Asia Pacific MarketView Q2 2021

05 Aug 2021

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  • Stable tenant enquiries and steady demand for traditional office space translated to stronger leasing activity in Q2 2021, with regional Grade A office net absorption increasing by 11.7% q-o-q to 10.3 million sq. ft.. Flight-to-quality and relocations incorporating upgrading remain a prominent trend. Grade A rents continued to contract, albeit at a slower rate, falling 0.6% q-o-q.
  • Consumer confidence weakened slightly due to a fresh wave of COVID-19 infections in several markets. Leasing demand remained driven by retailers catering to domestic consumption, with F&B groups the most aggressive category. Vacancy remained elevated but the rental decline slowed to 0.4% q-o-q as mainland China and Hong Kong SAR registered improved performance.
  • Overall industrial sentiment remained steady, with manufacturing PMI in most major regional markets staying in expansion territory. Leasing activity was solid as large-scale 3PLs and e-commerce occupiers stayed in expansionary mode. Net absorption in major Asian markets reached 35.6 million sq. ft. in H1 2021, the highest first half total on record. Rents increased by 0.8% q-o-q.
  • Investment activity continued to gain momentum, with investment turnover increasing by 45% q-o-q to US$40.3 billion, a figure 25% higher than Q2 2019. Turnover was driven by big ticket transactions, with deals worth more than US$1 billion accounting for a quarter of total investment volume. Cross-border investment volume rose by 37% q-o-q to US$9.2 billion, supported by strong purchasing by Singaporean and North American capital.