Prime Benchmark

Housing Investment Consultancy
Prime Benchmark

January 2017

 

In December 2016, the Federal Reserve Bank raised the benchmark rate by a quarter-point from 0.5% to 0.75% for the second time since the financial crisis. The action was in response to a stronger US economy and higher inflation expectations. The market generally expects the US dollar to strengthen as a result, with implications for dollar denominated accommodation costs in the region. 

The prime office rental market in Asia remained reasonably firm in local currency terms during the second half. According to our survey, among the 17 top markets in Asia, most recorded prime rental growth throughout 2016 with movement broadly in the range of -8% (Singapore) to +15.4% (Melbourne). A number of major buildings have been taken off the market due to redevelopment, helping to drive the Melbourne office rental market to post its remarkable growth rate, outperforming all other cities.

In the second half, the prime retail mall rental markets generally posted moderate growth except for Taipei (-2.1%), while Kuala Lumpur saw growth of 8.6% in local currency terms. There were three cities where we recorded double-digit growth during the first half (Sydney, Melbourne and Hanoi) which recorded a slowdown in the second half of 0%, 2% and 0.9% respectively. Seoul on the other hand switched to positive growth of 1.1% from -3.5% during the previous half.

In the luxury apartment rental market changes of between -12.8% (Osaka) and +8.8% (Seoul) were recorded in local currency terms. The Seoul luxury apartment rental market posted positive growth over two consecutive halves and was the only city to record positive growth in US Dollar terms among the cities we monitor, with rates of 3.8% in US Dollar terms and 8.8% in terms of local currency.

The Asia Pacific prime hotel rental market faced a tough operating environment, and half of the cities we monitor suffered negative changes in the second half, with overall movements between -16.4% (Hong Kong) and 14.9% (Hanoi)  in terms of local currency. Hanoi’s impressive growth was due to their new visa exemption policy in the second half of 2016

 

Key contacts

Simon Smith

Simon Smith

Senior Director
Research & Consultancy

kamaco Two Exchange Square

+852 2842 4573

 

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