Asia Pacific leads global office rental growth

KUALA LUMPUR: More than half of the Asia Pacific region office rental markets stabilised or grew during the second quarter of 2010, according to CB Richard Ellis’s (CBRE) quarterly Global Office Rental Cycle report released on Thursday, August 19.

“Asia Pacific was the driving force behind the continued recovery in global office markets in the second quarter, with over half of the markets in the region either at the bottom of the rental cycle or in growth mode,” said Dr Raymond Torto, CBRE global chief economist.

Hong Kong, Shanghai and Beijing led the region’s markets due to a push for office space from the financial sector in central business locations and an increased demand for Grade A space in Hong Kong.

“Singapore, Bangalore and Mumbai followed closely as employment levels improved and prime rents and incentives remained stable,” Torto added.

The financial and corporate sectors boosted demand for office space in Asia and Europe, supported by private demand growth and employment stabilisation in mature economies during the past quarter.

The Europe, Middle East and Africa (EMEA) region finished 2Q just behind Asia Pacific. Most major markets across the Americas clustered around the "rental decline slowing” position, meaning that rents are still falling but at a slower rate.

Torto points out that although Europe is slightly behind Asia Pacific in terms of the percentage of office markets registered rental growth, “the City of London continues to lead the other key global markets in terms of the scale of rental growth seen to date.”

This was because of the increase in demand in the financial sector and rents in London’s West End remained stable in 2Q2010.

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