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News Release


Singapore office market moves up to third spot in Asia Pacific

Recovery demand supports office rental growth

SINGAPORE, 13 August 2014 ​​​

Asia Pacific Office and Retail Market Performance

According to latest data from JLL, emerging markets in South East Asia continue to shine especially in the office market. Rents and capital values in local currency terms rose across major South East Asian markets in the second quarter of 2014. The strongest quarterly gains in the office segment were in Manila and Singapore.

In Singapore, limited new completions lifted landlords' confidence, resulting in rents rising 4.6 per cent this quarter, pushing Singapore to the third spot in Asia Pacific after Hong Kong and Beijing, according to the JLL Office Index. Small space occupiers, particularly those from the e-commerce and fast moving consumer group segment, continued to dominate the Singapore market.

Dr Chua Yang Liang, Head of Research for South East Asia opines "the short term tight supply has given landlords the confidence to push up rents. However with the impending supply coming in 2016, this growth is likely to be clipped by about end 2015. The upside will come from the growth in e-commerce, IT support and FMCG sectors that could continue to grow on the back of heightened consumption in Asia with increasing affluence."

The quarterly gain of 1.5 per cent in the Philippines was helped by the lower office cost compared to other cities in Asia Pacific. Manila office is ranked 21 out of 27 cities in Asia Pacific according to JLL's Office Index. This supported the continual growth in offshoring and outsourcing, alongside financial, IT and logistics demand.

Capital values were supported by a stronger leasing market. This was especially so in the Philippines, which saw yields compressing further as capital values expanded faster at 3 per cent. In Singapore, yields expanded on the risk of higher interest rates, as rental growth far exceeded capital value gains. ​


Similar to the office sector, retail markets across South East Asia expanded or remained stable. Top gainers were Bangkok, Manila and Singapore.

Despite the political tension in Thailand, retailers remained confident of the domestic consumption market. Landlords were also able to raise previously lowered rents by over 3.5 per cent as the military coup ended the political fallout. 

In Manila, the prevailing strong economic climate and an underlying young consumer market drove retail rents up by almost 1 per cent.  New-to-market international apparel brands, such as Givenchy and Under Armour, and home furnishing stores like Crate & Barrel and Pottery Barn, have opened in Manila. Existing retailers that are expanding include American Eagle Outfitters, Dorothy Perkins, Topshop, Old Navy and Cold Stone Creamery.

With the strong underlying occupier demand, capital values expanded at over 1 per cent and allowing yields to remain stable. In Singapore retail rents expanded moderately at slightly under 0.5 per cent. This was due to the growth in international retailers such as Etro and Givenchy. Capital values remained stable, allowing for marginal yield expansion.    

Despite the uncertainty leading up to the presidential election, F&B and apparel retailers in Jakarta remained upbeat and generated the most demand. ​

These include H&M, Aunty Anne, Tiffany & Co, and Galleries​ Lafayette. This has kept rents stable despite the stiff competition among landlords, which is unlikely to let up anytime soon.


Looking ahead, JLL remains positive on the office markets in Singapore and Manila. In the Philippines, continual support from the outsourcing and offshoring, financial and logistics sector should support rent. The limited physical completion with general recovery demand should bode well for the Singapore office.

On the retail front, Manila remains the hot favourite in South East Asia. Said Dr Chua: "As income levels in the Philippines rise, the strong underlying demographic and sustained economic growth over the past few years should support domestic consumption."

He added that overall retail rents in Manila are still ranked last according to JLL Retail Index, making it highly affordable compared to other cities in Asia and this would bode well for new to market retailers as well as existing ones that are on a growth trajectory.

With the military junta taking control, this has ended street demonstrations, which bodes well for Bangkok retailers. As such, Dr Chua recommends keeping a close watch on the Bangkok retail market going forward.​