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News Release


Office Rents Soften in most Southeast Asian Cities

Office rentals in most Southeast Asian cities declined in the final quarter of 2015 in line with an economic slowdown across the ASEAN region. The Bangkok office market registered strongest growth.

Office rents in most Southeast Asian cities declined in the final quarter of 2015 in line with the economic slowdown across the region, according to JLL, a professional services firm specializing in real estate. 

According to outlook by IMA, real growth among the ASEAN 6 (Singapore, Malaysia, Indonesia, Thailand, Philippines, and Vietnam) has moderated from 5.8 percent in 2012 to 4.1 percent in 2015, and is likely to maintain between 4.5 to 5.3 percent over the next five years.

JLL predicts that weakness in the commodity market and oil and gas sector continue to hurt the office markets of Kuala Lumpur and Jakarta. In these cities, rents have declined more severely than last quarter, although this has somewhat helped to maintain their competitiveness across Asia Pacific. Jakarta is the 13th most expensive while Kuala Lumpur is highly competitive at the lower 5th percentile (26/27), according to a recent JLL Asia Pacific Office Index. 

In Singapore, rental decline was slower at 1.4 per cent quarter on quarter as demand picked up supporting rental growth in other regional cities -- Singapore is now placed fifth after Hong Kong, Beijing, Shanghai and Tokyo. However, JLL does not expect a recovery in Singapore office any time soon. The large supply in 2016 and 2017, coupled with weak economy and expected low employment growth, are likely to force landlords to take aggressive cuts. 

A short term lack of good grade office space in Bangkok has sent rents, on local currency term, rising by over 2.6 per cent quarter on quarter- the highest across Southeast Asia this quarter. However the larger supply of good grade suburban offices in the coming years could add downward pressure on rents over the next 12 months. 

As expectedly, the growth in the Offshoring and Outsourcing sector, together with new completions, lifted rents by 0.9 per cent in Manila. Nonetheless, despite the increase, overall the rents in Makati CBD remains highly competitive compared to other cities in Asia Pacific. Based on the JLL Office Index, Manila (Makati CBD) comes in at the lower 23rd percentile (18/27). This bodes well for these occupiers.


Capital values across South East Asia office markets largely kept pace with rental movement. Except in Bangkok, where yield was driven down by high land cost plus strong buying interest but limited assets for sale. In Singapore, weak leasing demand coupled with the US interest rate rise, have led to yield expansion as capital values fell over 3 per cent quarter on quarter.