Prime Offices 

Prime office rental markets continued their gradual recovery in 1H/2024, with rental movements ranging from -8.4% HoH (Beijing) to 14.3% HoH (Bengaluru). 

Fifteen out of 21 markets saw rental growth in local currency terms and most markets continued to see moderate rental growth, ranging from approximately 1% to 3%.

• Notably, Bengaluru (14.3% HoH) and Hanoi (11.4% HoH) were the only two markets to register double-digit growth compared to the same period last year, driven by robust leasing activity and limited prime office stock.
  
  
• In Japan, even though two major Japanese markets (Tokyo and Osaka) didn’t see a significant growth in 1H/2024, both are expected to witness further rental growth in the second half, primarily supported by strong business sentiment, strong pre-leasing activity and limited new office space.
  
  
• In Australia, Sydney (2.8% HoH), Brisbane (1.3% HoH) and Melbourne (1% HoH) continued to register mild growth. However, rents in Melbourne are expected to fall in the second half, following weak take-up and low occupancy caused by hybrid working and rising levels of new supply.
  
  
• Due to weak business sentiment, high vacancy rates and oversupply, four major Chinese markets (Beijing, Shanghai, Shenzhen & Guangzhou) and Hong Kong continued to register declines, ranging from -8.4% HoH to -1.8% HoH. 

Prime Retail

Prime retail rental markets remained steady with rental movements ranging from -1.4% HoH (Hong Kong) to 24% HoH (Osaka).

11 out of 15 markets saw rental growth or remained flat in local currency terms, with only four markets (Hong Kong, Manlia, Shanghai, and Seoul) experiencing a slight decline. 

• Japan stood out across the region. Despite Tokyo’s rents remaining flat in 1H/2024, Osaka witnessed a remarkable growth of 24% HoH. Both Japanese markets are expected to see further rental growth, fueled by a weak yen and a compelling mix of travel experiences.

• Following closely behind Japan, three of the emerging markets in South-east Asia - Ho Chi Minh City (4.7% HoH), Hanoi (4.6% HoH) and Jakarta (3.8% HoH), also saw substantial rental improvement, due to a rise in middle class consumers and a recovery in tourism.

• The rental performance in Greater China was relatively flat, expect for Shenzhen (5.7% HoH) and Hong Kong (-1.4% HoH). After the pandemic, more Hong Kong shoppers have flocked to Shenzhen because of cheaper prices and greater variety, which has helped to fuel the city’s prime retail rents despite a weak domestic economy. This has also put pressure on Hong Kong’s prime retail market where the declining trend is expected to continue into the second half.

Prime Logistics

Prime logistics rental markets remained resilient in 1H/2024, with rental movements ranging from -2.8% HoH (Shanghai) to 7.6% HoH (Melbourne).

From 1H/2024, our report was expanded to included Seoul and three Indian markets - Mumbai, Delhi NCR and Bengaluru. 13 out of 15 markets saw rental growth or remained flat in local currency terms, with only two Chinese markets (Shanghai and Beijing) registering mild declines.

• Although the rental growth trend continued in the major Australian markets (Sydney, Melbourne and Brisbane) ranging from 3.5% to 7.6% HoH, growth has started to slow from the peak in 2023 due to declining sublease activity caused by short-term economic headwinds, as well as the normalization of leasing demand from the pandemic. The vacancy rate and incentives rose significantly, particularly in Sydney’s West (accounting for nearly 40% of nationwide stock). As a result, slower rental growth is expected in Melbourne and Brisbane, and Sydney might experience a rental correction in the second half.
  
  
• Greater China rental performance was mixed. The South China markets of Shenzhen and Guangzhou recorded a moderate growth of 2.9% and 2.2% HoH, respectively, while Shanghai and Beijing underperformed with declines of 2.8% and 1.9% HoH respectively. The divergence was due to the launch of new stock or oversupply issues weighing on rental performance in the latter two markets.
  
  
• Seoul’s rental performance was stable with growth of 0.3% HoH, but rents are expected to fall in the second half due to oversupply issues.
  
  
• In India, the three major markets registered nearly 5% HoH growth, driven by resilient demand for high quality warehousing. However, Delhi NCR is expected to see rental corrections, as demand might not offset new project deliveries.

Luxury Apartments

The luxury apartment rental markets slightly underperformed compared to other sectors in 1H/2024. Rental movements in this sector ranged from -2.3% HoH (Manila) to 1% HoH (Osaka).

Seven out of 10 markets saw mild rental declines in local currency terms, with only three markets (Osaka, Kuala Lumpur and Taipei) experiencing growth in 1H/2024.

• In Japan, the rental performance for Tokyo (-1.1% HoH) and Osaka (1% HoH) moved in opposite directions, however, the overall sentiment remains positive, supported by strong migration trends, rising office attendance and strong wage growth. Rents in both markets are expected to see further growth in the second half.

• Taipei and Kuala Lumper were also one of the three markets which saw a slight rental recovery in 1H/2024, driven by the strong economic performance of the semi-conductor industry and the resulting wealth effect.  However, Kuala Lumpur needs more time to return to its peak.

• In China, Shanghai, Guangzhou and Shenzhen remained on a downward trend due to a sluggish economy but the rental declines were relatively mild, ranging from -0.1% to 1.8% HoH. Rental performance in these markets is expected to remain subdued, unless the economy sees a rebound.

• Two prominent financial hubs – Singapore and Hong Kong continued to see a mild rental correction in 1H/2024, with declines of -2% and -1.9% HoH, respectively. However, both markets remained among the top three rental markets in the region.

Prime Hotels 

• The prime hotel market remained a bright spot in 1H/2024. Growth momentum in room rates continued in most markets, ranging from 1.8% YoY (Taipei) to 11.3% YoY (Kuala Lumpur), with the exception of Beijing (-13% YoY), Guangzhou (-7% YoY), Ho Chi Minh City (-5% YoY), and Hong Kong (-0.7% YoY), fueled by the strong rebound in tourism, and business travel.
  
  
• The decrease in the Greater China markets was primarily due to the normalization of room rates, which had spiked to extreme highs following the border reopening last year. In Ho Chi Minh, the market has not fully recovered yet, mainly due to soft demand from international visitors.

Notes:  

All % changes are compared to 2H/2023 and in local currency terms unless otherwise stated. The prime hotel data is an exception, compared to 1H/2023 to account for seasonal variations. 

Due to strong US currency in the 1H/2024, there may be a significant difference in results of reported in USD terms compared to those in local currency terms.