Asia Pacific Special Report - The Emergence of Asian Supertalls
- Within Asia, a high density of tall buildings is viewed as being synonymous with being a successful financial hub. A number of cities have pursued a “build and they will come” strategy as a means to establish themselves as a financial centre or to reposition their economy.
- In Asia, occupiers opt to lease space in supertall office buildings primarily because of the benefits afforded by their positive image and branding, building quality and prime location. These key differentiators enable supertall office buildings to command a rental premium of as much as 10 - 40% above the average Grade A rent in the same submarket.
- Occupiers in the financial services sector are the major tenants of supertall office buildings across the region, accounting for around 55% of total occupied space. Business services and legal firms are the other key users, accounting for 16% of total occupied space.
- The development pipeline of tall office buildings in emerging markets in Asia is significant. Several tier II cities in China account for almost 47% of the total new supply of tall office buildings set to be completed worldwide within the next five years. This is leading to growing concern of oversupply.
- The “build and they will come” strategy adopted by many emerging financial centres in Asia in recent years has been largely unsuccessful. The reality is that there are far more important success factors such as the business environment, legal and tax systems, market transparency, political stability, government efficiency, transport and telecommunications infrastructure, capital flows, human capital and reputational factors such as innovation.