Apac prime office rents fall 2.5% y-o-y in 3Q202

Prime office rents in the Asia Pacific (Apac) region fell 2.5% on a y-o-y basis in 3Q2024, according to a report by Knight Frank. This marks a slight moderation from the 2.8% drop registered the quarter before. On a q-o-q basis, prime office rents in the region slipped 0.1%.

The region’s drop in office rents was mainly due to Chinese mainland cities. Prime office rents in Beijing showed the steepest y-o-y decline out of the 23 cities monitored in the report, falling 11.3% y-o-y and dropping 1.9% on a quarterly basis in 3Q2024.

Source: Knight Frank

Other Chinese cities also saw a decline in rentals on a y-o-y basis. They include Shanghai (-11.2%), Hong Kong (-9.4%), Shenzhen (-9.2%) and Guangzhou (-6.4%). On a q-o-q basis, rents in these cities fell by 3.2%, 1.8%, 2.5% and 0.1% respectively.

Meanwhile, cities in India have continued to show growth in their prime office rents. Mumbai’s prime office space registered a y-o-y growth of 5% while Bengaluru recorded a y-o-y growth of 3%. Rents in the Delhi National Capital Region remained largely stable.

Australian cities also saw a rise in prime office rents. Brisbane saw a 11.4% y-o-y increase in rental prices for 3Q2024, topping the list for the region. Perth came in second place with a y-o-y growth of 5.4%.

On a q-o-q basis, Mumbai (+5%) showed the highest rental growth, followed closely by Brisbane (+4.2%) and Bangkok (3.1%).

Source: Knight Frank

In Singapore, prime office rents were up 0.6% q-o-q and 2.7% y-o-y in 3Q2024.

Overall, 16 out of 23 cities tracked by Knight Frank showed stable or increasing rents compared to the same time last year. This number increased from 15 cities in 2Q2023.

Prime office vacancy rates in the region also showed signs of stabilising, recording a fall of 0.2 percentage points q-o-q to 14.8%. According to the report, this is the first recorded fall in prime office vacancy rates since 2Q2022.

“While the business sentiment may improve as the Fed eases monetary policy, demand will continue to be tempered by prudent spending and workplace strategies focused on maximising space utilisation,” says Tim Armstrong, Knight Frank’s global head of occupier strategy & solutions.

However, he adds that as the production pipeline of prime office space shrinks, any future uptick in leasing activity could rapidly tighten the availability of prime space.

Almost 12 million sq m (129 million sq ft) of prime office supply was delivered in 2024. Moving forward, Knight Frank expects 2025’s pipeline of new office supply to shrink by about 20% of that.

Given these factors, Knight Frank believes that Apac prime office market will continue to favour tenants in 2024, with availabilities in the region to gradually fall over time.

Source: Knight Frank