Knight Frank Asia-Pacific Prime Office Rental Index Q2 2018

Fueled by economic growth, office rental remains positive throughout Asia-Pacific

Knight Frank, the independent global property consultancy has launched its Asia-Pacific Prime Office Rental Index for Q2 2018. The index increased by 2.4% quarter-on-quarter to 137.2 points, surpassing the 0.9% growth recorded in Q1 2018.

The index rise was primarily driven by rent increases seen in Tokyo, Bengaluru, Hong Kong and Sydney, although these markets are also facing supply constraints.

Results for Q2 2018

● The index rise was primarily driven by rent increases seen in Tokyo, Bengaluru, Hong Kong and Sydney.

● Rents are expected to remain steady or see marginal increases for the rest of 2018.

● Bengaluru topped the index at a 7% quarter-on-quarter increase. Tight supply pushed rents up as large corporates jostle for quality space within a finite market.

● Kuala Lumpur’s office market saw the steepest decline, with a 0.8% decrease quarter-on-quarter amidst supply concerns and slow absorption.

Knight Frank Malaysia, Executive Director of Corporate Services, Teh Young Khean says, “The office market outlook for both Kuala Lumpur and Selangor remains lacklustre as impending supply coupled with tight leasing market continue to put pressure on occupancy and rental levels. Landlords with older and newly completed buildings, especially in KL City, are more accommodating in providing additional incentives to retain existing tenants as well as to attract potential tenants.”

Head of Research for Asia-Pacific, Nicholas Holt says, “Steady demand seen in the prime office market is expected to bolster rental growth for the second half of the year. Despite several headwinds, including tensions around trade, regional economic growth continues to fuel demand for Grade-A office space.”