OFFICE rents inched up in the second quarter - the first time they have risen from one three-month period to the next since 2011, property consultancy Jones Lang LaSalle (JLL) said yesterday.
Net effective rents of Grade A space in the Raffles Placearea eked out a 0.6 per cent increase in the quarter from the first three months of the year.
That puts them at US$720 per sq m per year on average or about $7.13 per square foot per month - but still 3.1 per cent below the level in the second quarter last year.
JLL said the modest rise was due mainly to limited leasing options.
It added that the office rental market in Asian-Pacific financial centres "remained weak, with limited take-up in Hong Kong and Singapore mainly coming from small non-financial occupiers".
Office space capital values in Raffles Place rose 1.9 per cent in April through June from the preceding three months, mainly due to local investors buying in.
Grade A office space tracked by JLL in the area had an average capital value of US$22,251 per sq m in the second quarter, which works out to about $2,646 psf.
Financial centres such as Hong Kong, Tokyo and Sydney also saw slow take-up of office space in the second quarter, though emerging markets in South-east Asia fared better.
The Indonesian capital Jakarta topped the Asian-Pacific region in terms of both rental growth and capital value appreciation.
Average rents in Jakarta's central business district shot up 9.8 per cent in the second quarter from the preceding three months to US$309 per sq m per year on average, or about $3.06 psf per month.
Average capital values climbed 10.2 per cent quarter on quarter to US$4,100 per sq m, or $487 psf.
The most expensive Grade A office space in Asia-Pacific to rent or buy was in central Hong Kong.
Average rent was US$1,486 per sq m per year or $14.73 psf per month in the second quarter, while average capital values were at US$50,939 per sq m, or $6,057 psf.
"While we have seen some renewed activity from local corporates and specific sectors such as pharmaceutical and technology, there is still an overriding emphasis on maintaining costs," said JLL managing director of markets Jeremy Sheldon.
"For many markets, the supply side remains tight, which has kept rents relatively flat.
"Even as some activity returns to the markets, driven by smaller occupiers, we remain cautious over any significant growth for the remainder of the year," he said.
Source: Straits Times, 27 Aug 2013