Prime Benchmark

Housing Investment Consultancy
Prime Benchmark

January 2018

 

APAC economic growth continued to picked-up moderately in 2H/2017 and the International Monetary Fund estimates that the “Emerging and Developing Asia” economies grew by 6.5% over the year as a whole while China grew by 6.8% and Japan’s economy grew by 1.8% in 2017 from 0.9% in 2016. The improving global economic outlook and an accommodative monetary policy created momentum for business expansion.

In local terms, prime office rental markets recorded movement ranging from   -1.4% (Hanoi) to 6.7% (Sydney) across the cities we monitor.  Sydney recorded the highest growth due to building withdrawals and a low vacancy rate. There was negative net supply in 2017 and this is expected to remain negative in 2018. The vacancy rate fell close to 10-year lows, to 4.6% in 2H/2017. Hong Kong remains easily the most expensive prime office market in the region.

The regional prime retail rental markets moved by between -1.8% (Beijing) and 5.9% (Guangzhou). Strong local retail consumption growth of 9.5% YoY in 2H following 10.5% in 1H supported the Guangzhou leasing market while prime shopping malls began to re-position and upgrade, focusing more on entertainment and F&B. Again, Hong Kong’s prime shopping mall rents are considerably ahead of all other Asia-Pacific markets and are expected to move into an ‘early upswing’ cycle this year.

Luxury apartment rents remained stable in most Asian cities, with the exception of Shenzhen which saw strong rental demand from corporate executives, and rents in the city rose by 14% as a result. Shenzhen’s growing strength as an IT hub is expected to continue to lift top end rents over 2018. Despite the growth, however, luxury rents in the city are still 70% cheaper than first placed Hong Kong.

In the hotel sector, Hanoi recorded a staggering growth in room rates of 28% in 2H/2017 after a 50% rise in 1H, followed by Guangzhou (19.4%), Hong Kong (16%) and Kuala Lumpur (13.5%). Hanoi’s strong performance was down to a 23% increase in international arrivals alongside strong nationwide growth in FDI (+44.4% YoY) which supported the 5-star hotel performance. Korea, Japan, France, America, and Germany were the country’s biggest source markets for visitors.

 

Key contacts

Simon Smith

Simon Smith

Senior Director
Research & Consultancy

kamaco Two Exchange Square

+852 2842 4573

 

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