Cautious sentiment prevails in Asia Pacific

Conditions in the commercial property sector remain challenging across Asia Pacific, according to the Second Quarter 2016 RICS Global Commercial Property Monitor. India and Japan are the only two markets in Asia Pacific in which both the occupier and investment index readings are in positive territory, according to the Royal Institution of Chartered Surveyors.

The commercial property market in Australia remains relatively subdued. While occupier demand is broadly stable, availability continues to rise, depressing rental expectations, reports RICS.

The Singapore commercial property market is headed for further decline, with chartered surveyors predicting rents contracting in the next 12 months. Sluggish GDP growth and weak performance in the services sector continues to weigh on occupier demand. In response, landlords are increasing incentive packages to lure tenants, though this is expected to have little effect on demand. Investor demand in Singapore fell for the fourth consecutive quarter despite improvements in credit conditions compared with first quarter 2016. Only the office sector witnessed a rise in interest from potential buyers, though overall expectations remain gloom-ridden.

Having shown tentative signs of stabilizing in the first quarter, both the Investment and Occupier Sentiment Indices turned negative once more in China. The availability of leasable space rose at the sharpest quarterly pace since 2009, while occupier demand fell, albeit slightly, across all sectors. Excess supply continues to dampen the outlook for rents and capital values, with respondents expecting both to fall significantly across secondary locations. However, prime market segments are likely to prove more resilient.

In Hong Kong, slow economic growth weighs on the outlook for rents and capital values. Retail volume has continuously dropped for several quarters and rent will likely remain flat for the next year. While prime office values and rents are anticipated to hold steady, secondary units are likely to post modest declines on an annual basis.


AndreafinalwebThe views, statements and opinions expressed in this article are those of the author and are not necessarily those of Institutional Real Estate, Inc.

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Andrea Waitrovich is editor of IREN and web content editor of Institutional Real Estate, Inc.