In China, the economic catastrophe of 2007-08 is often called "The Western financial crisis", and this is borne out by GDP growth forecasts of 2% in the Americas, 1% in Europe and a much healthier 5% in the Asia Pacific region.
And this positive outlook is reflected in the office rental market there, according to Cushman & Wakefield’s Global Office Forecast for 2013-14.
"The economic momentum remains sufficient to strengthen employment, and in turn, sustain momentum in the property markets," said Sigrid Zialcita, managing director of research for Cushman & Wakefield, Asia Pacific region. "The outsourcing industry was an important growth pillar in 2012 and will continue to thrive into 2013 as demand for outsourced services persists in key cities in India and the Philippines."
Strong demand from IT enabled services (ITeS) and business process outsourcing (BPO) firms will benefit markets in India and the Philippines in particular, Zialcita said.
It’s not all rosy, however. While demand in some markets like Manila will outpace supply, others such as Ho Chi Minh, Kuala Lumpur and Guangzhou are either currently in, or at risk of, oversupply, with significant office completions due through to 2014.
However, the outlook suggests that demand for office accommodation, whether new-build, conversion or refurbishments, is likely to remain strong.
For illustration, here are slightly more detailed snapshots of five cities.
Ho Chi Minh City: Rents are likely to decrease further in 2013-14 due to the high volume of supply expected to be completed, and current high vacancy rates.
The expected supply over the next two years may not support market recovery given demand expectations. Vacancies are likely to remain elevated in the mid to long term.
Upcoming supply in 2013 and 2014 will substantially increase the total stock. Future projects could be put on hold or delayed over the next two years.
Chengdu: Chengdu will see a lot of new supply in the next two years due to large numbers of office completions in the emerging submarket of Nanyanxian.
With already high vacancy rates, rent is unlikely to grow during the next two to three years. The vacancy rate will keep going up during the next two to three years, and will fall slightly starting 2015.
Manila: With several project completions in the Makati and Fort Bonifacio area, supply reached nearly two million square feet in 2012, but could moderate in 2013-14. Most of the new supply is designed to accommodate the business process outsourcing (BPO) industry, which is thriving.
Stable demand from BPO companies for prime office spaces will continue to drive office vacancies down for the next two to three years. Demand will exceed supply at least until 2014-15.
Bangkok: After more than a million square feet of new supply came on stream last year, no new supply is expected in the next one to two years. But vacancies are still going down, and rents are going up, slightly.
With no grade A supply for the next two years, central business district (CBD) absorption is expected to hold up at a moderate level, and the vacancy rate is likely to decrease during 2012-2014 accordingly.
Jakarta: Higher amounts of supply are expected in the next two years and most of it is high-quality grade A space.
Most of the upcoming new office projects secured high pre-commitments during construction. Absorption and vacancy will gradually increase towards 2014, so rental rates are projected to increase as well. Highest increment is still expected to occur in grade A offices.
Overall, says Cushman & Wakefield, with few exceptions, office rental markets in Asia will continue along a "solid path of growth", thanks to the region’s "solid property fundamentals, improved liquidity and increased availability of low financing options".