Office supply to surge in Asia Pacific

By Cao Qian | February 3, 2016, Wednesday |

Online Edition

OFFICE supply will surge in Asia Pacific as completions peak in a number of gateway cities and emerging markets, according to latest research released by global property advisor DTZ/Cushman & Wakefield.

Total supply of new office space will rise to about 13 percent of current inventory this year while sustained construction will push overall supply in the 2016-17 period further up to the level of 16 percent of existing stock, the company forecast.

While emerging markets account for 60 percent of completions, a number of gateway cities will see substantial delivery as well. Beijing and Shanghai, which are expected to see more than 618,700 square meters' new office space completed during the two-year time frame, will account for 71 percent of total anticipated completions among the region's 12 core gateway cities during the period.

"The substantial level of absorption witnessed last year in China's core and emerging cities, mainly fuelled by IT sector and financial services occupier, and the continued high level of absorption heading into 2016, is providing a greater level of comfort," said Andrew Ness, head of research for China operation, while addressing the question of whether the surge in development can be supported by underlying demand.

Notably, a decentralizing trend -- shifting toward new submarkets and expanded business districts from downtown locations -- will continue to be seen in a number of cities across the region.

In Shanghai, for instance, 60 percent of the new supply will be located in emerging sub-markets, which will intensify competition for tenants in these areas but make the city more cost competitive for corporate occupiers. In Beijing, while new build in core sub-markets will be greater, 45 percent of the total new supply will still come on stream in emerging new sub-areas, leading to an anticipated easing in CBD rents, according to the research.

Real Estate

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Office supply to surge in Asia Pacific

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