying concerns that tightening curbs on industry and credit would impact growth. Growth in Japan, although lower than previous quarters, was at its longest stretch in nearly 0 years, suggesting that the economy is on a better footing than in the bubble years of the late s. Indonesia, Malaysia and Taiwan have also recorded the fastest growth in recent times on the back of rising exports. Meanwhile, in India, the impact of goods and services tax seems to be waning out but trade deficit is widening to its highest levels in nearly five years due to rising oil prices. has also slowed due to a contraction in the manufacturing sector. China s central bank has raised interest rates following the hike by the US Federal Reserve; India, Indonesia and Japan have held out for the time being. 0 powers to a strong finish, primed for a stronger 0 The office market has sustained a strong upward momentum during the fourth quarter, thus ending the year on a high note. Annual absorption gains were significant at %, driven by robust leasing activity in Chinese tier cities followed by tech cities in India,, and. Coworking has become a major demand driver, leasing more than.0 million sf. (msf) over the last months. Relocations and consolidations driven by new supply, growing requirements from start-up companies and e-commerce players, and rapid expansion of flexible space providers have sustained strong leasing activity in China during the quarter. Demand for larger back-end facilities has continued in India with tenants actively seeking options to optimize their portfolios. There were more than 0 transactions of 0,000+ sf. during the year, with a majority coming from the tech sector followed by financial and professional services. Tight vacancies in hot markets such as and have forced clients like Deloitte and Amazon to pre-lease more than.0 msf. each during the quarter. Meanwhile, relocations have gathered pace in and tenants are actively exploring newer properties. Clients like Google, Mixi and Anderson Mori & Tomotsune have recently pre-leased to relocate their headquarters. On the other hand, office vacancies in and have reached their lowest since 00 on the back of strong tenant demand. Tight vacancies are driving strong rental growth in several markets across the region. Average rent in continued to climb higher on the back of a red-hot Greater Central rental market, which is now the world's costliest. Rents in have been growing rapidly for the last two quarters, in line with declining vacancies. Similarly, and have shown strong rental growth (YoY). Rents in, and Ho Chi Minh city have also grown steadily during the year as vacancies dropped to % levels. On the contrary, high quality new supply has continued to push up rents in albeit at a slower pace. Meanwhile, generous incentives are on offer in supply heavy markets such as and.a Tech is supercharging office demand As Asian economies continue to evolve, the tech sector is growing at a rapid pace, adding nearly half a million jobs per annum. Favorable demographics, new technologies spawning start-ups and funds chasing the next unicorn are driving its momentum across the region. In 0, the tech sector accounted for more than 0% of the major leases inked in the region. Besides, the traditionally dominant markets of India and China, the tech invasion has taken over cities like, and Southeast Asia over the last two years. For example, tech giants like Facebook, Google, LinkedIn, Expedia and Apple have taken over Martin Place in 's CBD, which was once dominated by major banks. Similarly, in, which has seen the likes of Microsoft, Facebook, Airbnb and LinkedIn securing new leases for regional headquarters. Southeast Asia is also fast becoming the new battleground for tech stalwarts trying to dominate the nascent start-up ecosystem with massive investments. Companies like Google, Alibaba, Tencent and Softbank are pouring in large capital and business experience into promising start-ups like GO-JEK, Lazada, Tokopedia and Grab. Companies are chasing promising markets like Philippines, Indonesia, Thailand and Vietnam, banking on prospects of rapid economic growth, rising consumption levels and an underpenetrated internet economy., and Ho Chi Minh City are primed for tech growth standing out for availability of tech talent, lower rents and relatively more affordable cost of living. Meanwhile, in India, the tech sector is undergoing a transformation towards providing digitization and automated services as companies gear up for contract renewals of more than USD 0 billion in 0. This bodes well for the outsourcing ecosystem in India which has faced some turbulence over the last two years. As such, we expect tech sector to continue supercharging office demand over the next three to five years. OVERVIEW STATISTICS RENTAL RATES VACANCY RATES Q 0 0 0 US$/sf/mo Q 0 0 0 Percentage..%..0%..0%..%..%..%..% - SBD..%. *.%..% - CBD..%..%..0%..%..%.0.0%. - CBD.%..%.0.% 0 0. 0.% 0..%.0 0.%..%. 0.0%. - SBD.%..% 0. 0.0.% 0. 0.% 0 0 0 0. 0 0.%.0% * uses availability rate
A CUSHMAN & WAKEFIELD QUARTERLY RESEARCH PUBLICATION OFFICE OVERVIEW Rental Growth (YoY) DECREASING STABLE INCREASING Sorting order: Decreasing: High to Low, Increasing: Low to High Projects Under Construction 0 Q 0 TOP 0 sf 0 Q 0 BOTTOM 0 sf,0,,,000,, 0 0,,0,,,,0,,,,0,,,,0,,,,,,,,00,,,,0,,000,,,0,0 Construction Completions 0 Q 0 QUARTERLY 0 sf TRAILING MONTHS ENDING 0 0 0 sf NA,,0,0,,0,,,0,,0,, NA,,,,,,,,,,,,0 NA,,,,,,000,,000,0,,0, NA 00,000,, Vacancy Rates (%) CORE EMERGING CORE % 0 0 EMERGING. % 0 0 Rental Rates (US$/sf/yr) CORE EMERGING CORE. 0 EMERGING. 0
A CUSHMAN & WAKEFIELD QUARTERLY RESEARCH PUBLICATION YTD Absorption and Supply Million sf.0 Supply About The Data DATA INTO ACTION Absorption. Market coverage includes premium and Grade A properties in CBD and where relevant new prime centers that are well located, with office spaces that have higher design standards, large contiguous floor plates, managed professionally, are well leased to high quality tenants and suitable for institutional grade portfolios. 0.0 Australia Greater China North Asia South Asia Southeast Asia Under construction space includes all projects that have broken ground but not stalled as of the reporting quarter. OFFICE OVERVIEW Availability and Space U/C Million sf 0 Availability Space U/C Construction completions include all new supply with projects that have completed and are ready/fit for possession. Absorption refers to incremental new space takeup, and excludes renewals. For more information about C&W Research, contact: Disclaimer: Cushman & Wakefield (C&W) is known the world-over as an industry knowledge leader. Through the delivery of timely, accurate, high-quality research reports on the leading trends, markets around the world and business issues of the day, we aim to assist our clients in making property decisions that meet their objectives and enhance their competitive position. In addition to producing regular reports such as global rankings and local quarterly updates available on a regular basis, C&W also provides customized studies to meet specific information needs of owners, occupiers and investors. Occupancy costs include standardized market rents on net leasable area basis. Service charges are included if applicable. SIGRID ZIALCITA Managing Director, Research, Asia Pacific +() 0 sigrid.zialcita@ap.cushwake.com Cushman & Wakefield is a leading global real estate services firm with,000 employees in more than 0 countries helping occupiers and investors optimize the value of their real estate. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $ billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter. 0 Cushman & Wakefield, Inc. All rights reserved. 0 Australia Greater China North Asia South Asia Southeast Asia Data for Australia are based on bi-annual numbers as available from PCA. Cushman & Wakefield, Church Street #0-0 Samsung Hub 0 www.cushmanwakefield.com