Asian landlords more cautious than we thought

Confidence Index down to less than 50% in 3Q, says survey.

The Asia Office Leasing Market Confidence Index recently released by Colliers International registered 55.1% in 3Q 2012, edging down from 64.2% in the previous quarter.

Though the index was lower than 2Q 2012, it remained at above 50%, a clear indication of the positive overall sentiment in the office leasing market.

The Index, based on a survey conducted in 3Q 2012 among all office leasing professionals in Colliers’ offices in Asia is a consolidation of four sub-indices covering New Leasing Inquiry, Real Estate Requirements, Landlords’ Expectations and Rental Expectations, based on the methodology.

Compared to the previous quarters, these four sub-indices trended downwards in 3Q 2012.

Although the overall level of new office leasing inquiry in Asia decreased in 3Q 2012, the survey results found that the interest level from office tenants intending to take on additional space was sustained but was not as strong as that in 2Q 2012.

“Despite declining sub-index of Real Estate Requirements in 3Q 2012, the above 50% level indicates that office tenants in Asia are still seeking expansion but at a less aggressive pace than they did in 2Q 2012,” stated Simon Lo, Executive Director of Research and Advisory, Asia at Colliers International.

Similarly, the Rental Expectations sub-Index that stayed over the 50% mark in 3Q 2012 indicated positive anticipation by Colliers’ brokers on prospective office rental trends in the next twelve months.

Meanwhile, only the Landlords’ Expectations sub-Index at 41.5% dropped below the 50% level in 3Q 2012.

“With the Landlords’ Expectations sub-Index decreasing to below 50%, this means that landlords of office leasing properties in Asia generally took a more cautious view than the previous quarter and were more generous in offering lease incentives, for example, free rent, cash, etc. in 3Q 2012 in order to secure tenants,” said Lo.