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  • Singapore could face severe office shortage in five years
  • Kuala Lumpur office supply to surge over the next two years
  • Beijing office bounce back defies pundits' expectations

Cautious optimism is a common theme in many spheres, the Asia Pacific office market echoing the same tune. According to Knight Frank’s Asia-Pacific Prime Office Rental Index Q4 2021, the current Covid variant “… has merely tempered the already moderate expectations for recovery.”

Knight Frank Office Report

The company’s publication said prime office rentals “turned the corner” in the final quarter of 2021 with 0.3% quarter on quarter growth. It is the first time there has been an uptick since Q3 2019, according to the Asia-Pacific Prime Office Rental Index.

While the quarter to quarter figures may have seen an uptick, the year on year movement was still down 1.8% for the index. It is still a positive sign, as the previous downward movement was recorded at 4.1% year on year.

Asia-Pacific Prime Office Rents

City Submarket(s) Prime net headline rent Local measurement Annual change (YoY%) Quarterly change (QoQ%) Forecast next 12 months
Brisbane CBD 607 AUD/SQ M/Annum (Net Floor Area) 0.8% 0.0%
Melbourne CBD 708 AUD/SQ M/Annum (Net Floor Area) 0.0% 0.0%
Perth CBD 622 AUD/SQ M/Annum (Net Floor Area) 0.9% 0.0%
Sydney CBD 1,190 AUD/SQ M/Annum (Net Floor Area) 0.1% 0.0%
Auckland CBD 525 NZD/SQ M/Annum (Net Floor Area) -4.5% 0.0%
East Asia
Tokyo Central 5 wards 28,605 JPY/Tsubo/Month (Net Floor Area) -5.5% -0.5%
Beijing Various 324 CNY/SQ M/Month (Gross Floor Area) -1.4% 0.6%
Guangzhou CBD 184 CNY/SQ M/Month (Gross Floor Area) 0.0% -0.6%
Shanghai Puxi, Pudong 259 CNY/SQ M/Month (Gross Floor Area) 1.9% 1.5%
Shenzhen CBD 197 CNY/SQ M/Month (Gross Floor Area) -4.0% -1.7%
Hong Kong SAR Central 114 HKD/SQ FT/Month (Net Floor Area) -2.4% 2.6%
Taipei Downtown 2,853 TWD/Ping/Month (Gross Floor Area) 0.3% -0.3%
Seoul CBD, GBD, YBD 36,556 KRW/ SQ M/Month (Gross Floor Area) 4.6% 0.4%
Bengaluru CBD 1,460 INR/SQ FT/Annum (Gross Floor Area) -4.9% 1.0%
Mumbai BKC 3,385 INR/SQ FT/Annum (Gross Floor Area) -2.6% 0.0%
NCR Connaught Place 4,078 INR/SQ FT/Annum (Gross Floor Area) 1.0% 0.0%
Phnom Penh City centre 23.98 USD/SQ FT/Month (Net Floor Area) -10.1% -8.8%
Jakarta CBD 296,325 IDR/SQ M/Annum (Semi-gross Floor Area) -8.3% -1.2%
Kuala Lumpur City centre 6 MYR/SQ FT/Month (Net Floor Area) -3.0% -0.2%
Singapore Raffles Place, Marina Bay 10 SGD/SQ FT/Month (Net Floor Area) -0.3% 1.5%
Bangkok CBD 1,131 THB/SQ M/Month (Gross Floor Area) -3.0% -1.7%

Source: Knight Frank Research.

Knight Frank reported that office vacancy, overall, “remains elevated at 12.8%, similar to 12.7% in Q3 2021.”

One of the trends the report said will continue to shape the office market this year is the “flight to quality”. Expectations are that some will take advantage of the lower rents to occupy higher-quality office spaces within the CBD, particularly big tech.


Savills reported Beijing Grade A offices made a much swifter recovery than the market expected.

“The first three-quarters of the Beijing Grade-A office market in 2021 were marked by booming supply and demand in major submarkets, with new supply 1.7 times and net absorption 3.4 times of their annual equivalents of 2020, far exceeding early predictions,” said the Savills Research for Beijing Offices 2H 2021, authored by James Macdonald and Simon Smith.

Annual absorption was 3.4 times that of 2020, net take-up in the leasing market totalled 614,000 square metres.

In Knight Frank’s report, the expectations were that the Mainland office sector will remain resilient, but also expected some headwinds, “due to the rippling effects of policy tightening for property developers in the market.”

For the final quarter of 2021, Knight Frank said Beijing recorded 0.6% rental growth, and Shanghai recorded 1.5% rental growth.

Kuala Lumpur

It is a tenant’s market, with supply considerably higher than demand. Knight Frank said the Malaysian capital’s “prime office rents have continued to face downward pressure over the past few quarters, as supply outstripped demand.”

Savills Research said that supply is expected to surge over the next two years.

While it expects the office leasing market in Greater KL to pick up, “rental growth could prove limited.”

Knight Frank said approximately 220,000 square metres of office space was added in 2021, with net absorption of new stock some 40%. The report also noted rents declined 3.0% year on year to the final quarter of 2021.

“[The rent decline reflects] the growing mismatch in the office market as landlords lowered asking rents to compete for limited occupier demand.”

Knight Frank Asia-Pacific Prime Office Rental Index

In Savills Research, the total vacancy rate for Grade A offices in Greater Kuala Lumpur averaged 26.4% in Q3 2021, the report also said “[total vacancy for Grade A offices in Greater Kuala Lumpur] showed no changes from 2020.”

The research also noted that “Opportunistic investment and the divestment of office portfolios have characterised the pandemic period.” Some MYR$3.33 billion (A$1.11 billion) of transactions were recorded across twelve office transactions in the first three quarters of the calendar year 2021.


In Knight Frank Research, Singapore prime net headline rent came in at SG$10.13 per square foot per month. The year on year change is done 0.3% with the quarterly change up 1.5%. The next twelve months look positive.

In a brief interlude, Savillls’ 2H 2021 Singapore Offices report was headlined with “office market holding steady in a COVID world”. The next block of text was thought-provokingly titled: Singapore Office Rents – Death of the Rental Cycle?

The Savills analysis found that for short and medium term moving averages from Q1 2000 to End Q3 2021, rents in the central area of Singapore generally had a one quarter back positive correlation.

“Beyond that, the correlation is not diabnosable because there appear to be too many factors impacting the index.”

In the long term, Savills research said it seemed some cycles were present and overlaid on the index between Q4 2005 to Q3 2021. The strongest cycle identified was 1.33 years, with weaker cycles identified with lengths 2.66 years, 5.05 years, 4.78 years, and 7.17 years.

The research put the ‘noisy behaviour’ of the office market down to Singapore’s nature as an open economy, and the country’s “proactive administration [which] takes regular action to adjust the economy.” Another factor included Covid.

Interlude aside, office supply shortages may be an issue. The research found that there won’t be much by way of new stock on market until 2026, with “new completions from 2022 to 2026 … quite spaced out.”

Savills research said the Singapore office market can expect 660,000 square feet NLA of Grade A offices to come online over the next five years, on average.

Additional factors that may lead to a shortage in three to five years include stock coming off market for redevelopment, along with secondary space absorbed by tech companies.

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