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According to the latest Office Market Sentiment Survey by JLL, a professional services firm specialising in real estate, the outlook for most office markets in Asia Pacific is positive. There is strong demand in Australian cities Melbourne, Sydney as well as in Bangalore and Bangkok, especially in their Central Business Districts (CBD). Other cities such as Ho Chi Minh City, Manila and Hong Kong continue to hold steady in terms of rent outlook. Among the top sectors fuelling the demand for office space in 2017 are technology, professional services, pharmaceutical and real estate firms.
"The demand for space in much of the region is being driven by domestic companies seeking to enter or expand into prime CBD as well as growth in sectors such as technology and pharmaceutical," said Jeremy Sheldon, Managing Director, Markets & IPS, JLL Asia Pacific.
It has been reported that 70 per cent of the top 10 technology firms globally have set up their regional headquarters in Singapore, with 57 percent of the offices in the CBD. There is also strong government support for the technology sector in the Lion City, with the launch of the Smart Nation initiative in 2014.
Melbourne is another forerunner. More than half of Australia's top 20 technology companies are located in the city and several high-profile Silicon Valley companies have opened their APAC headquarters there. The state government has also been encouraging the sector through projects such as the Tech Voucher program. Meanwhile, Vietnam is steadily growing its tech industries –being in the midst of constructing the US$40 million Saigon Silicon City Center.
Bangkok has seen robust demand from e-commerce, call centre and IT firms for new office space and this trend is expected to continue in 2017.
The pharmaceuticals industry is another to watch. In August 2016, Thailand's Board of Investment approved of a five-year waiver of corporate income tax for phamaceutical firms in a bid to strengthen its position as a medical hub. Over in Manila, the prime One World Place in Bonifacio Global City saw two pharmacetical and medical firms occupying an office space of 1,000 square metre each. Singapore's One-North will also be the new Asian headquarters for a a phama giant later this year while Mumbai has recently finalised a 15-year lease deal with a healthcare company setting up its research and development centre.
The global pharmaceutical market is expected to be worth US$1.3 trillion in 2018. With Asia outpacing other continents in terms of population growth, this means a bigger market for medical products and solutions which pharmaceutical companies will be eager to capitalize on.
Over the next 12 months, JLL expects rents in 13 cities out of the 17 tracked to either remain steady or increase. Demand from high-growth sectors as well as quality developments in new and existing APAC commercial centres are likely to result in a robust rental property market in 2017.
RENTS EXPECTED TO INCREASE:
8. New Delhi
RENTS EXPECTED TO DECREASE
RENTS EXPECTED TO STAY STABLE
13. Ho Chi Minh City
14. Hong Kong