Among Asia’s leading financial centres, the relationship between the level of the stock market and Grade A office rents in CBDs is closest in Hong Kong, followed by Seoul. The relationship is weaker in Shanghai and Singapore, and weakest of all in Tokyo.
We now expect a lagging effect of the 22% drop in Hong Kong’s Hang Seng Index from its 2018 high to be a 4% decline in rents in Hong Kong Central in 2019. Our already cautious forecasts for rents in Seoul’s CBDs also look liable to downward revision.
In contrast, Shanghai’s economy looks broad enough to withstand financial shocks. The uptrend in rents in Singapore should persist due to tight vacancy and muted supply. In Tokyo, likewise, firm demand, limited supply and very low vacancy should underpin rent growth in the near term at least.
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