According to the latest research by Cushman & Wakefield, the world's largest privately-held commercial real estate services firm, the Asia Pacific region remains on track for solid economic growth in 2013.
Cushman & Wakefield managing director – Australia, David Woolford, said the Asia Pacific region is economically buoyed by the strong links between countries in the region, its reduced dependence on the US and Europe, and its minimal exposure to European debt.
“The good news for our region is that, at a time when global markets seem at the mercy of the European debt crisis, we are best placed to weather a slowdown. While growth in the region is slowing, Asian banks are in good health and there is scope for fiscal and monetary stimulus in most countries in the region if the need arises,” Mr Woolford said.
“Furthermore, Australia is viewed as a lower risk in terms of regional export activity and demand drivers like investment in telecommunications and mining remain strong, underpinning the strength of the main commercial property markets in 2012 and 2013.
“Our research indicates the commercial property market in 2012 is expected to be categorised as evenly balanced between tenant and landlord, moving toward being landlord favourable in 2013. But the shift should be gradual,” he said.
Cushman & Wakefield’s Asia Pacific 2012-13 Forecast Webinar, held in February, showed that, from a regional perspective, Sydney and Melbourne have comparatively low levels of supply expected to come online in 2012 to 2013.
In terms of occupier market conditions in 2012 through 2013, the research shows that, from a regional perspective, Melbourne is classified as having low availabilities (with a vacancy rate of less than seven per cent), while Sydney is classified as having moderate availabilities (vacancy between seven per cent and 13 per cent).
“In an analysis of 2012 rents compared with the previous cyclical peak in 2008, both Sydney and Melbourne are viewed as expensive for occupiers from an Asia Pacific perspective,” Mr Woolford said.
“This emphasises the competitiveness of our major office markets in a regional sense and demonstrates that demand, albeit increasing at a slower rate, remains robust enough to keep the market buoyant over the next 12 to 24 months,” he said.
Mr Woolford said that while the continued economic uncertainty at a global level could weigh on sentiment, and that growth will be uneven throughout the Asia Pacific region, the underlying fundamentals in the region and in Australia specifically will mean a recession will be avoided.
“We forecast economic growth in the region to slow over the next two years but don’t expect a recession to materialise, alleviating inflationary pressures. In Australia, this view is supported by stable to decreasing inflation levels and 10 year bond rates,” Mr Woolford said.
“This economic stability should result in sustained demand from tenants and enable them to absorb rising occupancy costs.”