Just a few years ago, Asia’s commercial property market was driven largely by Hong Kong and China. With the mainland economy booming, it was easy to fill office towers in the former colony and in prosperous cities such as Beijing and Shanghai. But with China in a slump and its real estate market cratering, the focus has shifted to India, Vietnam and Korea.
As more multinationals diversify their Asia operations beyond China, landlords in nearby countries have an increasingly strong hand. The total area leased in Asia in the first quarter was 5% higher than the average of the past five years, brokerage Jones Lang LaSalle reports. That stands in sharp contrast to the US, where it was 29% lower, and Europe, which was a third below the five-year average. Brokerage CBRE Group Inc. expects rents in China’s biggest cities to fall as much as 6% this year. In Ho Chi Minh City, they rose 6.6% in the first quarter from a year ago—one of the biggest gains in Asia, according to real estate broker Knight Frank LLP.
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