Knight Frank Asia-Pacific Prime Office Rental Index up 0.8 per cent in 1Q
KUALA LUMPUR: The AsiaPacific Prime Office Rental Index has increased by 0.8 per cent quarter-on-quarter (q-o-q) in the first quarter of 2022 (1Q22), compared to the 0.3 per cent growth in 4Q21, said independent global property consultancy firm, Knight Frank.
In a statement yesterday, it said the growth indicates a sustained economic recovery, despite rising inflation and the Russian invasion of Ukraine weighing down the market sentiment.
“Vacancy remains elevated at 13.1 per cent, similar to that of 4Q21.
“This should start to reduce further with the reopening of more Asia-Pacific markets and tenants in the tech industry continuing to seize opportunities for premium quality spaces in the central business district at low rents,” it said.
Knight Frank global head of Occupier Strategy and Solutions, Tim Armstrong said optimism at the start of the year was tempered by resurgences of Covid-19, which resulted in Hong Kong and several tier-1 Chinese mainland markets re-tightening movement restrictions.
“The sustained economic recovery post-Covid-19 in the region was also challenged by the Russia-Ukraine war which led to the surge in energy prices and inflationary pressure.
“As such, the growth forecasts for the region could be lower than what had been projected, but the Asia-Pacific market is not as directly impacted by the macroeconomic uncertainties as other regions,” he said.
He noted that in countries with sustained optimism over economic re-opening, corporates are choosing to take more decisive leasing decisions in view of the rising material costs and construction delays.
According to Knight Frank, of the 23 cities tracked by the Asia-Pacific Prime Office Rental Index, more cities recorded stable or increased rents in 1Q22.
However, in Kuala Lumpur, rental of office premises had declined by 2.1 per cent and is expected to continue decreasing in the next 12 months.
Knight Frank Malaysia executive director of Research and Consultancy, Judy Ong said the office market remains tenant-led as existing and incoming supply continue to outpace demand.
“An estimated 495,850 square metres of space is scheduled to enter the Kuala Lumpur market by the end of 2022 and this will continue to exert pressure on rentals,” she added. — Bernama