Prime Benchmark Highlights 

• Prime office rental markets in most cities remained in a down cycle in 1H/2022, albeit more have moved from an early downswing into the late downswing. Rental performance ranged from -5.8% (Shenzhen) to 3.9% (Shanghai). However, the stronger US Dollar continued to drive depreciation in various currencies across the region, especially Japan. Whilst six out of the 18 cities tracked showed signs of rental improvement in local currency terms in 1H/2022, none of them posted growth in occupancy costs in US Dollar terms. Elevated supply continued to exert downward pressure in some Chinese and Indian sub-markets. 

• Prime retail performance was clouded by the development of the pandemic, with rental performance ranging from -3.6% (Taipei) to +6.4% (Ho Chi Minh City). Many cities were disrupted by subsequent waves of infection and lockdowns in early 1H/2022, but quickly resumed normal operations and saw a pick-up in market conditions as tourist spending returned. The tight availability of prime properties in core shopping areas and limited  supply pipelines resulted in a low vacancy environment, supporting rental growth in Singapore (+1.1) Jakarta (+3.5%), Seoul (+6.1%), Ha Noi (+0.4%) and Ho Chi Minh City (+6.4%). Rising inflation across the region, however, as well as slower growth in areas such as China and Hong Kong may weigh on consumer confidence and spending, pointing to a softer recovery in the short term. 

• The logistics market remained the bright spot, as all eight markets we track remained in an upcycle, with rental performance ranging from -1.0% (Kuala Lumpur) to +4.4% (Beijing). Market sentiment remained buoyant in 1H/2022 despite the disruption to supply chains in China and slowing global trade. E-commerce remained a key demand driver in most markets while the low vacancy environment in high specification prime warehouse stock also lent resilience to rents, though overall growth may slow over the remainder of 2022.  

• The luxury apartment market remained largely stable across the region in 1H/2022. Singapore saw the highest growth (+9.7%), as demand rose as more expats and ultra-high net worth individuals relocated from areas with more restrictive travel requirements (Hong Kong for example) while supply remained tight. Taipei clearly regained momentum in 1H/2022, up 4.9% HoH, after a 2.5% drop in 2H/2021.  

• The hotel markets presented a mix picture, with reopened cities leading the growth. Room rate changes ranged from -2.4% (Shenzhen) to +46.8% (Ha Noi). Though the spike in rate growth was largely attributed to the lower base in 1H/2021, reduced supply combined with the support of ‘revenge tourism’ have also given operators greater pricing power, with some luxury hotel room rates even surpassing their pre-pandemic peaks. The 31st Southeast Asian Games in Ha Noi boosted the city’s luxury hotel occupancy and room rates. A broad-based recovery was observed in markets which have transitioned from a reliance on domestic demand more towards inbound tourism, while Beijing (-3.6%), Shenzhen (-2.4%) and Hong Kong (-0.9%) continued to struggle amid lingering outbreaks and stringent border controls.

 Note: All % changes are in local currency terms unless otherwise stated.