Mumbai, May 7 (UNI) An ongoing supply crunch continued to exert upward pressure on rentals in most Asian office markets during the first quarter of 2008.
According to CB Richard Ellis (CBRE) Research, the majority of the 16 cities covered in the quarterly Asian Office Market Flash have recorded vacancy levels below five for four or more quarters, and fresh supply was expected to be limited over the remainder of 2008.
These cities include the regional financial centres of Tokyo, Hong Kong and Singapore, India's first-tier cities, and Manila and Ho Chi Minh City in South East Asia.
Despite increasing uncertainty in the global economic outlook, corporate expansion continued in many parts of Asia and business sentiment remained largely positive due to expectations that leading Asian economies will outperform the US and Europe, the report said.
Commenting on India CBRE, South Asia Chairman and Managing Director Anshuman Magazine said ''Although absorption of office space remained brisk in most markets, continuous increases in occupancy costs have driven some companies to relocate beyond prime locations in cities including Tokyo, Hong Kong, Singapore and Mumbai''.
In India, supply remained limited in Central Business District (CBD) areas while facilities in secondary locations have attracted office occupiers due to superior availability, he added. In New Delhi, prime office rentals remained stable in the first quarter of 2008 and were expected to remain at current levels or increase marginally. New supply was expected to continue to be dismal in the CBD while the supply situation in the peripheral areas of Gurgaon and Noida was set to improve as a significant amount of supply is set to enter the market over the remainder of 2008 and into 2009.
A number of leases in Mumbai's CBD, Nariman Point, expired in the first quarter, with most tenants unable to renew office leases at the prevailing rentals. A number of these occupiers moved to more affordable areas. While this has not yet impacted rentals, the Nariman Point CBD was unlikely to witness substantial growth in rents through the rest of 2008. Supply remained limited in Bangalore's CBD and the situation was expected to persist throughout 2008, driving further increases in rental and capital values.
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