Global office rents 'up for seventh quarter'
London, November 9, 2011
The prime office rents across 81 global markets have risen for the seventh consecutive quarter reflecting an 8.2 per cent uplift since the bottom of the market in fourth quarter of 2009 and a 5.5 per cent increase year-on-year, said a report.
Despite corporations delaying real estate decisions and facing renewed pressure to drive down costs in the face of economic volatility, the prime office rents have increased further by 1.1 per cent during the third quarter, the real estate expert Jones Lang LaSalle (JLL) said in its inaugural global office index.
The global office index tracks the rental performance of prime office space across 81 major markets in the Americas, Asia Pacific and Europe.
“Most major markets are in better shape than they have been since 2008, but investors and corporations are unsettled by current economic uncertainties,' said Arthur de Haast, head of the International Capital Group at JLL.
'Appetite for risk has diminished as investors take refuge in core well-let product and sentiment is starting to impact corporate decision making,' he noted.
Jeremy Kelly, director in JLL global research team and author of the just released report said, “Despite the headwinds, global commercial real estate investment volumes, tenant absorption rates, prime rents and capital values are, so far, holding firm and most markets continue to make steady progress through this period of heightened volatility.”
According to the JLL Global Office Index, the Asia Pacific office markets had the highest rental growth of 2.5 per cent quarter-on-quarter followed by the Americas with an increase of 1.1 per cent in the third quarter.
However, economic concerns in Europe have weighed down on markets and growth has come to a virtual halt, from 2.1 per cent in Q2 to 0 per cent in Q3.
Also Real estate markets are diverging, with emerging markets in the BRIC economies demonstrating strong year-on-year performance, with increases in Beijing (over 50.6 percent), Moscow (over 41.2 percent), Shanghai (over 23.7 percent) and Sao Paulo (over 20.4 percent).
The largest quarterly falls in rents were experienced in Mexico City, Brussels, Dublin, Vancouver and Canberra, who all experienced drops between 2 and 4 per cent.
“We continue to expect positive rental growth in major prime office markets during 2012. Most major markets are expected to see at least single-digit growth, with some markets such as Beijing, Tokyo, San Francisco and Toronto having the potential to outperform in 2012.'
'Hong Kong and Singapore, however, may see rents soften over the next few months,” Kelly added.-TradeArabia News Service