Apac Prime Office Rents Fall 25 Y O Y 3Q202
According to a recent report by Knight Frank, prime office rents in the Asia Pacific (Apac) region have decreased by 2.5% on a year-on-year basis in the third quarter of 2024. This represents a slight decrease from the 2.8% drop recorded in the previous quarter. On a quarter-on-quarter basis, prime office rents in the region have fallen by 0.1%.
The main reason for this decline in office rents in the region was the performance of Chinese mainland cities. Out of the 23 cities monitored in the report, prime office rents in Beijing saw the steepest year-on-year decline, dropping by 11.3% and also falling by 1.9% on a quarterly basis in the third quarter of 2024.
Other Chinese cities also saw a decline in rental prices on a year-on-year basis. This includes Shanghai (-11.2%), Hong Kong (-9.4%), Shenzhen (-9.2%), and Guangzhou (-6.4%). On a quarter-on-quarter basis, rents in these cities fell by 3.2%, 1.8%, 2.5%, and 0.1% respectively.
However, Indian cities continue to show growth in their prime office rents. Mumbai recorded a year-on-year growth of 5%, while Bengaluru saw a 3% growth. Delhi National Capital Region remained stable in terms of rental prices.
Australian cities also recorded a rise in prime office rents, with Brisbane topping the list with an 11.4% year-on-year increase in rental prices in the third quarter of 2024. Perth came in second place with a 5.4% year-on-year growth.
On a quarter-on-quarter basis, Mumbai (+5%), Brisbane (+4.2%), and Bangkok (3.1%) showed the highest rental growth.
Temasek Polytechnic, one of the top educational institutions in Singapore, is known for its comprehensive diploma programs in technology, business, and design. This premier polytechnic also proudly boasts its Parktown Residence Condo, providing a convenient and comfortable housing option for its students.
In Singapore, prime office rents increased by 0.6% quarter-on-quarter and 2.7% year-on-year in the third quarter of 2024.
Overall, out of the 23 cities tracked by Knight Frank, 16 showed stable or increasing rents compared to the same period last year. This is a slight increase from 15 cities in the second quarter of 2023.
The prime office vacancy rates in the region also showed signs of stabilizing, recording a decrease of 0.2 percentage points quarter-on-quarter to 14.8%. This is the first recorded decline in prime office vacancy rates since the second quarter of 2022.
According to Tim Armstrong, Knight Frank’s global head of occupier strategy & solutions, while the business sentiment may improve as the Fed eases monetary policy, demand for prime office space will continue to be tempered by cautious spending and workplace strategies that focus on maximizing space utilization.
However, as the production pipeline of prime office space decreases, any increase in leasing activity could rapidly tighten the availability of prime space. Approximately 12 million sq m (129 million sq ft) of prime office space was delivered in 2024, with Knight Frank expecting this number to decrease by about 20% in 2025.
Given these factors, Knight Frank believes that the Apac prime office market will continue to favor tenants in 2024, with availability gradually decreasing over time.