Decline of Asia-Pacific prime office rents to decelerate in 2021
Knight Frank's Asia-Pacific Prime Office Rental Index for Q4 2020 reveals a 0.8 per cent quarter-on-quarter decrease and a 4.9 per cent year-on-year decline, according to expectations, due to muted demand from occupiers and continued new supply additions across the region.
Of the 22 cities tracked by the index, 10 recorded either stable or increased rents in the past quarter, as compared to eight in the previous quarter.
The quarterly decline was led by Mumbai at -5.5 per cent. However, sentiment is starting to improve with a resurgence of transactional activity with 17.5 million sqft in volume done across eight major cities in India.
Office markets in Mainland China showed further signs of strengthening, with average rents across Tier 1 cities only falling 1.0 per cent quarter-on-quarter, despite challenges of oversupply. With China’s economy on its road to recovery, there are potential upsides to rents in the Greater Bay Area in 2021.
Knight Frank forecasts the decline in rents to decelerate this year, with overall rents expected to decline between -3 to 0 per cent in 2021.
Tim Armstrong, head of occupier services and commercial agency, Knight Frank Asia-Pacific, says: “While leasing demand in Asia-Pacific has remained soft given weak global economic conditions, the resurgence of transaction activity in markets like India and the deceleration of rent declines in the Chinese Mainland are an indication of what to expect as long as vaccinations continue to roll-out in the region, and countries are able to keep a resurgence of infections at a minimum.”