Asia Pacific office market expected to be upbeat next year: C&W

SINGAPORE (Dec 14): Singapore, Japan, and South Korea are predicted to experience “above-average growth in 2022” driven by strong demand for exports, says Cushman & Wakefield report entitled Catch 22 — Asia Pacific Commercial Real Estate Outlook 2022.

C&W expects the Asia Pacific economy to regain its position as the highest-growth economy with an expected 4.5% real average annual GDP and total regional investment volume next year is expected to be on par with the 2019 peak at around US$180 billion ($245.6 billion).

The report notes that vacancy in the Asia Pacific office market marginally edged upwards this year, largely due to supply exceeding demand throughout the region. This resulted in a modest downward pressure on rents.

Next year, office demand is expected to reach 55 million sq ft which is 77% above 2020 levels. Overall demand across the region is also expected to increase to 72 million sq ft, reflective of a stronger economic recovery across the region.

“Although flexible working practices are likely to be more widely adopted across the region, their impact on demand is expected to be relatively muted as employee desire to work flexibly is lower in Asia Pacific than in the US and Europe,” says C&W.

In Singapore, the office market will turn in favour of landlords amid tight office supply and reopening of the economy. Singapore’s CBD Grade A office rents are poised to outperform the broad Asia Pacific market next year with rents expected to rise 4.6% y-o-y, says Wong Xian Yang, head of research, Singapore at C&W.

“Office demand is supported by a thriving tech and finance ecosystem in Singapore, which continues to have a healthy appetite for office space as they expand headcounts,” says Mark Lampard, executive director and head of Singapore commercial leasing at C&W. “The Omicron variant remains a downside risk, but early data looks encouraging. Barring the worst-case scenario (Omicron or another variant found to be very transmissible, deadly and immune to vaccines), the Singapore office market is expected to continue on its recovery path into 2022,” he says.

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