Apac Prime Office Rents Fall 25 Y O Y 3Q202
According to Knight Frank’s latest report, prime office rents in the Asia Pacific (APAC) region have experienced a 2.5% decline on a year-on-year basis in 3Q2024. This is a slight decrease compared to the 2.8% drop in the previous quarter. On a quarter-on-quarter basis, rents have also slipped by 0.1%.
The main reason for the region’s decline in office rents can be attributed to Chinese mainland cities. Beijing recorded the steepest year-on-year decline out of the 23 cities monitored in the report, with rents falling by 11.3% and dropping by 1.9% on a quarterly basis in 3Q2024. Other Chinese cities such as Shanghai, Hong Kong, Shenzhen, and Guangzhou also saw a decline in rentals on a year-on-year basis, with decreases of 11.2%, 9.4%, 9.2%, and 6.4%, respectively. On a quarter-on-quarter basis, these cities experienced rent decreases of 3.2%, 1.8%, 2.5%, and 0.1%.
However, cities in India have continued to show growth in their prime office rents. Mumbai and Bengaluru recorded year-on-year growth of 5% and 3%, respectively, while rents in Delhi National Capital Region remained stable. Australian cities also saw an increase in prime office rents, with Brisbane topping the list with a 11.4% year-on-year growth, followed by Perth with a 5.4% increase.
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In Singapore, prime office rents have increased by 0.6% on a quarter-on-quarter basis and 2.7% on a year-on-year basis in 3Q2024. Overall, 16 out of 23 cities tracked by Knight Frank have shown stable or increasing rents compared to the same time last year, an increase from 15 cities in 2Q2023.
The report also revealed that prime office vacancy rates in the region have shown signs of stabilising, with a 0.2 percentage points decrease quarter-on-quarter to 14.8%. According to Tim Armstrong, Knight Frank’s global head of occupier strategy & solutions, this is the first recorded fall in prime office vacancy rates since 2Q2022. However, he also mentioned that despite the improved business sentiment due to the Fed’s easing monetary policy, demand for office space will still be tempered by prudent spending and workplace strategies focusing on maximum space utilisation.
Looking ahead, Knight Frank expects the pipeline of new office supply in 2025 to decrease by about 20% compared to 2024. With this in mind, the report suggests that the Apac prime office market will continue to favour tenants, with availabilities in the region gradually decreasing over time.
