Office net absorption remained healthy in Q4 2017, supported by flight to quality and flight to centre leasing activity in major Pacific and Southeast Asian cities. Demand was primarily led by expansion and relocation by tech firms, while the co-working sector and domestic financial companies were also active. Regional rental growth picked up to 0.9% q-o-q or 2.8% y-o-y.
Retail leasing demand continued to be led by the F&B trade, but faster expansion was recorded by cosmetics, lifestyle and entertainment retailers. Overall retail rents were unchanged in Q4 2017, ending the year in positive territory (+0.9%) as the correction in Hong Kong and Singapore stabilised.
The period saw robust demand for logistics space as a steady flow of activity from e-commerce, 3PLs and manufacturing companies boosted warehouse leasing in Greater Seoul, Greater Tokyo and China tier I cities. Rents were flat in Q4 2017 but closed the year with 0.9% y-o-y growth, although performance varied across the region.
Asia Pacific commercial real estate investment turnover rose to US$47 billion in Q4 2017, while full year turnover increased by 21% to US$136 billion. Both figures marked new quarterly and yearly highs amid robust investment activity in China, Hong Kong, Singapore and Japan.