Office rents in Southeast Asia remain reasonable compared to world’s most expensive office markets

SINGAPORE, 12 February 2020 – Five Southeast Asian cities rank in the world’s top 86 most expensive premium office rental markets, according to the fifth edition of JLL’s Premium Office Rent Tracker (PORT).

The report, which compares occupancy costs for premium office buildings across the world’s leading real estate markets, reveals that Singapore holds the 14^th spot worldwide, with net effective rents and occupancy costs running US$117 per year per square foot. That is slightly more than half the premium rents in Hong Kong’s Central district, the most expensive submarket.

The rents in the other five ranked Southeast Asian cities were considerably less expensive as well, including Ho Chi Minh City (38^th, $78/sq ft), Jakarta (55^th, $60 sq ft), Manila (66^th, $54/sq ft), Bangkok (77^th, $46/sq ft) and Kuala Lumpur (85^th, $30/sq ft).

While the banking, financial industry sectors continue to be the major occupiers of premium office space globally, technology firms – in particular, online platforms – are playing a greater role in propelling demand for premium office space. Based on Singapore Economic Development Board’s statistics, 80 of the top 100 global tech companies, and 4,000 over home-grown and international start-ups from around the world have established their operations in Singapore. These include internet companies Google, Facebook and LinkedIn, new economy firms engaged in e-commerce or online businesses such as Shopee, Razer and Grab, as well as technology hardware manufacturers like Acer, Apple, Dell and Siemens.

Chris Archibold, Head of Leasing, JLL Singapore says: “Tech firms have been prioritising Singapore as a key hub due to the government’s supportive policies and the conducive business environment here. The smart nation digitalization plans have also helped to fuel the growth of this sector. Though some of the occupational demand created is going to business park locations, the sector has also been a significant driver of grade A office space due to the need to attract and retain top talent.”

Other gateway cities in Southeast Asia, including Jakarta and Ho Chi Minh City, are now competing with Singapore to become the next Silicon Valley. Specifically, their fast-growing tech start-up ecosystems are diverting some of the attention of venture capital and private equity investors from Singapore. They may eventually challenge Singapore for its position as Asia's investment and innovation hub.  

For more information, download the Premium Office Rent Tracker report here.

Notes:

In this fifth edition of JLL’s Premium Office Rent Tracker (PORT), we compare like-for-like occupation costs across 86 major office markets in 73 cities.

PORT comprises the key elements of occupancy costs – net effective rent, service charges and government tax on rent – all standardised to enable true international comparisons. While only a fraction of a city’s corporate base will pay premium rents, PORT provides a useful barometer of relative costs.

The average total occupancy costs of the five tracked markets in Southeast Asia are as follows: