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News Release

Singapore

JLL Office & Residential Indices: Singapore tops in Asia Pacific

Strongest growth in office and largest decline in residential in 2014


​​​SINGAPORE, 13 February 2015 – Singapore CBD office rents gained over 14% in 2014 – strongest across Asia Pacific, keeping Singapore’s position as the third most expensive locality after Hong Kong and Beijing, ahead of Shanghai and Tokyo. Demand from small space occupiers helped shape the Singapore market, with key movers from the social media, IT and business services. The short term mismatch between occupier demand and office stock available for lease further lent support to this rise. Across Southeast Asia, Ho Chi Minh office was top gainer in 2014 after Singapore, at 7.4% riding on the back of a broad based recovery demand. Not surprisingly, Jakarta came in weakly at 1.3% as elections woes set the market in a wait and see phase in 2014. As occupancy costs expanded slower than capital values across most Southeast Asia markets with the exception of Singapore, yield compressed further. Looking forward, we can expect the impending supply in Singapore to dampen rental growth as early as the second half of 2015. Typically preleasing works begin six to nine months before the building is physical complete. Across other major Southeast Asia markets, the same story is echoed that of new supply completions dampening rental growth in 2015.

On the retail front, the sustained economic growth in Southeast Asia in recent past has finally paid off with increasingly more retail demand supported by domestic consumption. International and domestic retailers have expanded into Southeast Asia to capitalise on the growing consumption market. Notable expansions include Ramen Nagi, Tim Ho Wan, and H&M and Zara in Manila. Overall topping the chart across Southeast Asia is still Singapore despite average rents in shopping center declining some 0.3% in 2014. The rest of Southeast Asia remains at the bottom stack of the pecking order across Asia. This bode well as international retailers continue to source out newer cheaper cities to grow their retail market share. Increasingly it would appear that Southeast
Asia could be moving towards a more domestic driven economy. Finally on the residential front, strongest gain was recorded in Manila at over 9% growth in 2014. This was on the back of sustained economic growth as well as continual remittances from Filipinos working overseas in recent years that have supported the strong domestic investor demand. Bangkok and Jakarta on the other hand the growth was capped by limited supply. Singapore luxury residential, expectedly, registered the largest decline of over 6% in 2014 compared to the rest of Asia as the market struggles with the myriad of policies aimed at a piloted market adjustment. In contrast, Hong Kong market expanded by over 2% on the back of pent-up demand arising from policy relaxation.