Asia Pacific Property Digest q3 2016

Domestic demand buffers
heightened uncertainty
Asia Pacific Property Digest | Q3 2016
Dear Reader,
Asia Pacific continues to show robust growth amid heighted uncertainty. That was the message from
the IMF in its October World Economic Outlook post the Brexit vote. Since then we have had the
unexpected result from the US election. At the time of writing, US markets are pricing in growth. Here in
Asia Pacific demographics remain our destiny, with domestic activity bolstering growth and demand for
real estate. Please read the report on the conditions in your city.
You can view this report online at http://www.jllapsites.com/research/appd-online/.
As always, we welcome your feedback on our reports and service.
Thanks,
4
8
9
10
11
Asia Pacific Economy and

Property Market
Tokyo multifamily an unrivaled

investment
Race for office space in the

Sydney CBD
Riding out Hong Kongs retail

downturn
What mass entrepreneurship

means for China
Office
Feature Articles
Dr Megan Walters
Head of Research Asia Pacific
13
Hong Kong
14
Beijing 15
Shanghai 16
Chengdu 17
Taipei 18
Tokyo 19
Osaka 20
Seoul 21
Singapore 22
Bangkok 23
Jakarta 24
Kuala Lumpur
25
Manila 26
Ho Chi Minh City 27
Delhi 28
Mumbai 29
Bengaluru 30
Sydney 31
Melbourne 32
Brisbane 33
Auckland 34
Hong Kong
58
Beijing 59
Shanghai 60
Tokyo 61
Singapore 62
Sydney 63
Melbourne 64
Industrial
Retail
Hong Kong
36
Beijing 37
Shanghai 38
Chengdu 39
Tokyo 40
Singapore 41
Bangkok 42
Jakarta 43
Delhi 44
Mumbai 45
Sydney 46
Melbourne 47
35
57
49
Hong Kong
66
Beijing 67
Shanghai 68
Tokyo 69
Singapore 70
Bangkok 71
Jakarta 72
Sydney 73
Hotels
Residential
Hong Kong
50
Beijing 51
Shanghai 52
Singapore 53
Bangkok 54
Manila 55
65
4 FEATURES
ASIA PACIFIC ECONOMY
Domestic policies bolster Asia Pacific

Asia Pacific is still outperforming the global economy as domestic policies bolster its resilience.
Nonetheless, growth was uneven with results varied across individual economies and with a short
period of adjustment following the Brexit referendum. China held steady with the services sector making
up for softening of momentum in industry, while policymakers in Japan took further measures to try to
reinvigorate its economy. In India, further progress on reforms was a positive step in reassuring foreign
investors that the governments reform agenda is gaining momentum.
Despite various challenges, the Asia Pacific economy is still expanding at a decent pace more than
twice as fast as the rest of the world.
Heightened uncertainty in the short term
The unexpected result of Novembers US presidential election
fuelled financial market gyrations around the globe in a similar
fashion as Brexit - with stock markets plummeting as initial results
rolled in and then subsequently making up for lost ground.
Nonetheless, the cautious market sentiment that arose is likely to
linger in the near term as information about the new governments
policies slowly trickles in. Other major events scheduled over the
next 12 months, including elections in France and Germany, could
weigh on market sentiment.
While it is still too early to fully understand the potential economic
ramifications of the US election on AP, governments across the
region are likely to maintain an accommodative policy stance to
support their economies. Regardless of political shifts in other
regions, growth in the region continues to be based on domestic
demand, demographics and urbanisation. Heightened financial
market volatility could also see the US Fed slow or even defer rate
hikes until markets stabilise.
Global trade remains challenging

The soft global trade environment remains a challenge for the
regions exporters including the worlds largest exporter China,
which continues to see exports fall despite a weaker Yuan. In
Japan, the strong currency is hurting competitiveness with exports

down for nearly a year straight. Despite some signals that regional
trade has improved from low points earlier in the year, the outlook is
still bearish with increased risks related to uncertainty about
Trumps trade policy stance.
Retail sales paint mixed picture

Expansion of Chinas e-commerce retailers networks is
underpinning a healthy rise in retail spending, with growth
remaining in double-digits. The worlds largest online shopping
event - Singles Day was held in November and surpassed last
years sales by more than 30%, reaching USD 18 billion. Retail
market conditions in other parts of the region have been less stellar
including in the regions second-largest economy, Japan, as
sales falter amid economic uncertainty and slow wage growth. In
Australia, record high household wealth levels are providing some
support for retail sales.
Governments continue to support growth

As the region continues to face headwinds, policymakers have
remained diligent in their efforts to implement growth-supporting
policies. Australia, India, Indonesia and New Zealand cut interest
rates in recent months, while the Japanese government approved
further stimulus measures. In September, the Bank of Japan
AP to remain global growth engine

In spite of lingering headwinds related to a slow and patchy global
recovery, strong domestic demand should see the Asia Pacific
economy continue to grow at a respectable pace of around

5% through end-2017. A mixture of monetary policy and fiscal
stimulus plus structural reforms will add impetus to AP growth.
Resilient growth in India and ASEAN is expected to partially offset
rebalancing in China and subdued growth in Japan. However, there
are notable risks to the outlook including the impact of Chinas
further slowdown, geopolitical uncertainty and timing of US interest
rate hikes.
Figure 1: Outlook for Major Economies

Country
Real GDP Growth (%)
2017 Outlook
2016F
2017F
China
6.7
6.3
Recent momentum difficult to sustain and reliant on policy stimulus. Growth to be underpinned by
infrastructure spending and buoyant consumer spending.
Japan
0.6
0.6
Subdued global trade and demand to weigh on the economy. Fiscal stimulus to support growth.
India
7.5
7.2
Underlying dynamics remain firm with consumption a catalyst for solid growth. Progress on policy
reforms bodes well for outlook.
South Korea
2.8
2.4
Slowdown in growth amid ongoing weakness in global trade environment.
Australia
2.9
2.4
Low interest rate environment to support growth. Mining investment to remain a drag.
Indonesia
5.0
5.1
Household consumption and government spending on infrastructure to be main drivers.
Singapore
1.4
2.0
Ongoing challenges on both domestic and external fronts.
Hong Kong
1.4
1.9
Stronger-than-expected growth in 3Q, but growth outlook remains lacklustre.

Growing concerns about the property market.
Source:Oxford Economics, November 2016
ASIA PACIFIC PROPERTY MARKET
Investors active, corporates cautious

Occupier demand continued to soften; however, we are optimistic that regional leasing volumes for the
full-year 2016 will remain largely in line with last years level. Financial and technology firms continue to
be the key drivers of demand across many office markets, while the oil & gas industry further downsizes.
On the commercial real estate investment front, investor interest remains healthy with strong liquidity and
a low interest rate environment supporting demand for assets. 2016 investment volumes are expected to
be similar to 2015.
Office leasing activity softens with uneven performance
Overall regional leasing activity slowed further in 3Q, with a
double-digit decline in leasing volumes being recorded for the
second straight quarter. Low vacancy in key markets and a lack of
high-quality space contributed to the decline. India weighed most
on regional volumes falling about 60% y-o-y, due to fewer big ticket
transactions and slower leasing activity. Subdued leasing activity
was also evident in Hong Kong as slowing PRC demand and a lack
of available space in Central curbed leasing activity, while a tight

vacancy environment also saw leasing volumes drop in Tokyo.
Similar to recent quarters, the performance across the region was
not uniform as a number of markets recorded solid growth in gross
leasing. In Australia, volumes rose by a strong 78% y-o-y, driven
mostly by Melbourne (where there was broad-based demand),
which saw the highest volumes in AP. The three China Tier 1 cities
5 FEATURES
revamped its policy framework to target interest rates rather than

expanding the monetary base, after years of asset purchases had
failed to stimulate the economy.
Supply additions similar to a year ago

Half of all Asia Pacific markets recorded completions in 3Q, but the
volume of new supply was only slightly up from the same period a
year earlier. New office completions were seen in most of Greater
China, Australia, Singapore and Tier 1 India. Although vacancy rates
climbed in many monitored markets most obvious in Guangzhou,
Singapore and Seoul they remained exceptionally low in some
major markets - most notably Tokyo and Hong Kong.
Steady rental growth; Melbourne & Sydney outperform

In aggregate, Asia Pacific rents grew 0.5% q-o-q, slightly slower
than the pace in 2Q. Broad-based expansionary demand contributed
to Asia Pacifics strongest quarterly rental growth, achieved in
Melbourne (+5.7%). On an annual basis, Sydney (+19.7%) continued
to record the strongest growth supported by leasing activity from
professional services firms.
In Hong Kong, demand from Mainland Chinese financials continued
to underpin leasing activity and support moderate rental growth.
Upcoming supply put downward pressure on Tokyo rents, holding
them flat q-o-q. Caution from peer-to-peer lenders coupled with a
ban on new registrations fuelled a marginal decline in Shanghai
rents, while large supply and a lacklustre economy weighed further
on rents in Singapore.
Experience-oriented retail on the rise

Many landlords in China are actively adjusting tenant mixes and
putting more emphasis on experience-oriented tenants to support
foot traffic; F&B and kids brands continued to be active. In Hong Kong,
the difficult operating environment is seeing some shopping centre
landlords diversifying their tenant mix towards lifestyle, sportswear
and F&B offerings. An uneven pace of recovery is evident for retail
sales in Singapore where retailers are still cautious and looking
towards strengthening their online presence, while landlords of
underperforming malls are utilising pop-up stores to boost
occupancy. Market conditions in the Australian retail sector
remained broadly stable in 3Q; a clear divergence has emerged
between individual retailers in each segment of the market.
Figure 2: Office Rental & Capital Value Changes
Yearly % Changes, 3Q16
Home sales rise in some markets; new policy measures

rolled out
Rumours about further policy tightening in Shanghai prompted
buyers to return to the market and this supported a pick-up in sales
activity at the end of August. However, after these rumours proved
unfounded, sales volumes fell back in September. Homes sales
continued to improve in Hong Kong as accommodative financing
offered by developers and low mortgage rates enticed buyers.
There was sustained improvement in buying demand for residential
units in Singapores prime districts, in part fuelled by developer
incentives and attractively-priced units.
Many governments across the region remain steadfast about policy
restrictions to curb speculation with several governments recently
tightening measures including Hong Kong which raised the
stamp duty and multiple Chinese cities which tightened purchase
restrictions.
Commercial investment holds up

Commercial real estate investment activity held up during 3Q16,
despite market volatility after Brexit. Regional transaction volumes
totalled USD 86.6 billion in the nine months ending September 2016,
a stable result compared with the same period of 2015. Intraregional purchaser capital flow within the region trended slightly
higher, as Asian investors preferred markets closer to home. On
the other hand, capital flow by inter-regional purchasers regionally
declined over the same period of last year.
China was the outperformer during 3Q, accounting for 30% of
regional investment activity and with volumes up 45% y-o-y.
Mainland Chinese corporates also took the lead in Hong Kong.
Singapore and South Korea too saw an active quarter although
owners held onto stock in Japan and Australia.
Investor demand underpins capital value growth

In aggregate, Asia Pacific quarterly capital value growth increased
to 0.9%, up slightly from the 0.8% recorded in 2Q. Investment
demand for Grade A office assets remained high. Supported by
robust rental growth, Sydney (+5.4%) and Melbourne (+4.6%)
recorded the strongest quarterly capital value growth in the region.
Negative interest rates again contributed to increases in Osaka
while demand from PRC investors pushed up Hong Kong capital
values.
Figure 3: Direct Commercial Real Estate Investment

20073Q16
20
140
15
120
10
100
USD Billion
y-o-y %
60
Figures relate to the major submarket in each city

Soruce: JLL (Real Estate Intelligence Service), 3Q16
re
po
rta
ga
Si
n
ka
Ja
ijin
Be
ng
Ba
um
ou
Se
el
ng
an
Ko
ne
ng
Ho
Capital Values
ko
k
ba
i
15
bo
ur
ne
Sh
an
gh
ai
To
ky
o
20
ila
10
40
Rental Values
YTD 2016
$86.6 bill
1% y-o-y
80
Sy
d
6 FEATURES
saw an increase of 12% y-o-y on mixed trends; high rentals in

Shanghai led occupiers to lease affordable options outside the CBD
while Beijing and Guangzhou saw leasing activity in new
completions. Singapore volumes also spiked as large take up was
seen in new/soon-to-complete buildings.
2007
2008
2009
2010
2011
2012
2013
Japan
China
Australia
Hong Kong
South Korea
Other
2014
2015 YTD 2016

Singapore
Figures refer to transactions over USD 5 million in office, retail, hotels and industrial
Soruce: JLL (Real Estate Intelligence Service), 3Q16
7 FEATURES
Figure 4: Rental Property Clocks, 3Q16

Grade A Office
Prime Retail
Wellington
Guangzhou
Beijing
Guangzhou
Beijing, Kuala Lumpur
Shanghai, Tokyo^
Shanghai, Seoul
Jakarta
Bangkok
Kuala Lumpur
Auckland, Hong Kong

Tokyo
Growth
Slowing
Rents
Falling
Rents
Rising
Decline
Slowing
Auckland
Singapore
Manila
Sydney
Wellington
Jakarta,
Manila
Melbourne,
Bangkok, Osaka
Bengaluru
Canberra
Ho Chi Minh City
Delhi
Chennai
Mumbai
Growth
Slowing
Rents
Falling
Rents
Rising
Decline
Slowing
Hong Kong^
Singapore
Mumbai
Delhi
Perth
Bengaluru
Brisbane
Adelaide
Taipei, Hanoi
Melbourne*, Chennai
Note: Clock positions for the office sector relate to the main submarket in each city.
Prime Residential
Sydney*, SE Queensland*
*Regional
^High Street Shops/Multi-level High Street
Industrial
Guangzhou, Shanghai
Bangkok
Hong Kong
Shanghai
Beijing
Jakarta
Tokyo
Growth
Slowing
Rents
Falling
Rents
Rising
Decline
Slowing
Auckland
Kuala Lumpur
Wellington
Singapore
(Logistics)
Growth
Slowing
Rents
Falling
Rents
Rising
Decline
Slowing
Manila
Beijing
Manila
Hong Kong
Singapore*
Sydney
Melbourne
Brisbane
*Logistics (Hong Kong, Shanghai, Beijing, Greater Tokyo)
Source: JLL (Real Estate Intelligence Service), 3Q16

Note: Clock positions for the office sector relate to the main submarket in each city.
Occupier and investor demand to sustain momentum

We expect to see occupier market conditions in 4Q16 and into 2017
to be broadly similar to recent quarters. Given the year-to-date
result for leasing volumes and the increased economic
uncertainties both in the region and globally, we expected
aggregate growth in gross leasing volumes for this year to be flat or
slightly down on 2015.
The overall commercial real estate investment market should
remain stable in 2017, as we expect continued institutional appetite
for real estate in the region but an ongoing shortage stock. Positive
spreads to risk-free rates should persist, given the prospect of most
central banks keeping interest rates low.
ABOUT THE AUTHOR

Dr Megan Walters joined JLL in 2010 and
in October 2016 was appointed as Head of
Research Asia Pacific. In this role, Megan
leads a team of 160 professional researchers
in the region, which forms part of a network of
over 400 researchers in 65 countries around
the globe.
Singapore
(Business Park)
8 FEATURES
Tokyo multifamily an unrivaled investment

Japan is unique in an Asia Pacific sense in that it has a very deep,
liquid and intuitional multifamily real estate market. Japan has more
traded multifamily real estate than the rest of the Asia Pacific region
combined with over USD 55 billion in transaction volumes over the
past 10 years. This amount is larger than every other market in the
Asia Pacific region combined over the same timeframe.
For more information on Tokyos multifamily sector, please visit our

website.
Tokyo is also the most actively traded multifamily city in the world
outside the US. In fact multifamily real estate in Japan has been the
third most-traded asset class over the past five years, with volumes
higher than those in the industrial and hotel sectors. In recent years,
the case for investing into the multifamily sector in Japan has
strengthened.
Strong population growth in central Tokyo, high job security and
early signs of wage growth have helped to improve occupancy rates
to 97 percent. The low volatility nature of the asset class meant that
even as market conditions tightened, the sector has seen only
modest rental growth over the past few years relative to other
sectors. By the same token, as fundamentals weakens, any price
falls are limited. Following a number of years of above-trend rent
and value growth in most other asset classes, investors are seeing
the multifamily sector as a high yield, low volatility, low risk sector
with superior downside protection characteristics. Its stability is
particularly appealing for investors seeking predictable returns, and
there has been a noticeable growth in the level of interest, given the
pricing and cap rate trends seen in more traditional asset classes.
Despite the lower risk nature of the multifamily asset class, cap
rates for core Tokyo product remain at over a 100 bps (basis points)
premium to typical Grade A office and retail assets while, at
approximately 4 percent in central Tokyo. The cost of debt for the
sector has also continued to compress. The average long-term
interest rate for listed REITs in the sector is now below 1 percent,
with cash-on-cash yields often hitting close to or in excess of 10
percent.
A widening price spread between the multifamily and private
residential markets has also given rise to an interesting investment
opportunity. Land prices are starting to show strong growth and
pricing in the private condominium market has accelerated
significantly over the past few years, leading to a price differential
between the multifamily and the private condominium markets. This
is providing potential for reconversions as well as other value-add
plays on existing multifamily assets or older strata condominium
buildings.
ABOUT THE AUTHOR

Nicholas Wilson joined JLL in 2010 and
worked in both Australia and Singapore prior
to relocating to Japan in early 2015. He is
an Associate Director in the Japan Capital
Markets team and is responsible for
undertaking research and investment
advisory services for the firms investor
clients.
9 FEATURES
Race for office space in the Sydney CBD

In late 2015 the New South Wales (NSW) State Government
announced a new metro rail line that will go through the Sydney
CBD. The Sydney Metro will be a fully automated metro rail
extending from Rouse Hill, in the North West of metropolitan Sydney,
through the Sydney CBD, down to Bankstown, in the south west of
Sydney.
How will the Sydney Metro affect the office market?
A reality of constructing the Sydney Metro through a commercial
precinct such as the Sydney CBD is the compulsory acquisition of
office assets by the NSW Government to make way for the new
metro stations. JLL Research estimates the project will affect up to
63,000 sqm of office stock across the Sydney CBD, which equates to
1.1% of total stock.
Close to three quarters of the tenants to be displaced in the Sydney

CBD have space requirements less than 500 sqm. It is likely they will
be forced to expand their search into suburban markets because of
the limited options in the CBD and surrounding markets. This
points to positive leasing conditions over the short term across
metropolitan Sydneys office markets. However, if current market
conditions persist, finding a place for tenants which suits their
space requirements will prove to be a difficult task.
Figure 1: Sydney CBD office withdrawals and displacement of tenants,
2016 to 2018
Data compiled by the JLL Leasing team suggests that as many as

100 tenants will be displaced within the Sydney CBD because of
these compulsory acquisitions. The withdrawals come at a time
where market conditions are already tight in the CBD. Total net
absorption over the 12 months to 3Q16 (120,400 sqm) is well above
the 20 year long-term average of 50,000 sqm. This has pushed the
total vacancy rate from a cyclical high of 10.7% in 3Q13 down to
7.2% in 3Q16.
On top of this, a further 222,800 sqm of CBD office stock (4.4% of
total stock) is expected to be withdrawn between 2016 and 2018.
Figure 1 shows where the majority of tenants will be displaced in the
Sydney CBD. On top of tenants to be displaced by the compulsory
acquisitions, JLL Leasing estimates as many as 280 tenants will be
displaced because of office redevelopments and residential
conversion during this period of time.
Tenants are also being forced to assess their space options well
before their lease expiry, which is causing a flurry of leasing activity,
particularly in the less than 500 sqm tenant cohort of the market. A
combination of secondary asset withdrawals and tenants relocating
into secondary space has pushed the secondary vacancy rate
(currently 6.6%) well below the 10-year average (8.5%).
This leads to a difficult question to answer: where can the tenants
go? The nearest office market to the CBD the Sydney Fringe has
the lowest total vacancy rate (3.9%) of the 19 Australian office
markets monitored by JLL. North Sydney, the second closest market
to the CBD, also has limited space options because of the
withdrawal of office space within that market 37,100 sqm in 2016
or 4.5% of total stock.
Source: JLL Research, JLL Leasing, Esri
ABOUT THE AUTHOR

Paul Chapko is a Strategic Research Analyst
based in Sydney. He is responsible for
covering Sydneys office, retail and industrial
markets, but with a key focus on the office
sector.
10 FEATURES
Riding out Hong Kongs retail downturn

Against a challenging retail environment, mall operators have had
to review business strategies to maximise rental income. To this
end, operators have adopted a variety of approaches to increase
footfalls and sales. Among the most common strategies currently
being utilised in the market, include:

Diversifying offerings: The collapse in luxury goods sales has

propelled mall operators to diversify their tenant mix more
towards lifestyle, sportswear and F&B offerings.
Cityplaza in Quarry Bay brought in Eslite Spectrum, a

lifestyle bookstore that offers reading, art, cultural and
dining experiences to capture a wider range of shoppers;
Olympian City in Tai Kok Tsui made room for a new MUJI
store centred around a philosophy of versatile lifestyle
products;
Harbour City in Tsimshatsui opened an Adidas Sportswear

Collective Store that carries a wider variety of the brands
crossover collaborations; and
Pacific Place Mall in Admiralty increasing its F&B

offerings by about 50%.
Introducing new brands: Landlords are increasingly turning to

new brands to freshen their offerings as a means to stand out
from the crowd. Yet, they remain selective, being more
receptive to brands with established reputations overseas.
Harbour City, for example, has helped a number of new brands
debut in the local market with retailers including Youk Shim
Won from South Korea, Rouge Vif La cLe by Abahouse from
Japan and Ed Hardy from the U.S. all opening their first stores
in the city in the mall.
Leveraging on pop-ups: Incorporating pop-up stores is

becoming a popular strategy for mall operators to generate
excitement among shoppers and draw higher footfalls.
Nutellas recent pop-up store in Pacific Place Mall successfully
created a buzz in the city, drawing hour-long queues of people
to buy personalised jars of the famous spread. The flexible
nature of pop-up store leases also allows landlords a quick
assessment of the retailing potential of prospective tenants
before offering more permanent stores within their malls.
Hachill, a local eyewear brand, was able to parlay a pop-up
store at Hysan Place in Causeway Bay into a permanent store
within the mall after it was able to demonstrate its potential to

the malls owner.

Focusing on youths: With housing prices moving beyond the

reach of most of the citys young urban professionals, the
incentive to save for a downpayment on a home purchase has
decreased. Sensing the increased spending potential of this
cohort, mall operators have sought to adjust their tenant mix to
better cater towards the younger generation. At Times Square
in Causeway Bay, the operator has introduced a number of
vibrant F&B operators into the mall including Denmarks Joe &
The Juice, a brand that targets younger customers and Selfie
Caf, a new concept making use of food printing technology.
Over at Harbour City, the operator has beefed up its young
fashion offerings by adding Market Liberty, a South Korean
collective store renowned among the youngsters.
Recent visits to some of these malls would suggest that these

strategies appear to be working. In most malls, footfalls seem to be
on the up. Whether these moves will be enough for operators to ride
out the current downturn, however, remains to be seen.
ABOUT THE AUTHOR

Cristine Lai is a Senior Research Analyst
based in Hong Kong. She is responsible for
coverage of the Hong Kong retail market,
providing market analysis and forecasting
for the sector. Cristine also contributes to
quarterly publications including for JLLs Real
Estate Intelligence Service (REIS).
11 FEATURES
What mass entrepreneurship means for China

The future of office demand in China will rest not only on the stateowned sector and the foreign-invested sector, but increasingly
domestic, private companies. Where will the new generation of
these companies emerge from?
Inspiring millions
The Alibaba IPO in 2014 inspired millions of bright minds to start
companies and ushered in a wave of followers looking to be the
next Jack Ma. In China, e-commerce platforms, gig economy apps,
and ridesharing are adopted at rates far faster than in the West,
putting innovation on an accelerated timeline. China may not be an
early adopter with new technologies, but adoption rates go straight
up when technologies gain traction. Many are arguing that
innovation in China is real: its not just around hardware, but also the
processes, the packaging, the supply chains, and the integration
with other platforms. Many start-ups begin in co-working space,
incubators, and even apartments. As these firms grow in scale, their
presence is poised to spill over into the broader office market to
become a significant demand driver.
From incubator to office tenant

For early-stage companies, the mass entrepreneurship drive is
poised to deliver office demand on several fronts: through
incubators, accelerators, co-working spaces, and maker spaces,
all of which lease space from landlords to then sub-lease to
individual tenants. These are all designed with small companies in
mind who need maximum lease flexibility and growth flexibility over
a short time horizon, even as short as a single day. There are even
options for pre-incubators: Beijings Startup Street lets you take a
table for the day for the price of a coffee.
Once companies reach a certain maturity threshold, they will be
looking for a better place to call home to provide comfortable,
high-quality work environments for their employees, especially as
attracting and retaining top talent takes on a new level of
importance for their business.
7 businesses registered per minute

The policy frameworks of recent years mark a renewed effort by the
central government to encourage the formation of new, high-tech
companies. By an official count, China has more than 1,000
investment agencies funding entrepreneurs in China, with a total
investible capital of more than USD 57 billion. Some 115 university
science parks and over 1,600 technology business incubators are
said to be facilitating 80,000-plus enterprises and hiring 1.7 million
employees in China. State media reported that seven businesses are
registered every minute, based on 4.8 million company registrations
in the 14 months leading to May 2015.
The spectrum of office demand

At the top of the size scale sit Alibaba, Tencent, and Baidu. While
these firms are typically business park users due to their sheer size,
the story of the next few years will be the rise of the mid-sized
company: we can expect more of these firms to appear in the
standard, high-rise Grade A market. This will likely happen as a
process whereby firms start in co-working space, expand into
Grade B space, and ultimately end up in Grade A offices as their
needs evolve.
ABOUT THE AUTHOR

Steven McCord is Head of Research, North
China and Head of Retail Research, Asia.
He regularly monitors major commercial
real estate trends in China and trends in the
shopping centre industry across Asia. He has
been with the firm for over ten years.
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13 OFFICE
Office
The hunt for yield has driven prices to record

highs across the market.
Denis Ma, Head of Research, Hong Kong
130
Growth
Slowing
Leasing activity was relatively subdued against limited availability. In Central,

PRC demand continued to slow as tenants adopted a wait-and-see approach
amid a tight vacancy environment. Outside of Central, insurers were the most
active, leasing about 100,000 sq ft.
110
Index
HKD 109.8
115
105
100
95
90
85
4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
Capital Value Index
Arrows indicate 12-month outlook

Index base: 4Q12 =100
Source: JLL
Financial Indicators are for Central.
GOVERNMENT TENDERS DRAW STRONG MARKET INTEREST

The government released two commercial/business sites in Wong Chuk Hang

and Kai Tak for sale via tender, with a closing date in 4Q16. Both sites are
likely to draw strong market interest, with the local press reporting at least 15
developers expressing interest in the former site.
Sun Hung Kai Properties and Transport International have agreed to terms
with the government on the lease modification premium (HKD 4.31 billion or
HKD 3,447 per sq ft) to change the land use of 98 How Ming Street in Kwun
Tong to non-residential use.
Physical Indicators
6
250
200
150
100
50
50
CENTRAL RENTALS TREND HIGHER DESPITE A SLOWDOWN IN PRC DEMAND

Percent
300
1
13
9.6%
STAGE IN CYCLE
A widening rental gap between core and non-core areas saw

decentralisation gather momentum. Aside from a handful of consumer goods
companies relocating from Causeway Bay to non-core areas, some
international banks and law firms in Central were in active negotiations on
space in Quarry Bay.
120
12
SQ FT PER MONTH,
NET EFFECTIVE ON NLA
125
80
4Q12
RENTAL
GROWTH Y-O-Y
TENANT DECENTRALISATION GATHERS PACE
Financial Indices
Thousand sqm
14 OFFICE
HONG KONG
14
15
16F
Despite slowing PRC demand, Central rentals advanced 2.2% q-o-q as

landlords pushed rents higher against limited availability. Increasing supply
pressure from new developments in Kowloon East contributed to rents in
Tsimshatsui and Kowloon East retreating by 1.3% q-o-q and 0.3% q-o-q,
respectively.
Investors continued to favour en bloc office properties with a total of four

office buildings changing hands. The high pricing recorded in the en bloc
market appeared to be spreading into the broader market with several stratatitled properties transacting at record high levels.
17F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
For 2012 to 2015, take-up, completions and vacancy
rates are year-end annual. For 2016, take-up,
completions and vacancy rates are YTD, while
future supply is for 4Q16.
Physical Indicators are for the Overall market.
OUTLOOK: CENTRAL RENTAL MARKET TO REACH A CYCLICAL PEAK IN 2H17

The expected launch of Shenzhen-Hong Kong Stock Connect should serve as

a catalyst for PRC demand in Central. Coupled with limited availability, rents
remain on track to grow 510% in 2016 and edge higher through 1H17. Still, we
expect rents to reach a cyclical peak in 2017.
Capital values in Central will likely grow in the range of 05% in both 2016 and
2017 given strong pricing recently achieved in the investment market. The wall
of PRC capital flowing into the city is likely to offset any change in market
sentiment arising from potential interest rate hikes over the near term.
Note: Hong Kong Office refers to Hong Kongs overall Grade A office market.
Strong leasing progress at recent completions

shows resilient demand for quality
Grade A buildings.
BEIJING
Steven McCord, Head of Research, North China
SQM PER MONTH,

NET EFFECTIVE ON GFA
0.7%
RMB 385
STAGE IN CYCLE
Rents
Stable
RECENT, HIGH-QUALITY COMPLETIONS DRIVE NET TAKE-UP
Financial Indices
High-quality projects, including both new and existing properties, continued

to attract tenants, driving the majority of take-up in the quarter. However, CBD
absorption was negative for a third consecutive quarter; vacancies emerged
at lower-end Grade A buildings where landlords failed to respond to market
conditions and reduce rents accordingly.
Domestic finance firms continued to be active in looking for space, but overall
demand remained soft. To reduce operating costs, companies continued to
take advantage of relocation opportunities in the market as they became
available.
110
105
100
Index
Lei Shing Hong Centre A (89,000 sqm) entered the market in Wangjing and
reached 70% occupancy, as the landlord offered below-average rents to
secure large deals with stable tenants.
The retail-to-office conversion at Pacific Century Place was completed and

reached 90% commitment in the quarter. The successful outcome of the
project, which speaks to less traditional office tenants seeking space in the
high-profile Sanlitun area, is an important reference point for others
attempting office conversions in the market.
85
80
4Q12
The limited availability of Grade A en bloc properties in the market prompted

buyers to consider alternative options in the CBD. Activity has picked up in
the Grade B market, with several sales transactions in progress.
OUTLOOK: CBD RENTAL GROWTH TO BE RESTRAINED BY NEW PROJECTS

Overall rental growth will face downward pressure as several newly

completed buildings enter the market, especially in the CBD. However, rents
are forecast to rise further in Finance Street, which continues to benefit from
limited available space and steady demand from domestic companies.
Two more new projects are scheduled to come online before the end of the
year. With one of the buildings in East Changan already mostly leased up, the
completions are expected to drive net take-up as they help alleviate some
pent-up demand in the market.
Note: Note: Beijing Office refers to Beijings overall Grade A office market.
4Q15
4Q16
4Q17
Capital Value Index
Physical Indicators
Thousand sqm
800
700
600
500
400
300
200
100
Percent
As some landlords failed to respond to market conditions, mixed signals led

to flat overall rental growth for a second consecutive quarter. Finance Street
remained an exception and saw strong growth on the back of limited supply
and stable demand from domestic finance companies.
4Q13
4Q14
Rental Value Index

Source: JLL
Financial Indicators are for the CBD.
TWO STRATA-TITLE DEALS TRANSACT IN THE CBD

95
90
TWO NEW COMPLETIONS LEASE THE MAJORITY OF THEIR SPACE

15 OFFICE
RENTAL
GROWTH Y-O-Y
0
12
13
14
15
16F
17F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
As the market slows, some landlords have started

to moderate their rental stance and offer
more concessions.
SHANGHAI
130
SQM PER DAY,

4.7%
RMB 10.5
STAGE IN CYCLE
Rents
Stable
In the CBD, rapid rental growth over the past year has outpaced some
companies rental affordability, leading some firms to seek affordable options
in the decentralised market. Disruption in the P2P industry including early
lease terminations and a ban on registration of new P2P companies continued to negatively affect net absorption.
The CBD recorded net absorption of 31,900 sqm in 3Q16, down 56% from the
same time last year. An encouraging trend for the quarter was consistently
strong demand in the decentralised market, as companies continued to look
for upgrade, consolidation and cost-saving options. The decentralised market
recorded net absorption of 124,000 sqm in 3Q16.
120
Index
110
100
90
80
4Q12
RENTAL
GROWTH Y-O-Y
DECENTRALISED TAKE-UP MAKES UP FOR CBD SLOWDOWN
Financial Indices
4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
Capital Value Index
PUXI CBD VACANCY UP DUE TO SLOWER DEMAND AND NEW SUPPLY

Source: JLL
Three developments reached completion in the Puxi CBD: HKRI Centre One
(95,725 sqm), Raffles City Changning T2 (32,418 sqm) and Bund Finance Center
N1/2/3 (29,010 sqm). In the Puxi decentralised market, Gopher Center (59,775
sqm) and Hongqiao Vanke Center Ph2 (40,036 sqm) were completed.
Physical Indicators
Puxi CBD vacancy rose 3.8 percentage points q-o-q to 7.6% in 3Q16, partially
due to new supply. Pudong vacancy remained flat at 6.5% due to the absence
of new supply. Decentralised market vacancy declined 1.1 percentage points
q-o-q to 15.8% despite increased supply.
800
16
700
14
600
12
500
10
400
300
200
100
RENTS DOWN IN PUXI CBD AND STABLE IN PUDONG CBD

Percent
Thousand sqm
16 OFFICE
Daniel Yao, Director - Research, Shanghai
0
12
13
14
15
16F
The Puxi CBD recorded a rental decrease of 1.0% q-o-q as vacancy rose. In
light of competition from the decentralised market, landlords of older CBD
projects are more willing to offer discounts to retain tenants. In Pudong, rental
growth also slowed down during the quarter, only edging up by 0.3% q-o-q.
The investment market remained active in the quarter. SOHO Century Plazas
sale once again demonstrated that domestic institutional investors
notably insurance companies have intense interest in Shanghais office
market, along with strong buying power. Many foreign investors have been
priced out of the CBD market by low yields.
17F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
Physical Indicators are for the CBD.
OUTLOOK: LARGE SUPPLY SHOULD EXERT PRESSURE ON LANDLORDS

Both the CBD and decentralised markets are expecting high volumes of
new supply through 2017. Vacancy in both markets is expected to rise as the
market takes time to absorb incoming supply.
Amid rising vacancy, more CBD landlords are likely to adjust their rental
expectations. Older projects, in particular, are expecting to face competition
from high-quality projects in decentralised markets.
Note: Shanghai Office refers to Shanghais overall Grade A office market, consisting of Pudong, Puxi and
decentralised areas.
Landlords strategy of lowering rents to improve

occupancy pays off.
Frank Ma, Head of Research, West China
4.2%
RMB 91.7
STAGE IN CYCLE
Rents
Falling
UPGRADING AND NEW SET-UP DEMAND PUSH UP NET ABSORPTION

Lower rentals and incentives (e.g. flexible lease terms, fit-out periods) offered
by landlords enticed some tenants to upgrade and also triggered demand
from new set-ups. For example, a domestic real estate company upgraded to
a 2,100 sqm unit in China Overseas International Center (Tower J) while a
domestic trading company set up its first Chengdu office (3,500 sqm) in
CapitaMall Tianfu.
Financial Indices
110
100
Requirements from tenants upgrading and setting up new offices contributed

to a 33.7% q-o-q rise in net absorption to 80,200 sqm.
Effective July 1st, Chengdus local tax bureau lowered the tax rate applicable
for commercial properties owned by individual landlords for lease from about
30% to 10%. This change reversed a tax increase which was put in place at
the beginning of the year.
In 3Q16, net effective rents declined 3.0% q-o-q to RMB 91.7 per sqm per
month in part due to the impact of the recent tax change. A high vacancy
environment also prompted some landlords to continue lowering rents to
improve occupancy. However, a few buildings saw rents hold stable
supported by strong leasing momentum.
OUTLOOK: MORE UPGRADING DEMAND EXPECTED; FURTHER RENTAL DECLINES

4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
Three Grade A office projects are expected to be delivered during 4Q16,

which should push up the vacancy rate. The new supply is likely to erode
landlords bargaining power and further rental decreases are expected.
Lower rents are expected to encourage more tenants to upgrade.
As the New South Area matures, which presently has the lowest average
rental among all submarkets, this may generate more upgrading and
relocation demand from older buildings in mature submarkets.
Note: Chengdu Office refers to Chengdus overall Grade A office market.
Physical Indicators
800
60
600
45
400
30
200
15
Percent
4Q13
4Q14
Rental Value Index
A lack of new supply and robust leasing activity pushed the vacancy rate
down slightly from 36.4% in 2Q16 to 33.4% in 3Q16.
OVERALL RENTS CONTINUE TO TREND DOWN

70
4Q12
Thousand sqm
Twin Rivers International Tower A completed construction in 3Q16, but the

developer postponed its opening due to plans of selling the project. As a
result, the quarter witnessed no new Grade A completions and total stock
remained at 2,697,000 sqm.
90
80
NO NEW SUPPLY

17 OFFICE
SQM PER MONTH,

Index
RENTAL
GROWTH Y-O-Y
CHENGDU
0
12
13
14
15
16F
17F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
Occupier and investment markets remain muted.

Jamie Chang, Head of Research, Taiwan
140
120
Index
PING PER MONTH,

NET ON GFA
2.6%
NTD 3,118
STAGE IN CYCLE
Rents
Stable
Net take-up decreased from 5,400 ping in 2Q16 to 4,300 ping in 3Q16. The
largest leasing deal during the quarter was from a retailer taking a large unit
in Dunhua South. Most other leasing deals involved small-sized units.
The city fringe continued to attract corporate occupiers because of the

relatively cheaper rents and better incentives on offer by landlords. Demand
mostly came from retail, telecommunication, high-tech and mobile gaming
businesses.
130
110
100
NO SUPPLY IN 3Q16
90
80
4Q12
RENTAL
GROWTH Y-O-Y
RELOCATIONS SUPPORT DEMAND
Financial Indices
4Q13
4Q14
Rental Value Index
In a similar trend to the previous quarter, several landlords released self-use

space for lease. However, overall vacancy remained flat q-o-q at 10.6%.
New supply planned for 2016 is rather limited with only two projects expected
to complete by year-end, adding 37,000 ping of floor space of which 77% is
committed for self-use. Both upcoming buildings are located in the Non-core
submarket.
4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
Financial Indicators are for Xinyi.
RENTAL GROWTH MODERATES AS LANDLORD OFFER BETTER DEALS
Physical Indicators
Average rent remained relatively stable as landlords softened their stance on

rentals. Landlords have been cautious about raising rents given the fragile
state of the economy, and have prioritised maintaining occupancy levels.
Quarterly investment volumes for all property types reached NTD 8.9 billion in
3Q16, a 60% decrease from the previous quarter. As at YTD September 2016,
total transaction volumes reached NTD 40.3 billion, the second lowest level
for this period in the last six years.
160
16
140
14
120
12
100
10
80
60
40
20
OUTLOOK: OCCUPIERS AND INVESTORS REMAIN ON THE SIDE-LINES
A JLL market survey indicated that new leases are likely to remain centred
on small-to-mid-sized units as corporations try to keep a lid on expenditures.
Nonetheless, upcoming buildings in the pipeline over the next two years are
likely to entice some tenants to relocate.
The latest estimates based on financial statements published by the

countrys top ten largest insurers show that there is NTD 4.2 trillion in capital
available for real estate investments. With such abundant capital and a low
interest rate environment, these investors are likely to continue to scout for
investment opportunities both domestically and abroad.
0
12
13
14
15
16F
Percent
Thousand sqm
18 OFFICE
TAIPEI
17F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
Note: Taipei Office refers to Taipeis overall Grade A office market.
Vacancy continues to decline but rent growth

is slowing.
TOKYO
Takeshi Akagi, Head of Research, Japan
TSUBO PER MONTH,

GROSS ON NLA
3.3%
JPY 35,840
STAGE IN CYCLE
Growth
Slowing
NET TAKE-UP IN THE FIRST NINE MONTHS NEARS FULL-YEAR 2015 LEVEL
Financial Indices
A tight labour market persists with Augusts unemployment rate at 3.1%, near
a 21-year low, while the job offer to applicant ratio was stable at a 24-year
high of 1.37.
Firms in industries such as manufacturing, professional services and
information & communication continued to look for space, but major
relocations were limited in the exceptionally low vacancy environment.
Net absorption in 3Q16 was 30,000 sqm, and this brought the total as at YTD
September 2016 to 333,000 sqm, equivalent to 95% of the full-year 2015 total.
160
150
140
Index
No new supply entered the market in 3Q16.
Available space in the CBD continued to decrease on the back of stable

demand and no new supply. The vacancy rate dropped below 1.5% for the
first time since 2007, decreasing 40 bps q-o-q and 190 bps y-o-y to 1.4%.
130
120
110
100
VACANCY RATE DIPS TO A NINE-YEAR LOW

19 OFFICE
RENTAL
GROWTH Y-O-Y
90
4Q12
4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
RENT AND CAPITAL VALUE GROWTH CONTINUES TO DECELERATE
Rents averaged JPY 35,840 per tsubo per month in 3Q16, up 0.2% q-o-q and
3.3% y-o-y. Rent growth continued to slow but remained in positive territory
for the 18th consecutive quarter. The Shinjuku submarket drove growth in the
quarter.
OUTLOOK: RENTS AND CAPITAL VALUES TO GROW, ALBEIT AT A SLOWER PACE

According to the economic outlook by Oxford Economics, real GDP is

expected to grow 0.6% in 2017 while the unemployment rate should edge
lower. Corporate profits remain high; however, corporates neutral outlook for
business conditions is a concern.
In 2017, rents are expected to edge higher as the vacancy rate remains below
3% amid limited new supply. However, scheduled supply completions for 2018
are expected to be the second largest on record, and this could put pressure
on rents. Sustained investor interest and rent growth should support a further
rise in capital values.
Note: Tokyo Office refers to Tokyos 5 Kus Grade A office market.
600
500
400
300
200
100
Percent
Capital values were stable q-o-q but higher y-o-y by 9.2%. Investment yields
were generally stable in the quarter and remained at a record low. Investor
interest remains high, but there continues to be a lack of assets for sale. A
notable investment transaction was Hulic Reits acquisition of a stake (8.7%)
in Ochanomizu Sola City for JPY 15.2 billion or at an NOI cap rate of 3.9%.
Physical Indicators
Thousand sqm
0
12
13
14
15
16F
17F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
Rents continue to grow amid a tight vacancy

environment but global economic uncertainty
remains a concern.
OSAKA
170
Index
140
JPY 17,013
Rents
Rising
Demand continued to come from companies in construction, manufacturing,

and wholesale & retail trade industries. With low vacancy and no new supply,
space that becomes available is quickly leased. Net absorption in the first
nine months of 2016 totalled 30,000 sqm, equivalent to only 30% of the same
period in 2015. However, take-up last year was supported by a large volume of
new completions.
130
120
110
100
4Q16
4Q15
4Q17
Capital Value Index
4Q13
4Q14
Rental Value Index

Source: JLL
VACANCY REMAINS AT AN EIGHT-YEAR LOW

No new supply entered the market in 3Q16.
Amid no new supply and firm demand, the vacancy rate remained below 4%
for the second consecutive quarter. The vacancy rate stood at 3.8% at end3Q16, stable q-o-q but down 170 bps y-o-y.
CAPITAL VALUE GROWTH ACCELERATES
Physical Indicators
12
150
10
120
90
60
30
Percent
180
Rents averaged JPY 17,013 per tsubo per month, up 0.9% q-o-q and 5.5%
y-o-y. Growth was registered for the ninth successive quarter and led by the
Umeda submarket. Although rents surpassed JPY 17,000 for the first time
in seven years, landlords remained cautious about raising rents due to
increased uncertainty in the global economy.
Capital values increased 4.0% q-o-q and 18.4% y-o-y. Cap rates reached a
new record low and have been below 4% for four straight quarters. Investor
demand continued to spill over from the Tokyo Metropolitan region. A notable
sales transaction included Activia Properties acquisition of Umeda Gate
Tower.
0
13
5.5%
STAGE IN CYCLE
Employment conditions continued to improve in Greater Osaka, with the July

unemployment rate decreasing 0.1 percentage points m-o-m to 3.6% and the
jobs to applicant ratio improving for the fourth consecutive month to 1.29.
150
12
TSUBO PER MONTH,

GROSS ON NLA
160
90
4Q12
RENTAL
GROWTH Y-O-Y
NET ABSORPTION SLOWS AS AVAILABLE SPACE DECREASES
Financial Indices
Thousand sqm
20 OFFICE
14
15
16F
17F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
OUTLOOK: RENTS AND CAPITAL VALUES TO GROW MODERATELY

According to Oxford Economics, labour market conditions are expected to

remain firm in 2017, with the unemployment rate likely to stay at a low level.
Furthermore, Septembers Greater Osaka Tankan Survey indicates that large
manufacturers are slightly more optimistic about the short-term outlook than
in the previous survey.
The vacancy rate is expected to rise next year as new supply enters the
market for the first time in nearly two years, but it should remain below 4%.
We expect rents to grow next year, albeit at a slower pace than in 2016.
Capital values are also expected to rise, largely reflecting rent growth.
Source: JLL
Note: Osaka Office refers to Osakas 2 Kus Grade A office market.
Investment volumes accelerate while Center Point

Gwanghwamun sells for a record unit price.
SEOUL
Yongmin Lee, Head of Research, Korea
PYUNG PER MONTH,

2.3%
KRW 97,410
STAGE IN CYCLE
Rents
Falling
SAMSUNG LIFE RELOCATES FROM CBD TO GANGNAM
Financial Indices
Overall net absorption was -5,300 pyung in 3Q16 due to the relocation activity
of Samsung affiliates which departed from Samsung Life HQ and Samsung
Taepyungro Building in the CBD for Samsung Seocho Town in Gangnam.
Several large new leases were signed by landlords in the CBD. The landlord
of Tower 8 leased 6,000 pyung to eight tenants including Panocean (2,400
pyung), Mirae Asset expanded owner-occupied space at Center One (1,300
pyung) and LVMH Perfume & Cosmetics (1,900 pyung) moved into D Tower.
140
130
120
Index
110
100
PARNAS TOWER COMPLETES IN GANGNAM
Negative absorption in the CBD and the completion of Parnas Tower pushed
the overall vacancy rate up 220 bps q-o-q to 13.9% in 3Q16.
Parnas Tower (office area GFA 31,600 pyung) is the first Grade A completion in
Gangnam since 2014 and it had a commitment rate of 37% at end-3Q16.
TENANT DEPARTURES OR EXPECTED DEPARTURES DRAG DOWN CBD RENT

Overall rents increased 0.4% q-o-q in 3Q16. However, the departure of

Samsung affiliates put downward pressure on CBD rents which declined by
1.5% q-o-q.
OUTLOOK: SEVERAL LARGE CORPORATES EXPECTED TO LEAVE CBD

Pending lease contracts at Parnas Tower and potential consolidation and

relocation activity due to Mirae Assets acquisition of Daewoo Securities are
expected to lead take-up, although the relocations of several anchor tenants
from CBD stock to owner-occupied buildings including Hana Bank, Amore
Pacific and LG may limit a rebound in absorption.
Momentum in the investment market is expected to remain strong with a solid
pipeline of deals scheduled to close by the end of the year including the sale
of AIGs International Finance Center to Brookfield, Blackstones acquisition
of Capital Tower and the purchase of Samsung Fire and Marine HQ by
Booyoung.
Note: Seoul Office refers to Seouls Grade A office market.
4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
Physical Indicators
400
15
400
12
300
200
100
100
Percent
A record quarterly investment volume of KRW 1.77 trillion was led by Center
Point Gwanghwamun (GFA 11,781 pyung) which traded to Koramco for
KRW 307 billion. The sale price reflected a record unit price of
KRW 26.1 million per pyung, surpassing the previous record for a Seoul office
building of KRW 24.9 million per pyung.
90
4Q12
Thousand sqm
21 OFFICE
RENTAL
GROWTH Y-O-Y
3
12
13
14
15
16F
17F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
For 2012 to 2015, take-up, completions and
vacancy rates are year-end annual. For 2016, takeup, completions and vacancy rates are YTD, while
Continual rental decline amid supply pressures

and weaker economic conditions.
Dr Chua Yang Liang, Head of Research, South East Asia
130
Index
110
SGD 8.63
Rents
Falling
Overall, demand in the quarter was driven by business services, and the
finance, insurance and technology sectors. The competitive leasing
environment, together with the new supply and the availability of capital
expenditure budgets, albeit still tight, resulted in some relocation and
expansion in the quarter.
90
4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
THE VACANCY RATE COULD INCREASE AS MORE SUPPLY COMES ON STREAM

Guoco Tower (0.9 million sq ft) was completed in 3Q16 with a healthy level of
commitment. The completion of Marina One (1.9 million sq ft) has been
delayed from 4Q16 to 1Q17. We do not expect any major en bloc supply in the
CBD to be completed in 4Q16.
The upcoming supply of 2.2 million sq ft (Marina One and UIC Building) in 2017
has some pre-commitments. These pre-commitments are mainly relocations
from buildings within the CBD, with minimal expansion demand.
Physical Indicators
10
200
150
100
50
LEASING MARKET FACES PROLONGED HEADWINDS

Rents declined for the sixth consecutive quarter but the pressure on rents
was alleviated by the delayed completion of Marina One from 4Q16 to 1Q17.
Buildings with better technical specifications and higher occupancy rates
were still commanding a slight rental premium.
The office investment market received steady interest from investors,

especially for investment grade office buildings. The 110 Robinson Road
building was sold by OCBC for SGD 45.1 million (about SGD 3,200 per sq ft) to
Indonesian tycoon, Dr Tahir this deal should be examined cautiously as the
buyer may have other intentions for the building.
Percent
150
0
13
10.2%
STAGE IN CYCLE
Despite the weak economy, the stronger net take-up in the quarter can be
attributed to the prolonged rental decline and the attractive leasing incentives
offered such as longer fitting-out periods. However, the leasing market
remains weak and global economic headwinds should remain a challenge.
100
12
SQ FT PER MONTH,
GROSS EFFECTIVE ON NLA
120
80
4Q12
RENTAL
GROWTH Y-O-Y
IMPROVEMENT IN CBD TAKE-UP A RESULT OF PROLONGED RENTAL DECLINE
Financial Indices
Thousand sqm
22 OFFICE
SINGAPORE
14
15
16F
17F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
Physical Indicators are for the CBD.
OUTLOOK: 2017 LEASING MARKET TO BE SIMILAR TO THAT OF 2016

Overall CBD gross rents had fallen by 10.2% y-o-y at end-3Q16, but the
quarterly rate of decline had slowed consecutively for three quarters. On the
back of the upcoming 2.2 million sq ft of supply, we expect rents to continue
falling by another 23% in the coming quarters.
Asset yields are expected to compress slightly as the US Federal Reserve

has maintained its interest rate. The capital value trend is thus likely to mirror
that of rental decline but at a slower rate, given the interest in prime buildings
such as the potential sale of both 77 Robinson Road and the 50% stake in
Capital Square.
Note: Singapore Office refers to Singapores CBD Grade A office market in Marina Bay, Raffles Place,
Shenton Way, and Marina Centre.
New high-quality Grade A buildings continue to

draw tenants who are relocating from older, less
expensive buildings.
BANGKOK
Andrew Gulbrandson, Head of Research, Thailand
SQM PER MONTH,

GROSS ON NLA
1.9%
THB 817
STAGE IN CYCLE
Rents
Rising
DEMAND FOR SPACE IN NEWLY COMPLETED BUILDINGS REMAIN STRONG
Financial Indices
Net absorption in 3Q16 totalled 22,000 sqm, down from 29,000 sqm in 2Q16.
Take-up in 3Q16 was driven mainly by new tenants moving into FYI Center,
which was completed in 1Q16.
Leasing activity in the quarter was dominated by international occupiers in
the education, agriculture and manufacturing sectors.
180
160
140
120
Index
AVAILABLE SPACE DWINDLES WITH VACANCY FALLING TO 8.3%
Magnolia Ratchadamri Boulevard (6,000 sqm), the podium office component

of a mixed-use project that includes 316 ultra-luxury condo units and the first
Waldorf Astoria in Bangkok, delayed its scheduled completion to 4Q16. The
office space will be partially occupied by the project landowner, the Debsirin
Alumni Association.
As no new Grade A office buildings completed in 3Q16, office stock in the CBA
remained at 1,884,000 sqm. The vacancy rate declined to 8.3% amidst healthy
take-up.
RENTS AND CAPITAL VALUES RISE SLIGHTLY WHILE YIELDS REMAIN STABLE
Net effective rents edged up 0.3% q-o-q to THB 633 per sqm per month in
3Q16. The increase was driven by rising rents in the Central Bangkok
submarket, which represents 70% of total prime grade space in the CBA.
Capital values rose to THB 114,191 per sqm, an increase of 0.1% q-o-q. As
rents and capital values both increased at a similar pace, yields remain stable
at 6.7%.
OUTLOOK: ROBUST DEMAND AND THINNING SUPPLY PIPELINE EXPECTED

Annual net absorption is projected to reach 65,000 sqm in 2016. Vacancy

rates are expected to remain stable into 2017, as we expect new supply and
demand for 2017 to be well balanced.
Given the limited supply in prime areas and strong demand for prime grade
office space in the CBA, indicated by strong pre-commitment rates in new
projects, rents will likely continue to increase at a modest pace into 2017.
However, reduced renewal rents offered in some older existing Grade A
buildings to retain existing tenants and a large supply of relatively less
expensive Grade A office space outside the CBA, which is scheduled to
complete in 20162017, should continue put downward pressure on CBA
rents.
Note: Bangkok Office refers to Bangkoks Central Business Area (CBA) Grade A office market.
80
40
20
0
4Q12
4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
Physical Indicators
120
16
90
12
60
30
Percent
100
60
Thousand sqm
23 OFFICE
RENTAL
GROWTH Y-O-Y
0
12
13
14
15
16F
17F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
Vacancy stabilises as 3Q16 is a rare quarter with

no new supply.
James Taylor, Head of Research, Indonesia
300
Index
150
IDR 3,943,574
Rents
Falling
The e-commerce and IT sectors remained strong while enquiries continued

to come in from banks, insurance firms and professional service providers,
although not all of this necessarily reflected new demand as some firms
sought to relocate or consolidate. The oil & gas and mining industries
remained relatively weak.
100
50
4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
Physical Indicators
30
500
25
400
20
300
15
200
10
100
Percent
600
0
13
8.6%
STAGE IN CYCLE
Enquiry levels remained high in 3Q16. However, the volume of closed deals
was relatively low in the face of falling rents and high vacancy rates; tenants
know their value and are negotiating hard. We continued to see upgrade
demand from some tenants seeking to take advantage of available space and
attractive rents in some quality buildings.
200
12
SQM PER ANNUM,

250
0
4Q12
RENTAL
GROWTH Y-O-Y
UPGRADE DEMAND REMAINS A THEME AS TENANTS SEARCH FOR VALUE
Financial Indices
Thousand sqm
24 OFFICE
JAKARTA
14
15
16F
17F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
NO GRADE A COMPLETIONS IN 3Q16

A post Global Financial Crisis construction boom led to a packed supply

schedule and after no Grade A supply was delivered in 2014, we saw new
completions in every quarter between 1Q15 and 2Q16. No projects were
completed in 3Q16 but with more new supply expected in the final quarter, the
respite for landlords is likely to be short lived.
Vacancy rates have risen sharply in each quarter since supply started being
delivered in early 2015. However, given that 3Q16 was a rare quarter with no
Grade A completions, the average market vacancy rate stabilised despite
relatively low q-o-q net absorption levels.
RENTS FALL AMID HIGH VACANCY AND A PACKED SUPPLY PIPELINE

Rents in the CBD have now declined in each of the past five quarters as
new completions have driven up vacancy rates and landlords have become
increasingly flexible. Low single digit, quarterly rental declines have become
the new normal and Grade A rents came down by 2.5% q-o-q in 3Q16.
While no en bloc sales transactions were closed in 3Q16, there were reports
of one major deal of note. Around 50,000 sqm of an under-construction project
located on Jakarta CBDs Gatot Subrotot thoroughfare was reportedly sold for
investment purposes to a local bank from a local developer.
OUTLOOK: HIGH VACANCY RATES AND FURTHER RENTAL COMPRESSION LIKELY

In what is expected to be a record year in terms of supply, two more Grade A

assets are earmarked for completion by end-2016. The current demand profile
is set to continue in 4Q16 and into the new year with strong demand from
e-commerce while oil & gas and mining are likely to remain weak.
High vacancy rates are likely to persist and landlords are expected to
continue to lower rents in order to achieve or maintain target occupancy
levels. Low, single-digit quarterly rental declines are likely in the final quarter
of 2016 and into next year.
Note: Jakarta Office refers to Jakartas CBD Grade A office market.
The uncertain economic situation continues to

exert pressure on rents.
Veena Loh, Associate Director - Research & Consultancy, Malaysia
SQ FT PER MONTH,
GROSS ON NLA
1.6%
MYR 6.22
STAGE IN CYCLE
Rents
Falling
LOWER RENTS IMPROVE NET TAKE-UP IN KLC
Financial Indices
Overall net absorption turned positive as demand picked up in Kuala Lumpur

City Centre (KLC) during the quarter due to more attractive rents and
incentives offered by landlords.
Leasing activity was mainly driven by the relocation of finance, oil and gas
companies, and expansion of technology, e-commerce and business services.
130
120
110
Index
100
NEW COMPLETION DRIVES VACANCY UP IN DECENTRALISED SUBMARKET
The completion of UOA Corporate Tower A in the Decentralised (DC)

submarket added about 706,800 sq ft to total stock. A significant amount of
space in the building was under negotiation at end-3Q16. Three more projects
namely, JKG Tower, Public Mutual Tower and The Pillars KL Eco City are due
for completion by end-2016.
The overall vacancy rate rose by 12 bps q-o-q to 13.2% in the quarter as more
new supply came on stream in the Decentralised submarket.
RENTAL CORRECTION IN BOTH SUBMARKETS

Rents in the KLC submarket continued to slide in 3Q16 and rents in the DC
submarket declined slightly for the first time in six quarters. Some landlords of
older buildings lowered rents to retain tenants amid competition from
landlords of upcoming office buildings in the vicinity.
OUTLOOK: CLOUDY OUTLOOK IN KUALA LUMPUR MARKET

We expect vacancy to rise as an additional 1.5 million sq ft of upcoming

supply is scheduled to be completed by end-2016. The market will take time
to absorb the influx of supply as economic conditions remain uncertain. The
weak global economic outlook is also likely to see investors remain cautious.
The much anticipated Mass Rapid Transit Line 1 is expected to commence
operations by end-2016 and this should increase the attractiveness of the
Decentralised market.
Note: Kuala Lumpur office refers to Kuala Lumpurs Grade A office market consisting of Kuala Lumpur City
Centre and Decentralised submarkets.
80
4Q12
4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
Financial Indicators are for the Kuala Lumpur City
Centre.
Physical Indicators
350
20
280
16
210
12
140
70
Percent
Capital values in KLC increased modestly by 1.8% q-o-q while yields

compressed by about 20 bps. Liquidity in the market improved following a
recent reduction of 25 bps in the Overnight Policy Rate by the Malaysian
central bank.
90
Thousand sqm
25 OFFICE
RENTAL
GROWTH Y-O-Y
KUALA LUMPUR
0
12
13
14
15
16F
17F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
Physical Indicators are for Kuala Lumpur City
Centre.
Take-up sustained as the O&O sector continues

expansionary track.
Claro dG. Cordero, Jr., Head of Research, Philippines
150
7.8%
PHP 965
STAGE IN CYCLE
Rents
Rising
Net absorption in Makati CBD and Bonifacio Global City (BGC) remained high
in 3Q16 at 43,000 sqm. However, net take-up slid from the 59,800 sqm recorded
in 2Q16 due to increased occupancy levels in a number of existing and newly
completed developments.
Key lease transactions during 3Q16 included a 1,583 sqm office space leased
by an offshoring & outsourcing (O&O) firm in Tower 6789 in Makati CBD, a
1,085 sqm office space leased by a tech firm in Net Park in BGC, a 2,240 sqm
office space leased by an advertising firm in 8 Rockwell in Makati CBD and a
2,501 sqm office space leased in BGC Corporate Center.
130
Index
SQM PER MONTH,

140
120
110
100
90
4Q12
RENTAL
GROWTH Y-O-Y
OFFICE DEMAND LED BY O&O EXPANSION AND TECH FIRMS
Financial Indices
4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
VACANCY RATE DECLINES AS SUPPLY TIGHTENS

No new office development completed in Makati CBD and BGC, as

developments slated for completion in the quarter were delayed. Office
developments expected to complete in 4Q16 include Inoza Tower, Ore Central,
Vista Hub and W City, all located in BGC.
The vacancy rate dropped to 2.2% in 3Q16 from 3.7% in 2Q16, due to high takeup among existing and newly completed office developments sustained by the
expansion of the O&O sector, along with demand from the tech and financial
industries. The lack of new stock during the quarter also contributed to the
decrease in vacancy.
Physical Indicators
500
400
300
200
100
CAPITAL VALUE GROWTH MARGINALLY EXCEEDS RENT GROWTH
Percent
Thousand sqm
26 OFFICE
MANILA
0
12
13
14
15
16F
Rents increased by 2.0% q-o-q to PHP 965 per sqm per month in 3Q16, as
leasing activity remained robust during the quarter. Capital values posted an
increase of 2.2% q-o-q to PHP 126,115 per sqm in 3Q16, up from PHP 123,400
per sqm in the previous quarter.
The Philippines remains a popular FDI destination in the region, on the back of
firm economic fundamentals and robust domestic consumption.
17F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
OUTLOOK: INCOMING SUPPLY MAY PRESSURE RENT GROWTH

Ten office developments are expected to add 348,000 sqm to total stock in the
next two quarters. This will likely push rent growth rates down as the large
incoming supply comes on stream.
Nonetheless, the market is likely to remain tilted in favour of landlords with

rents expected to continue to increase amid ongoing demand from the O&O
sector and a low vacancy environment. Many upcoming projects in Makati
CBD and BGC have high pre-commitments.
Note: Manila Office refers to the Makati CBD and BGC Grade A office market.
Leasing activity remains healthy amidst strong

demand and no new completions.
Trang Le, Head of Research, Vietnam
SQM PER MONTH,

2.3%
USD 38.6
STAGE IN CYCLE
Rents
Rising
NEW SET-UPS THE MAIN DRIVER OF DEMAND
Financial Indices
Net absorption in 3Q16 totalled 3,600 sqm, a minor decrease relative to the
previous quarter. Saigon Tower had the last of its vacant space taken up,
becoming the second fully occupied property in the quarter after Saigon
Centre.
New set-up businesses continued to be the main driver of office demand in
3Q16. Notable leasing deals in the quarter included Great Eastern, Daewoo
Engineering & Construction Co., Ltd, and the Consulate General of the
Republic of Korea (KOTRA) taking up a total of more than 2,700 sqm at
Diamond Plaza.
110
105
Index
100
95
90
4Q12
VACANCY MOVES LOWER

27 OFFICE
RENTAL
GROWTH Y-O-Y
HO CHI MINH CITY
4Q13
4Q14
Rental Value Index
4Q15
There were no new completions in 3Q16. The retail podium of the Saigon
Centre Phase II project was finished and launched in 3Q16; the podiums
major tenant from Japan, Takashimaya, attracted a lot of attention in the
market.

Source: JLL
Strong demand put further pressure on vacancy, with the average vacancy
rate of Grade A office properties decreasing 190 bps q-o-q to 5.2% in 3Q16.
Physical Indicators
4Q16
4Q17
28
60
24
50
20
40
16
30
12
20
10
During the quarter, landlords of most Grade A projects maintained their

rents unchanged. Saigon Centre and Times Square were the exceptions, as
landlords of these buildings increased rents in the quarter. The average net
effective rent of Grade A properties stood at USD 38.6 per sqm per month in
3Q16, a slight increase of 0.8% q-o-q, continuing the recent positive trend.
No investment transactions were recorded in 3Q16. Most investors continued
to focus their attention on the residential sector rather than commercial
property. The average capital value of the Grade A office market reached
USD 4,981 per sqm, an increase of 0.8% q-o-q. The increase was due to rising
rents and stable market yields in the quarter.
OUTLOOK: RENTS TO KEEP RISING

The next wave of new supply will come in 2017 and will be dominated by
Grade A office space in the CBD. Saigon Centre Phase II and German House
are in the final stages of construction and expected to come on stream in
3Q17.
Enquiries from the fast-moving consumer goods (FMCG), IT, insurance and
financial industries are expected to drive demand in the coming quarters.
Rents at established properties are expected to increase in 4Q16 but this
uptrend will slow down as new supply is scheduled to enter the market soon.
Note: Ho Chi Minh City Office refers to Ho Chi Minh Citys Grade A office market.
Thousand sqm
70
Percent
RENTS MAINTAIN AN UPTREND
0
12
13
14
15
16F
17F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
Sustained leasing activity but occupier exits and

relocations widen the gap between gross leasing
volumes and net take-up.
DELHI
130
INR 140
Rents
Rising
Leasing activity slowed down q-o-q in the CBD and SBD but was higher in
Gurgaon. Net absorption declined by 53.3% q-o-q in Noida. Major lettings
were recorded by Sapient, TCS, Genpact, Inditex, Tower Research and
Concentrix.
Index
100
90
4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
Financial Indicators are for the SBD.
Physical Indicators
1,400
35
1,200
30
1,000
25
20
600
15
400
10
200
0
15
16F
17F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
A solitary completion of 0.34 million sq ft in Gurgaon characterised the lowest

quarterly supply in nine years.
The vacancy rate fell by 50 bps q-o-q to 31.2%, with limited vacant space in
prime office buildings, barring a few recent completions.
RENTS AND CAPITAL VALUES UNDER PRESSURE IN SELECT SUBMARKETS
0
14
NEW SUPPLY AT A NINE-YEAR LOW, WITH ONLY ONE COMPLETION
Older and strata-titled properties were responsible for the rental decline
observed in the CBD and SBD. In Gurgaon, rental gains in DLF Cybercity and
in prominent SEZ projects were countered by corrections in strata-titled office
buildings, particularly in the MG Road corridor. Rents moved higher for SEZ
buildings in Noida, contributing to a marginal increase in this submarket.
Capital values moved higher driven by premium, leased assets in preferred

office corridors. Gains in capital values were largely in line with rents and as
such, yields held steady.
Percent
800
13
3.7%
STAGE IN CYCLE
Net absorption declined 42.0% q-o-q to its lowest level in eleven quarters, as
consolidation and relocation activity by occupiers moving from older
premises tempered what would otherwise be a healthy level of demand. IT/
ITeS occupiers were the most active during the quarter, but e-commerce,
manufacturing and financial services firms were also seen signing up for
additional office space.
110
12
SQ FT PER MONTH,
GROSS ON GFA
120
80
4Q12
RENTAL
GROWTH Y-O-Y
HEALTHY DEMAND MOMENTUM
Financial Indices
Thousand sqm
28 OFFICE
Ashutosh Limaye, Head of Research, India
Source: JLL
OUTLOOK: HEALTHY OCCUPIER REQUIREMENTS BUT A LACK OF QUALITY SPACE

Driven by large IT occupiers, take-up in existing and upcoming SEZ projects is

expected to remain strong. A healthy level of demand is also likely to come
from telecom, financial services, manufacturing, and professional and
consulting services firms.
Further leasing progress is expected for upcoming quality supply in the

emerging corridors due to their relative cost advantage. Strata-titled buildings
are likely to drive rental corrections in certain precincts. Private equity and
institutional money are likely to chase leased assets in core office markets.
Note: Delhi Office refers to Delhi NCRs overall Grade A office market.
Occupiers are starting to consider suburban

locations and this could provide a boost to non-IT
buildings in these areas.
MUMBAI
SQ FT PER MONTH,
GROSS ON GFA
1.9%
INR 212
STAGE IN CYCLE
Rents
Rising
LEASING ACTIVITY DECREASES
Financial Indices
In 3Q16, net absorption decreased 11% q-o-q. Take-up in the quarter was
supported by pre-commitments to new completions which were significantly
higher than in previous quarters.
Banking, financial services, insurance, telecom and pharmaceutical
companies drove demand for office space in the quarter.
120
115
110
Index
FOUR NEW BUILDINGS PROVIDE 1.52 MILLION SQ FT OF SPACE
Mumbais total office stock grew by 1.4% q-o-q to 107.4 million sq ft.
SLIGHT APPRECIATION IN RENTS AND CAPITAL VALUES IN SOME SUBMARKETS

Select submarkets in Mumbai saw a small q-o-q appreciation in rents. The

majority of renewals and new leases were closed with rents 0.51.2% higher
than the previous quarters level.
Interestingly, in the CBD submarket, rents continued to decline, causing
yields to decrease marginally. However, the SBD Central, SBD BKC and West
Suburbs submarkets witnessed an appreciation of 12% q-o-q.
The Mumbai office market is anticipated to see robust leasing activity next
year. However, demand in 4Q16 could be impacted by global events such as
the US presidential election as some occupiers may take a wait-and-see
approach.
Occupiers requiring back office space, e-commerce and new start-up
companies should generate demand along with occupiers from other sectors.
Meanwhile, developers are likely to carry out assessments about how and to
what degree automation in various industries is likely to affect the expansion
plans of occupiers.
Note: Mumbai Office refers to Mumbais overall Grade A office market.
95
90
4Q12
4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
Financial Indicators are for the SBD BKC.
Physical Indicators
1,200
30
1,000
25
800
20
600
15
400
10
200
Percent
OUTLOOK: HEALTHY LEASING ACTIVITY EXPECTED IN 2017
105
100
In 3Q16, four buildings became operational and provided a total of 1.52 million
sq ft. Pre-commitment levels for these new buildings was relatively high at
57% and this helped push down the overall vacancy rate in Mumbai by 30 bps
q-o-q to 18.9%.
Thousand sqm
29 OFFICE
RENTAL
GROWTH Y-O-Y
0
12
13
14
15
16F
17F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
Vacancy is at an exceptionally low level due to

limited supply and strong demand.
140
SQ FT PER MONTH,
GROSS ON GFA
7.9%
INR 72
STAGE IN CYCLE
Rents
Rising
Net absorption in Bengaluru dropped significantly in 3Q16 to 0.8 million sq ft,

as there was limited space available for expansion in the most preferred
locations. However, given strong underlying demand, leasing volumes
remained strong with about 1.5 million sq ft of space being transacted across
the city. Key occupiers who leased space in 3Q16 included ABB, Athena
Health and Accenture.
The SBD submarket continued to witness strong demand and as such,

vacancy in this submarket decreased to an extremely low 1.1%.
130
120
Index
RENTAL
GROWTH Y-O-Y
LIMITED AVAILABILITY RESTRICTING NET ABSORPTION
Financial Indices
110
100
90
80
4Q12
VACANCY DROPS TO NEAR RECORD LOW

4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
Financial Indicators are for the SBD.
1,200
12
1,000
10
8
600
400
200
0
13
Two office buildings opened in in the quarter and added a total of 0.57 million
sq ft to the Grade A office stock, which stood at 98.3 million sq ft at end-3Q16.
Both buildings opened with good commitment rates.
Robust demand amidst limited new supply pushed overall vacancy down 30
bps q-o-q to 3.1% in 3Q16.
14
15
16F
In 3Q16, average rents remained stable across the city and this followed a
period of strong growth in 2Q16, where rents increased in the range of 24%
q-o-q.
In a similar situation to rents, capital value growth stalled in 3Q16 after

witnessing healthy growth in the previous quarter. With rents and capital
values moving in tandem, yields remained stable.
Percent
800
12
RENTS STABLE AFTER A SIGNIFICANT INCREASE IN THE PREVIOUS QUARTER
Physical Indicators
Thousand sqm
30 OFFICE
BENGALURU
OUTLOOK: LIMITED VACANCY AND SUPPLY RESTRICT OCCUPIER OPTIONS

Vacancy rates across the city are anticipated to remain at a low level given
an expectation of strong demand amidst limited new supply.
A low vacancy environment and firm demand should underpin a further rise in
rents and capital values. Yields are likely to compress along some stretches of
the SBD Outer Ring Road given the good occupancy rates in that submarket.
17F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
Note: Bengaluru Office refers to Bengalurus overall Grade A office market.
Displaced tenants from stock withdrawals are

generating a new source of leasing enquiry in the
Sydney CBD.
SYDNEY
Andrew Ballantyne, National Director - Research, Australia
SQM PER ANNUM,

15.4%
AUD 754
STAGE IN CYCLE
Rents
Rising
CENTRALISATION TO THE CBD A KEY THEME OVER 3Q16
Financial Indices
The Sydney CBD recorded an eleventh consecutive quarter of positive

net absorption in 3Q16. A large contributor to the 3Q16 figure was major
tenant moves (1,000 sqm) from the finance & insurance and the public
administration industry sectors. The majority of leasing activity was
concentrated in the prime sector.
The largest tenant move of the quarter was Lendlease relocating into
preleased space at International Towers Sydney - Tower 3 (24,160 sqm).
Centralisation was a relevant theme in Sydney with the NSW Government and
Roche Products moving operations to the CBD.
170
160
150
140
Index
Despite the quarters strong net absorption figure, the total vacancy rate
increased marginally to 7.2% in 3Q16. However, the prime vacancy rate fell by
0.8 percentage points over the quarter to 7.5%.
The second phase of International Towers Sydney - Tower 3 (43,860 sqm) and
One Wharf Lane, 161 Sussex Street (6,500 sqm) completed over the quarter.
There are a further seven projects currently under construction totalling
(160,200 sqm). The largest of these developments is International Towers
Sydney - Tower 1 (101,050 sqm).
90
80
4Q12
There were eight major sales ( 5 million) totalling AUD 584.0 million in 3Q16.
The largest acquisition was Poly Real Estate Development purchasing 210 &
220 George Street from Anton Capital for AUD 160 million. Poly plans to
redevelop the site into a new office tower.
OUTLOOK: SYDNEYS VACANCY RATE IS PROJECTED TO DECLINE IN 2017

The withdrawal of office space should be a relevant theme in the Sydney CBD
over 2017 and 2018. JLL Research estimates withdrawals to average 95,300
sqm per annum between 2016 and 2018, representing 5.5% of total Sydney
CBD stock. Displaced tenants will likely generate a new source of leasing
enquiry over this period of time.
Following a record year of development activity in 2016 (238,700 sqm),

construction activity will be limited in 2017 and 2018 in the Sydney CBD (73,000
sqm). Tenant enquiry and activity is expected to remain firm, and vacancy is
projected to trend below 5% in 2017.
Note: Sydney Office refers to Sydneys CBD office market (all grades).
4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
Physical Indicators
Thousand sqm
250
15
200
12
150
100
50
50
Percent
A lack of quality contiguous and suite options in the secondary market has
resulted in strong face rental growth and a reduction in leasing incentives. As
a result, secondary gross effective rents increased by 26.1% y-o-y. Prime
gross effective rents also recorded strong growth and were up 15.4% y-o-y.
120
100
COMPETITION FOR SPACE EXERTS DOWNWARD PRESSURE ON INCENTIVES

130
110
WITHDRAWAL ACTIVITY IS DISTORTING THE VACANCY RATE

31 OFFICE
RENTAL
GROWTH Y-O-Y
3
12
13
14
15
16F
17F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
Strong demand for prime grade assets results in

the highest quarter of net absorption (67,510 sqm)
since June 2005.
MELBOURNE
150
130
Index
SQM PER ANNUM,

6.4%
AUD 431
STAGE IN CYCLE
Rents
Rising
Strong leasing market conditions in 3Q16 resulted in the tenth quarter of

positive net absorption and 159,100 sqm of net absorption over the last 12
months.
The centralisation trend continued in 3Q16 with two tenants entering the CBD
from outside markets as tight prime grade vacancy is limiting contiguous
space options in Melbournes Fringe office market.
140
120
110
TWO COLLINS SQUARE BUILDINGS ADD 105,540 SQM TO THE CBD STOCK
100
90
80
4Q12
RENTAL
GROWTH Y-O-Y
EXPANSIONARY OUTWEIGH CONTRACTIONARY MOVES IN THE QUARTER
Financial Indices
4Q13
4Q14
Rental Value Index
Collins Square buildings 2 (65,540 sqm) and 4 (40,000 sqm) reached completion
in 3Q16. Vacancy in the CBD office market edged up to 8.9%; however, it
remains within the equilibrium range of 79%
Pre-commitments secured over the last six months will kick off the next wave
of office sector supply. Four or five major office projects are likely to complete
in 2018 and 2020.
4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
CBD PRIME OFFICE YIELDS REMAIN AT RECORD LOWS

Physical Indicators
200
12
150
100
50
Percent
Thousand sqm
32 OFFICE
Dr David Rees, Head of Research, Australasia
50
12
13
14
15
16F
17F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
The Prime CBD yield range narrowed to 5.25%6.50% in 3Q16.
Investment transaction activity was focused in the Southbank precinct in the

quarter with three sales. Southbank Riverside received a disproportionally
large share of transaction activity as at YTD September 2016, accounting for
approximately 50% of the AUD 1.404 billion transacting in 2016.
OUTLOOK: YIELDS LIKELY TO STABILISE AT OR NEAR CURRENT RECORD LOWS

Vacancy is forecast to decline to a cyclical low in 2017.
Solid rental growth is anticipated for the next 1218 months, with landlords
expected to continue to ease incentives to match improving business
sentiment.
Source: JLL
Note: Melbourne Office refers to Melbournes CBD office market (all grades).
Signs of improvement in leasing demand steadily

pushing down vacancy.
SQM PER ANNUM,

1.9%
AUD 391
STAGE IN CYCLE
Decline
Slowing
STRONG LEASING DEMAND IN CBD MARKET SO FAR IN 2016
Financial Indices
The CBD office market recorded a solid year with net absorption as at YTD
September at 36,100 sqm, well above the long-term average of 22,000 sqm.
The education and public sectors have provided positive demand in 2016,
whilst the trend of mining related companies handing back space appears to
be subsiding.
120
115
110
105
100
Index
85
Vacancy edged down to 16.3% in 3Q16. Vacancy peaked in 1Q16 at 18.2% after
the completion of 480 Queen Street (55,400 sqm), with many tenants leaving
other premium CBD buildings to move into the new building.
A combination of elevated supply and relatively subdued leasing activity over
the past few years pushed vacancy higher. One project is scheduled to be
completed in 4Q16, One William Street (75,000 sqm), which is 100% leased to
the state government.
95
90
VACANCY FALLS FROM PEAK IN 1Q16

33 OFFICE
RENTAL
GROWTH Y-O-Y
BRISBANE
80
75
70
4Q12
4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
YIELDS TIGHTEN FURTHER IN 3Q16
Effective rents have continued to decline with landlords choosing to raise

incentives and keep face rents stable. In 3Q16, gross face rents averaged
AUD 698 per sqm per annum for prime buildings with incentives at 36.2%.
OUTLOOK: VACANCY IS FORECAST TO PEAK IN 2016

With the completion of 1 William Street, vacancy is expected to rise in 4Q16

and then gradually improve in 2017.
Yields are now close to their expected cyclical low. Investor demand in the
Brisbane market is expected to continue with some investors being priced out
of southern markets.
Note: Brisbane Office refers to Brisbanes CBD office market (all grades).
20
200
150
15
100
10
50
50
Percent
The investment market was strong in Brisbane over the past 12 months with
total sales volumes of AUD 855.6 million. The lack of available investment
opportunities in Sydney has forced investors to look elsewhere, with Brisbane
being a beneficiary.
Physical Indicators
Thousand sqm
100
10
150
15
12
13
14
15
16F
17F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
Landlord-favourable market with few large

options but relief in the medium term as supply
begins coming online in mid-2017.
AUCKLAND
170
150
Index
NZD 475
Growth
Slowing
Premium vacancy at end-1H16 was less than 1% across the top 4 office
towers in Auckland. Strong demand over the short term is expected to see
vacancy remain persistently low, until new supply eases pressure via the
delivery of Commercial Bay in 2019. Grade A vacancy is forecast to remain
low for the remainder of 2016, underpinned by the absorption of new Wynyard
Quarter space delivered in 1H16 along with further absorption of existing
space in the core CBD.
130
120
110
100
90
4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
SIZEABLE SUPPLY PIPELINE TAKING SHAPE

New supply remains Wynyard Quarter focused, with Goodmans VXV precinct
continuing with construction and leasing in 3Q16. Projects within the Grade A
supply pipeline include Innovation 5a, Mason Brothers and Datacom.
Demolition of the existing shopping centre on the Commercial Bay site is

nearing completion, with preliminary ground works to commence by the end
of the year. The tower will deliver 39,000 sqm of premium grade office space
above 18,000 sqm of retail space, which will lead to a restructuring of the
office and retail markets in the area.
Physical Indicators
15
48
12
36
24
12
CONTINUED UPWARD PRESSURE ON RENTS

Rental growth persisted in 3Q16, with both average prime and secondary
rents increasing during the period. Strong demand fundamentals and limited
options have placed substantial upward pressure on rents, ensuring that the
market remains landlord friendly.
Prime investment yields firmed further during the quarter, with the average
prime yields dropping by 20 basis points to 6.30%. Tight competition for assets
has forced many investors to consider alternative locations for their property
allocation, such as the fringe and suburban office markets as well as
Wellington and Hamilton.
Percent
60
0
13
3.5%
STAGE IN CYCLE
Business growth and healthy economic fundamentals ensured demand

remained robust in 3Q16, with demand outstripping available existing stock.
140
12
SQM PER ANNUM,

NET ON NLA
160
80
4Q12
RENTAL
GROWTH Y-O-Y
ROBUST DEMAND KEEPS CONDITIONS TIGHT
Financial Indices
Thousand sqm
34 OFFICE
Tom Barclay, Head of Research, New Zealand
14
15
16F
17F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
OUTLOOK: SUPPLY FORECAST TO EASE HEATED MARKET CONDITIONS

Demand for prime space should remain elevated in 4Q16, as competition

remains strong amongst occupiers. High demand is expected to underpin
further rental growth.
The new supply that will enter the market in the coming years is predicted to
reduce some pressure on the Auckland office market. New additions will be
primarily Grade A space and delivered in the Wynyard Quarter and Britomart
areas, in line with the westward and waterfront shift of stock and occupiers.
However, the premium market will not see relief until Commercial Bay
completes in 2019.
Note: Auckland Office refers to Aucklands CBD and Viaduct Harbour office market.
35 RETAIL
Retail
Rental decline on the high streets accelerates as

retail sales continue to disappoint.
HONG KONG
Terence Chan, Head of Retail, Hong Kong
12 0
HKD 492.0
Rents
Falling
Total visitor arrivals retreated by 3.8% y-o-y in JulyAugust following a

3.5% y-o-y drop in 2Q16 and despite a more moderate 9.2% y-o-y decline in
Individual Visitor Scheme visitors. Following closely, retail sales recorded the
seventh straight quarter of decline, down 9.1% y-o-y in JulyAugust and on
pace to eclipse the 8.2% y-o-y fall recorded in 2Q16.
Amid the deterioration in key demand drivers, leasing activity improved as

landlords slashed rents to secure tenants ahead of the year-end holiday
season. Riding on more affordable rentals, mass retailers, notably cosmetics
and F&B operators, underlined demand. Luxury retailers, on the other hand,
remained in consolidation mode.
100
Index
18.4%
STAGE IN CYCLE
110
90
80
36 RETAIL
SQ FT PER MONTH,
NET ON GFA
INBOUND TOURISM AND RETAIL SALES CONTINUE TO DECLINE
Financial Indices
70
60
4Q12
RENTAL
GROWTH Y-O-Y
4Q13
4Q14
4Q15
4Q16
4Q17
RV Index (High Street Shop)
CV Index (High Street Shop)
RV Index (Premium Prime Shopping Centres)
RV Index (Overall Prime Shopping Centres)
LARGEST RETAIL PODIUM SINCE 2010 TO COMPLETE IN 4Q16

Popwalk Phases 2 and 3 in Tseung Kwan O, two of three projects slated for
completion in 2016, were issued with their Occupation Permits in June and
August, respectively.
YOHO Town Phase 3 in Yuen long, the largest prime shopping centre project
since 2010, is expected to complete in 4Q16; leading vacancy to potentially
creep up at the end of the year.

Source: JLL
Physical Indicators
200
RENTAL CORRECTION SPREADS TO PREMIUM PRIME SHOPPING CENTRES
Thousand sqm
160
With landlords offering significant rent reductions to lock in tenants, the

decline in high street shop rentals escalated in 3Q16. Base rentals in prime
and premium shopping centres also edged down, with the latter under
pressure from a changing tenant mix towards lower-paying F&B operators.
Capital values of high street shops continued to drop as vendors adjusted

expectations against a faltering leasing market. However, the expectation gap
between buyers and vendors remained wide apart, leading to limited
transactional evidence. Market yields compressed slightly as landlords were
generally more flexible in cutting rents than prices.
120
80
30
12
13
Completions
14
15
16F
17F
Future Supply
Source: JLL
For 2012 to 2015, completions are year-end annual.
For 2016, completions are YTD, while future supply
is for 4Q16.
OUTLOOK: INVESTMENT MOMENTUM TO PICK UP

Amid subdued inbound tourism and retail sales, we have downgraded our fullyear forecast for high street shop rents to decline 1520% in 2016. Rents in
prime shopping centres, affected by ongoing trade mix adjustments, are likely
to end the year down slightly.
The still-low interest rate environment and growing availability of retail assets
(street shops) at reduced prices should help drive investment activity, though
it will likely remain away from core retail areas. Still, capital values are likely
to continue to fall over the near term, down 1520% in 2016 and the decline is
forecasted to moderate in 2017.
Note: Hong Kong Retail refers to Hong Kongs overall Prime Shopping Centres and High Street retail
markets.
Landlords seek tenants that are able to attract

customers with fresh experiences.
SQM PER MONTH,

3.3%
RMB 890
STAGE IN CYCLE
Growth
Slowing
LIFESTYLE BRANDS STRIKING A CHORD WITH DESTINATION MALL SHOPPERS
Financial Indices
As the customer base of destination malls like Taikoo Li matures, premium

lifestyle brands are appealing to consumers who are willing and able to
splurge on non-essentials. Mall landlords continued to maximise on VR
attractions. Kids brands are displacing second-floor fashion boutiques as
mainstream tenants at Suburban malls.
At 4.1%, Suburban vacancy dropped to its lowest point since the market
emerged in 2008. The low-vacancy environment is supported by growing
demand, which has enabled most Suburban projects to open fully or nearly
fully occupied.
140
130
120
Index
100
90
80
4Q12
ONE URBAN AND ONE SUBURBAN MALL OPEN NEARLY FULLY OCCUPIED

Beijing Harmony Plaza opened fully committed and with 92% of store space
open and trading. The strong start was notable given that the project is on the
city fringe and is the Shandong developers first Beijing project.
The second Paradise Walk in south Beijing opened in the quarter. The 270,000
sqm-project was fully committed and 95% of store space was ready for
business on opening day, especially impressive considering the large size of
the project and the generally slower leasing market.
110
4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
Physical Indicators
600
SUBURBAN RENTAL GROWTH CONTINUES TO BE FASTER
Landlords remained under pressure to raise rents, but the pace of growth was
constrained by slow sales growth. However, rents have not yet turned and
landlords of strong projects still managed to squeeze out slight rental
increases. Overall rental growth was flat q-o-q.
Department store Parkson Taiyanggong in eastern Beijing was sold to a
domestic fund for a total consideration of 2.32 billion RMB. Meanwhile, in the
Olympic Area, the low-end Piaoliang Shopping Center was bought by
Hong Kong tech firm Alltronics, which assumed 1.5 billion RMB of the
projects debt.
OUTLOOK: RENTAL GROWTH LIKELY TO STAY FLAT IN THE NEAR FUTURE

Just three new projects are set to come online by end-2016, after the highprofile China World 3B was pushed back to 2017. Similar to China World
Phase 3, China World 3B will focus on premium brands aimed at white-collar
workers. Delays on other projects are also possible due to slow leasing
progress.
Rents are expected to hold largely flat. Against weakening consumer

confidence, retail sales growth is not expected to see a pick-up.
Note: Beijing Retail refers to Beijings Urban retail market.
500
450
Thousand sqm
550
400
350
300
250
200
150
100
50
0
12
13
Completions
14
15
16F
17F
Future Supply
Source: JLL
is for 4Q16.
37 RETAIL
RENTAL
GROWTH Y-O-Y
BEIJING
Retailers and landlords are increasingly catering

to consumers seeking healthy lifestyles.
SHANGHAI
Joe Zhou, Head of Research, China
120
Index
105
Growth
Slowing
Childrens entertainment remained very active. A notable example included

the opening of Snow World childrens playground in Chamtime Plaza. Fitness
centres catering to consumers rising focus on health are increasing their
presence in mature malls, as are restaurants selling juices and other health
foods.
100
95
4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
Capital Value Index

4Q10 =100
Index base: 4Q12
Source: JLL
Financial Indicators are for the Core market.
Physical Indicators
600
ONE PRIME MALL AND FOUR DECENTRALISED MALLS OPEN IN 3Q16

In prime Pudong, the 64,000 sqm-Bailian Shiji Shopping Center opened with
excellent connectivity. In the decentralised market, community-focused Jiujin
Plaza and Jinqiao Taimao Plaza in Pudong, Kongjiang CIFI Mall in Yangpu, and
Qibao Powerlong City Plaza in Minhang each opened with occupancy above
60% and added 194,000 sqm of new stock.
Vacancy rose to 10.3% in prime areas as intensified competition forced lesscompetitive projects to adjust tenants, notably in mature submarkets such as
West Nanjing Road and Huaihai Road. Vacancy increased slightly to 10.1% in
the decentralised market as new projects opened with a higher-than-average
vacancy.
550
500
450
Thousand sqm
RMB 52.3
F&B demand remained robust, especially from Chinese regional cuisine

restaurants targeting middle-income customers as well as coffee and tea
shops. Luxury retailers such as Dunhill continued to adjust store portfolios,
while major fast fashion brands including Zara and Gap slowed their rates of
expansion.
110
38 RETAIL
2.8%
STAGE IN CYCLE
115
400
350
RENTAL GROWTH SLOWS AMID LARGE SUPPLY AND FIERCE COMPETITION
300
250
200
Prime open-market ground floor base rents rose 2.8% y-o-y to RMB 52.3 per
sqm per day. Decentralised rents rose 3.0% y-o-y to RMB 20.8 per sqm per
day. Rental growth slowed amid large future supply and rising competition,
particularly in saturated submarkets and projects with poor metro access.
Keppel Land and Alpha Partners sold their 80% stake in Jinqiao Life Hub to
Chongbang Group for USD 516.9 million. Joy City sold its 49% stake in six
projects in China to GIC and China Life for RMB 9.3 billion.
150
100
50
0
SQM PER DAY,

NET ON NLA
STRONG LEASING MOMENTUM FROM EXPERIENCE-ORIENTED RETAILERS
Financial Indices
90
4Q12
RENTAL
GROWTH Y-O-Y
12
13
Completions
14
15
16F
17F
Future Supply
Source: JLL
is for 4Q16.
Physical Indicators are for the Core market.
OUTLOOK: F&B TO REMAIN THE MAJOR DEMAND DRIVER

Looking forward, large supply in both prime and decentralised markets means
that rental growth is likely to further decelerate into 2017, though maturing
malls in densely populated areas should continue to see stable rent growth.
F&B and experience-oriented brands will remain major demand drivers.

For fashion retail, we expect to see consumers growing preference for
quality over mass market and fast fashion to lead to greater demand from
premium retailers, while the growing focus on healthy lifestyles will likely spur
expansion by sportswear brands.
Note: Shanghai Retail refers to Shanghais overall Core and Non-core retail markets.
International retailers continue to debut and

expand in premium malls.
Frank Ma, Head of Research, West China
SQM PER MONTH,

NET ON NLA
1.3%
RMB 384.4
STAGE IN CYCLE
Rents
Falling
RETAILERS ACTIVE ACROSS THE CITY
Financial Indices
Retailers with an optimistic outlook for Chengdus retail market debuted and
continued to open new stores in prime retail locations. For example, the
fifth flagship store of Victorias Secret opened in MixC and Italian brand O
Bag opened a new store in Sino-Ocean Taikoo Li Chengdu. Asias largest Air
Jordan flagship store is set to open in Chengdu IFS later this year.
Several anchor tenants also debuted or expanded store networks during the
quarter. For example, G-super Supermarket secured 3,000 sqm in The One,
Decathlon secured 4,000 sqm in MixC and Yonghui Supermarket secured 6,000
sqm in 339 Chengdu Fun Square.
120
110
Index
90
80
4Q12
VACANCY DECLINES DUE TO ARRIVAL OF SEVERAL ANCHOR TENANTS

Newcore City Mall soft-opened on 30th September, adding 31,722 sqm to the
total stock. As the first project of Eland Group in West China, the project had
an occupancy rate of over 90% at its soft-opening and secured many fashion
brands, including Tommy Hilfiger, New balance, Eland, Teenie Weenie and
ROEM.
Several malls saw vacancy decrease due to anchor tenants opening stores.
As a result, the overall vacancy rate decreased 1.4 percentage points q-o-q to
9.8% in 3Q16.
In the investment market, CapitaLand acquired the Galleria mall for a total
consideration of RMB 1.5 billion (NOI yield 5.4%) in August 2016. The project
has a total GFA of 91,816 sqm and was fully committed at end-3Q16.
OUTLOOK: SLOW LEASING PROGRESS MAY SEE MORE PROJECTS DELAYED

Qingyang Wanda Plaza in the urban retail market, Shuangliu Wanda Plaza and
injoy Plaza in the suburban retail market are all expected to open by year-end.
These three projects are expected to add 268,000 sqm to total stock and
should further enhance the retail environment in these emerging submarkets.
Retailers are expected to become more selective about store locations

including paying closer attention to the landlords track record. As such, more
projects in emerging submarkets where the pipeline of new malls is large are
likely to find it more difficulty to secure suitable tenants. Intensifying
competition may also cause some developers to delay openings.
Note: Chengdu Retail refers to Chengdus Urban retail market.
4Q15
4Q16
4Q17
Capital Value Index
Physical Indicators
1,400
1,200
1,000
Thousand sqm
The average ground floor effective rent marginally increased by 0.4% q-o-q to
RMB 384.4 per sqm per month. Premium malls including Galleria and IFS
continued to outperform. However, high-end projects in Tianfu SquareHongzhaobi witnessed rental declines due to intense competition from
Hongxing Road.
4Q13
4Q14
Rental Value Index

Source: JLL
MODERATE RENTAL GROWTH DUE TO MIXED PERFORMANCE BETWEEN MALLS

100
800
600
400
200
0
12
13
Completions
14
15
16F
17F
Future Supply
Source: JLL
is for 4Q16.
39 RETAIL
RENTAL
GROWTH Y-O-Y
CHENGDU
Rents continue to grow but select retailers

are cautious regarding new openings as visitor
consumption slows.
TOKYO
190
Growth
Slowing
Falling luxury goods sales triggered increased caution amongst retailers.

Nonetheless, retailers continued to open new stores including Valentinos first
flagship store in Omotesando Hills. In Ginza, La Perla opened a new store on
Namiki-dori following its first flagship store in Omotesando in February, and
Tiffanys opened a Bridal Boutique near its main store on Chuo-dori.
160
150
Index
JPY 78,304
Retail indicators showed mixed results in the first two months of 3Q16, with
consumer confidence improving while large-scale retail store sales in Tokyo
continued to decline. Visitor arrivals continued to trend higher in 3Q16 but
tourist consumption decreased for the first time in nearly five years. This is in
part due to the shift away from spending on luxury goods by Chinese tourists
and the appreciation of the yen.
170
140
130
120
110
100
4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
Retail Sales
10
GINZA PLACE OPENS AT THE GINZA 4-CHOME CROSSING

Ginza Place opened in 3Q16. The commercial building, with 11 storeys above
ground and two basement floors, offers 7,350 sqm (GFA) of retail space.
Nissan Crossing occupies the ground floor while Sony is a tenant on an upper
floor.
The completion of the Ginza 6-chome 10 District Redevelopment Project has

been delayed until April 2017. The office and retail mixed-use facility (148,000
sqm) will include a retail podium of 46,000 sqm and additional retail space on
the 13th floor.
8
6
y-o-y (%)
4.8%
STAGE IN CYCLE
180
40 RETAIL
TSUBO PER MONTH,

GROSS ON NLA
DEMAND FROM LUXURY BRANDS AND INTERNATIONAL RETAILERS HOLD FIRM
Financial Indices
90
4Q12
RENTAL
GROWTH Y-O-Y
RENTS AND CAPITAL VALUES GROW MODERATELY
Rents averaged JPY 78,304 per tsubo per month, increasing 0.7% q-o-q and
4.8% y-o-y. Rent growth continued for the 16th successive quarter, largely
reflecting the tight demand-supply balance. The Ginza submarket drove
growth.
Capital values increased 0.3% q-o-q and 11.9% y-o-y. Two investment
transactions in the quarter were the acquisition of Damiani Ginza Tower and
CSS Building by domestic corporations. Neighbouring buildings to these
assets have luxury brands occupying the ground floor space.
0
2
4
6
2Q11
2Q12
2Q13
2Q14
2Q15
2Q16
Sales Growth of Large-Scale

Retail Stores in Tokyo
Source: Ministry of Economy, Trade and Industry
OUTLOOK: FURTHER GROWTH IN RENTS AND CAPITAL VALUES EXPECTED

The economic forecast by Oxford Economics expect that private consumption

and disposable income will likely grow 1.0% and 1.8%, respectively, in 2017.
The number of visitor arrivals is also projected to increase, but it is possible
that the slowdown in tourist consumption will persist for a while.
Ginza Six, which is due for completion next year, has secured tenants so it
is likely to have little impact on the tight vacancy environment. This situation
should place continued upward pressure on rents. Heightened interest from
investors is expected to place downward pressure on cap rates.
Note: Tokyo Retail refers to Ginza and Omotesando Prime retail markets.
Business and consumer confidence continues to

be shaken by fragile economic outlook.
Angelia Phua, Associate Director - Research, Singapore
SQ FT PER MONTH,
7.4%
SGD 34.55
STAGE IN CYCLE
Decline
Slowing
NEW CONCEPTS EMERGING AMIDST NECESSITY-DRIVEN SPENDING
Financial Indices
Excluding motor vehicles, total retail sales in July 2016 declined compared to
a year ago as spending continues to be driven by necessity. Despite extending
the Great Singapore Sale, computers and telecommunications equipment,
and watches and jewellery recorded low sales.
Total tourist arrivals and receipts witnessed a slight improvement in 1Q16,
driven by a significant increase in Chinese visitors. However, increased
interest in expanding their e-commerce reach has dampened occupier
demand by retailers. With fewer new-to-market brands, malls have taken to
introducing new concepts like retail-tainment.
120
115
110
105
Index
95
90
85
80
4Q12
VACANCY RISES WITH NEW SUPPLY AVAILABLE FOR RETAILERS

Funan DigitaLife Mall was closed for redevelopment in a bid to embrace a

new lifestyle concept. Refurbishment of The Centrepoint completed in the
quarter with similar aims, but was met with poor take-up. This is likely due to
retailers expecting new supply to be available in the Marina submarket.
Compass One reopened in the quarter at 95% occupancy after conducting

asset enhancements to its interior, providing a refreshed mix of tenants with
an emphasis on more F&B options for its patrons. Its success cements the
need for malls to fine-tune the tenant mix continually to remain attractive.
Developers were still keen to hold on to their core retail assets, as the
increase in investment sales volumes was largely underpinned by shophouse
transactions. Compared to 2Q16, three more transactions were recorded in
3Q16. The rate of capital value correction was similar to the rate of decline for
rents, keeping yields stable.
OUTLOOK: PERSISTENT FRAGILE ECONOMIC OUTLOOK STEERS CORRECTION

Wary of the fragile economic outlook, consumers are likely to continue

scaling down their propensity to spend. Likewise in the coming quarters,
weak tourist receipts will likely continue to dampen retailers business
sentiment.
Government initiatives to alleviate manpower constraints by means of

automation and supporting omni-channel strategies are expected to continue
weakening occupier demand, causing further correction to rents and capital
values.
Note: Singapore Retail refers to Singapores Orchard, Marina and Suburban retail markets.
4Q15
4Q16
4Q17
Capital Value Index
Physical Indicators
200
150
Thousand sqm
Rents declined the steepest in the Orchard submarket with tenants hesitant
to take up space in view of weak consumer buying sentiment and manpower
constraints. For retailers, new supply available in the coming quarters,
coupled with landlords offering lower base rents, resulted in rental correction.
4Q13
4Q14
Rental Value Index

Source: JLL
Financial Indicators are for Orchard Road.
DEVELOPERS CONTINUE HOLDING ONTO THEIR CORE RETAIL ASSETS

100
100
50
12
13
Completions
14
15
16F
17F
Future Supply
Source: JLL
is for 4Q16.
41 RETAIL
RENTAL
GROWTH Y-O-Y
SINGAPORE
International retail brands continue expanding

across the market driving rents and landlord
renovation strategies.
BANGKOK
120
110
Index
1.5%
THB 2,467
STAGE IN CYCLE
Growth
Slowing
Prime grade retail space was still in high demand in 3Q16 despite slightly
negative net absorption being recorded as it was driven by a single underperforming shopping centre.
International retailers continue to show strong interest in entering the

Bangkok market as well as expanding existing footprints. In 3Q16, at least two
internationally recognised retailers opened their first stores in Thailand. Given
the lack of available space in the most desirable prime centres, many
landlords including Central Group and Siam Piwat have either recently
renovated their centres or plan to do so in the near future in order to
accommodate more appropriate tenant mixes.
115
105
100
95
4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
Capital Value Index
NO NEW RETAIL CENTRES COMPLETE IN 3Q16

Source: JLL
No new prime grade retail centres completed in 3Q16, as Show DC (78,000

sqm NLA), a specialty centre, and the expansion of Seacon Square Srinakarin
(12,000 sqm NLA), an expansion of the existing super regional centre,
postponed their grand opening dates from 3Q16 to the end of 2016.
Physical Indicators
Total prime grade retail stock remained stable from the previous quarter at
3,052,000 sqm. As a result of negative net absorption in the quarter, the
market-wide prime grade vacancy rate increased to 4.3% in 3Q16, up from a
three-year low of 4.0% in 2Q16.
500
400
RENTS AND CAPITAL VALUES SLIGHTLY INCREASE

Thousand sqm
42 RETAIL
SQM PER MONTH,

GROSS ON NLA
INTERNATIONAL RETAIL BRANDS ARE EXPANDING FOOTPRINTS
Financial Indices
90
4Q12
RENTAL
GROWTH Y-O-Y
300
Gross rents in 3Q16 increased by 0.5% q-o-q to THB 2,467 per sqm per month
as international brands continued to enter the Bangkok market and landlords
made changes in tenant mixes in older existing centres.
Capital values increased moderately, driven by rising land prices and

expenditure by landlords on renovations. Market yields expanded slightly from
the previous quarter; investor demand for prime grade retail assets remained
strong.
200
100
12
13
Completions
14
15
16F
17F
Future Supply
Source: JLL
is for 4Q16.
OUTLOOK: ASSET ENHANCEMENTS SHOULD PUSH RENTS UP

Show DC is expected to complete in 4Q16 and will bring a number of new-tomarket brands including Lotte Duty Free. In addition, the expansion of Seacon
Square Srinakarin (12,000 sqm NLA) is expected to complete in 4Q16. More
than 200,000 sqm of new supply is expected to complete in 2017, anchored by
the planned opening of ICONSIAM in late 2017.
Despite limited future projects from major players through the forecast
horizon, large investment budgets have been allocated by major developers
for the refurbishment of older existing retail centres. This strategy should
keep pushing rents and capital values up further.
Note: Bangkok Retail refers to Bangkoks Central Business Area (CBA) Prime retail market.
A rare new prime retail completion provides

options in supply-constrained Jakarta.
James Taylor, Head of Research, Indonesia
SQM PER ANNUM,

2.7%
IDR 5,982,692
STAGE IN CYCLE
Growth
Slowing
NET ABSORPTION DRIVEN BY PRE-COMMITMENT IN NEW COMPLETION
Financial Indices
A moratorium on new retail supply has led to a thin supply pipeline and low
vacancy rates. Spikes in net absorption in recent quarters have been driven
by take-up in new or recent completions and in 3Q16, 26,000 sqm of absorption
was helped by take-up in newly completed Neo Soho.
F&B has, for some time, been the most active retail segment in Jakarta and
this continued in 3Q16. Several local F&B tenants expanded, while two
international health food brands entered Jakarta for the first time.
Anecdotally, the entertainment and cosmetics industries remained strong
while the luxury market tends to be more niche in Jakarta.
140
130
120
Index
110
100
90
4Q12
ONE NEW COMPLETION; VACANCY REMAINS LOW

A moratorium on stand-alone prime-retail development in Jakartas CBD has

been in place since 2011. While the moratorium is not official policy, the
situation is such that the Jakarta governor is extremely selective in signing off
on new retail projects in core areas of the city.
However, one prime mall was completed in 3Q16. Developed by Agung

Podomoro, Neo Soho is an extension of Central Park in the west of the city.
The narrow supply pipeline is such that completions of high-quality shopping
malls are likely to enjoy the attention of retailers and Neo Soho was
completed with healthy pre-commitment.
Physical Indicators
400
350
250
An improving macro economy, healthy occupancy levels and increasing rents

are such that retail remains on the radar for investors. However, the market
is tightly held and given the lack of supply, investment options are limited. As
such, we see few en bloc sales in Jakarta and none were witnessed in 3Q16.
OUTLOOK: NO NEW SUPPLY EXPECTED; VACANCY TO REMAIN LOW

Demand is likely to remain strongest from the F&B segment, with

entertainment playing a supporting role. However, given that we expect no
new supply over the next 12 months and vacancy rates are likely to remain
low, tenants looking to expand are likely to be faced with few options.
Given the attractive supply and demand dynamics, rents are likely to continue
to edge up over the next year. Sustained interest from investors is likely but
some may choose to look beyond Jakarta city limits given the tightly held
nature of the market and the lack of supply in core areas.
Note: Jakarta Retail refers to Jakartas overall Prime retail market.
Thousand sqm
300
4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
RENTS FLAT Q-O-Q; NO EN BLOC DEALS CLOSE

Rents have grown slowly but steadily over the past few years and quarterly
increments typically come in at anything between 0 and 2% and in 3Q16 rents
were flat q-o-q. High-profile malls sometimes report waiting lists for prime
units and such landlords are generally best positioned to raise rents more
aggressively.
4Q13
4Q14
Rental Value Index
200
150
100
50
0
12
13
Completions
14
15
16F
17F
Future Supply
Source: JLL
is for 4Q16.
43 RETAIL
RENTAL
GROWTH Y-O-Y
JAKARTA
Quality new completions filling up fast, yet net

take-up at a five-quarter low due to a lack of
vacant space in premium malls.
DELHI
120
Index
105
Rents
Rising
Healthy leasing activity in Logix City Centre in Noida resulted in the Suburban
submarket contributing over 70% of the quarterly net absorption. A significant
lease by Decathlon in Ansal Plaza and smaller leases by brands such as CK
Jeans and Hermes in superior malls saw the Prime South submarket record
its highest net absorption in nearly five years. However, low vacancy in quality
malls restricted leasing activity in the Prime Others submarket.
100
95
4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
Financial Indicators are for the Prime South.
NO PROJECT COMPLETIONS DURING THE QUARTER

No new supply entered the market as construction delays caused projects to

miss completion deadlines.
With rationalisation of prime mall stock and take-up of space in some top
prime malls, vacancy fell by 270 bps q-o-q to 21.1%. Prime Others continued to
have the highest vacancy rate among all retail submarkets.
Physical Indicators
RENTS AND CAPITAL VALUES RISE IN THE SUBURBAN SUBMARKET
300
250
Thousand sqm
INR 248
Recent completions and quality established malls saw the dominate share of
leasing activity in 3Q16. However, with limited available space in quality malls
and retailer exits from underperforming centres, net absorption fell to a fivequarter low.
110
44 RETAIL
0.0%
STAGE IN CYCLE
115
200
Overall rents rose by less than 1.0% q-o-q and this was largely on account of
rental increases at well-performing malls in the Suburban submarket.
Capital values were also largely unchanged across most submarkets

barring the Suburban submarket, where they moved up together with rental
increases. As a result, yields generally remained stable.
150
100
OUTLOOK: SINGLE-BRAND RETAILERS LIKELY TO BE ACTIVE
50
0
SQ FT PER MONTH,
GROSS ON GFA
NET ABSORPTION FALLS AMID LIMITED AVAILABILITY IN QUALITY MALLS
Financial Indices
90
4Q12
RENTAL
GROWTH Y-O-Y
12
13
Completions
14
15
16F
Large single-brand retailers, especially fast fashion, entertainment,

hypermarkets and F&B, are looking to take up space in quality retail projects.
The relaxation of FDI restrictions in food retailing could see major global
retailers entering the country, creating demand for more physical retail space.
Quality malls operating at high occupancy is likely to be a factor that limits

absorption and leasing activity. Upcoming projects have limited precommitments but may attract retailer interest as they come close to
completion. However, leasing progress is likely to impact project timelines.
17F
Future Supply
Source: JLL
is for 4Q16.
Note: Delhi Retail refers to Delhi NCRs overall Prime retail market.
Given the strong demand for prime retail space,

new high-quality supply meets with great success.
1.6%
INR 256
STAGE IN CYCLE
Rents
Rising
NEW SUPPLY IN SUBURBS DRIVES NET ABSORPTION DURING THE QUARTER

F&B, apparel, fast fashion and entertainment operators have been active in
looking for new stores to expand their networks in the city.
Popular brands were attracted to the new mall that entered the market during
the quarter due to its good residential catchment area, low rents and quality
structure.
Financial Indices
120
115
110
DESPITE NEW SUPPLY, VACANCY EDGES LOWER

A 500,000 sq ft mall became operational in the Suburbs during the quarter.

This was the only completion of a prime mall in the city.
The overall vacancy rate declined by 20 bps q-o-q to 14.2% in 3Q16, largely on
account of a drop in vacancy in the Suburbs.
STEADY RENT GROWTH

Overall rents rose 5.2% y-o-y to INR 133 per sq ft per month, while rents in the
Prime South increased 1.6% y-o-y to INR 256 per sq ft per month.
With rents and capital values moving in tandem, yields remained stable at
11.2%.
105
100
95
90
4Q12
Physical Indicators
90
70
Retailer categories such as entertainment, F&B and fashion are expected to

remain active.
Thousand sqm
80
4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
Financial Indicators are for the Prime South.
OUTLOOK: GRADUAL RISE IN RENTS AND CAPITAL VALUES IN NEAR TERM

With poorly performing malls closing down or on the verge of doing so,
landlords of successful malls should have an opportunity to raise rents.
4Q13
4Q14
Rental Value Index
60
50
40
30
20
10
0
12
13
Completions
14
15
16F
17F
Future Supply
Source: JLL
is for 4Q16.
Note: Mumbai Retail refers to Mumbais overall Prime retail market.
45 RETAIL
SQ FT PER MONTH,
GROSS ON GFA
Index
RENTAL
GROWTH Y-O-Y
MUMBAI
A range of supportive drivers of retail spending,

but a slowing housing market means the wealth
effect is less of a tailwind than it was
12 months ago.
SYDNEY
Andrew Quillfeldt, Associate Director Strategic Research,

Australia
120
Index
46 RETAIL
AUD 1,933
Rents
Stable
Retail spending growth in New South Wales remains solid in a historical

context (at 4.4% y-o-y), although by state, New South Wales is no longer the
top performer, ending a two-year period of national outperformance.
Leasing demand in regional and CBD shopping centres remains firm,

supported by international and domestic clothing, beauty and accessory
retailers seeking to expand. Conditions in neighbourhood shopping centres
are more subdued as the strong competition between supermarkets
continues to drive deflation in food, and weighs on retailer confidence within
this segment.
100
90
4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
VACANCY ACROSS THE OVERALL SYDNEY MARKET RISES SLIGHTLY IN 1H16

New supply in 2016 is likely to be slightly lower than the long-term average at
110,000 sqm, and is expected to decrease to 106,000 sqm in 2017. LaSalle
Investment Managements new homemaker centre at Marsden Park (Home
Hub) completed construction in 3Q16, totalling 17,500 sqm. In addition, Mirvac
completed two developments, the Harrold Park Tramsheds (6,000 sqm) and a
minor extension to Broadway Shopping Centre (3,400 sqm).
The average vacancy rate in regional centres remained stable at 1.1% in

1H16, and is the lowest nationally. Vacancy rates across the CBD, subregional and neighbourhood sub-sectors all increased in 1H16.

Source: JLL
Financial Indicators are for regional shopping
centres.
Physical Indicators
300
250
Thousand sqm
0.0%
STAGE IN CYCLE
110
INVESTMENT ACTIVITY IS INCREASING IN SYDNEY
200
Investments volumes rose to AUD 1.0 billion in 3Q16, up from

AUD 471.3 million in 2Q16 and AUD 112.7 million in 1Q16. A number of major
transactions occurred in 3Q16: David Jones at 77 Market Street sold for
AUD 360 million to CBUS/Scentre Group, Campbelltown Mall sold for
AUD 197 million to Charter Hall Prime Retail Fund and a 50% share in East
Village sold to Mirvac for AUD 154.7 million.
Yields continued to compress as competition for assets remained firm. Debt

costs remain low and return expectations have gradually reduced. JLL
recorded 10 bps of compression on average across the shopping centre
formats (unweighted) in 3Q16, consistent with the recent trend.
150
100
50
0
SQM PER ANNUM,

NET ON GLA
DEMAND INCREASINGLY DIVERGENT BETWEEN MALL FORMATS
Financial Indices
80
4Q12
RENTAL
GROWTH Y-O-Y
12
13
Completions
14
15
16F
17F
Future Supply
Source: JLL
is for 4Q16.
OUTLOOK: RENTAL GROWTH TO BE PRIMARY DRIVER OF CAPITAL VALUES

While completions are expected to be in-line with the long-term average

in 2016, on a five-year outlook, Sydney is expected have low levels of new
supply relative to forecast population growth. Landlords remain focussed on
development, but refurbishment of existing space remains a key part of many
developments.
As yields approach their low for the current cycle, rental growth is likely to
become the key driver of captal value movements over the next 12 months.
Note: Sydney Retail refers to Sydneys overall retail market.
The market continues to be refreshed with

redevelopments that incorporate new concepts,
innovations and retailers.
Andrew Quillfeldt, Associate Director Strategic Research,
Australia
SQM PER ANNUM,
NET ON GLA
1.4%
AUD 1,483
STAGE IN CYCLE
Rents
Rising
RETAIL SPENDING GROWTH TO BE SUPPORTIVE OF LEASING DEMAND
Financial Indices
Retail spending grew by 4.7% y-o-y in August 2016. Growth was broad-based
across all the major retail categories except for food. A notable trend was the
strength in department store spending growth, which has remained strong
throughout 2016. Growth between the categories ranged between 4.1% and
6.6% y-o-y except for food which grew at 3.4% as at August.
New developments in the CBD and regional shopping centres continue to
attract international fashion tenants, while sub-regional shopping centres
continue to be repositioned towards food, service and convenience.
120
110
Index
90
SUPPLY REMAINS MODEST COMPARED WITH HISTORICAL AVERAGE LEVELS

The AUD 660 million redevelopment of Chadstone, Australias largest shopping

centre, was partially opened in October. The development, which will include
a Legoland Discovery Centre, will add 19,600 sqm of space, bringing the total
centre to over 180,000 sqm. The development is expected to reach completion
in 2Q17.
Only one project completed in 3Q16, Scentre Groups AUD 155 million
redevelopment of Casey Central, a sub-regional shopping centre in Narre
Warren.
80
4Q12
Investment transaction volumes increased in 3Q16, but remain relatively low

as at YTD September 2016 (AUD 648 million) compared with previous years.
Key transactions in 3Q16 included: the acquisition of the mixed-use Southgate
complex in Southbank by ARA Asset Management for AUD 578 million (retail
estimated to be approximately AUD 106.5 million). Brandsmart Nunawading
also transacted for AUD 67 million to Acure Asset Management.
OUTLOOK: THE RENTAL GROWTH OUTLOOK REMAINS POSITIVE

Market conditions are likely to remain healthy in the Melbourne retail market
over the next 12 months. Above-average population growth will support
demand for space from retailers and drive mild upward pressure on rents.
While investor demand for assets remains robust, yields are likely to reach
their low point over the next 12 months.
Note: Melbourne Retail refers to Melbournes overall retail market.
4Q15
4Q16
4Q17
Physical Indicators
350
300
250
Thousand sqm
The recovery in retail turnover growth is translating into low positive rental
growth across all shopping centre sub-sectors. On an annual basis, growth
ranges between 0.4% and 2.0% between the different sub-sectors. Bulky
goods rents continued to outperform, driven by housing construction activity
and low levels of new supply since 2009.
4Q13
4Q14
Rental Value Index

Source: JLL
Financial Indicators are for regional shopping
centres.
LOW POSITIVE RENTAL GROWTH CONTINUES

100
200
150
100
50
0
12
13
Completions
14
15
16F
17F
Future Supply
Source: JLL
is for 4Q16.
47 RETAIL
RENTAL
GROWTH Y-O-Y
MELBOURNE
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Jones Lang LaSalle
49 RESIDENTIAL
Residential
Home sales hit the high notes as market

sentiment improves.
HONG KONG
Henry Mok, Regional Director Capital Markets, Hong Kong
SQ FT PER MONTH,
NET ON SA
6.7%
HKD 42.2
STAGE IN CYCLE
Decline
Slowing
HOME SALES REACH THEIR HIGHEST QUARTERLY LEVEL SINCE 3Q14
Financial Indices
110
A post-Brexit rally in financial markets and improved sentiment saw home

sales climbing to 17,890 units, up 30.6% q-o-q and 32.0% y-o-y. In the primary
sales market, attractive incentives drew avid buying interest, with Grand Yoho
in Yuen Long and The Papillons in Tseung Kwan O selling out their available
units within a month of being launched.
Seasonal demand from families ahead of the new academic year saw leasing
activity remain steady, with landlords holding relatively firm on asking rentals
given tight availability in the market.
105
100
Index
RENTAL
GROWTH Y-O-Y
95
90
85
80
4Q12
LAND SUPPLY ON TRACK TO MEET GOVERNMENTS ANNUAL TARGET

4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
Capital Value Index
According to the governments land sale programme for 4Q16, five residential
sitescapable of yielding about 2,800 unitswill be released for sale via
public tender. Together with other land supply sources, the government will
have accounted for 87% of its 18,000-unit annual target in the first three
quarters of this financial year.
A total of 108 luxury units are expected to be issued with Occupation Permits
in 3Q16, including 76 units from New World Developments Mount Pavilia in
Sai Kung.
Physical Indicators
800
700
INVESTORS SHIFT FOCUS TOWARDS REDEVELOPMENT OPPORTUNITIES
600
Despite a 28.2% y-o-y drop in the number of transactions involving properties

priced over HKD 20 million, investors actively sought out redevelopment
opportunities. In one of the more notable deals, PRC-backed developer
Carnival Group acquired a residential site in Shouson Hill for HKD 1.30 billion.
In the public land sales market, six out of eight residential development
sites tendered during the quarter were awarded above the higher-end of
market expectations, reflecting improved sentiment in the overall market and
increased competition for prime sites.
500
Units
50 RESIDENTIAL

Source: JLL
400
300
200
100
0
12
13
Completions
14
15
16F
17F
Future Supply
Source: JLL
is for 4Q16.
OUTLOOK: MARKET TO TURN MORE FAVOURABLE TO BUYERS AND TENANTS

In view of the recent buying frenzy, developers remain keen on launching

more projects to meet annual sales targets and relieve inventory build-up.
With interest rates still slated to rise and modest economic growth ahead, the
upside in capital values should remain somewhat limited.
Leasing activity is expected to taper in 4Q16, as the restructuring of

manpower arrangements in the finance, retail and tourism sectors trims
enquiries at the top-end of the market. All-in-all, we expect rent to decline
510% in 2016 and 05% in 2017.
Note: Hong Kong Residential refers to Hong Kongs overall Luxury residential market.
The tightening measures marked a turn in policy,

after nearly two years of loosening.
SQM PER MONTH,

GROSS ON GFA
3.1%
RMB 130.8
STAGE IN CYCLE
Rents
Rising
STRONG SALES FOR BOTH LUXURY APARTMENTS AND HIGH-END VILLAS
Financial Indices
Supported by active upgrade demand, both luxury apartments and high-end

villas witnessed strong sales in 3Q16, recording 939 and 634 units, up 39%
q-o-q and 17% q-o-q, respectively.
Leasing demand picked up slightly, as tenants relocated due to stricter
housing budgets from many foreign companies. Serviced apartments also
saw an increase in the number of short-term tenants over the summer
vacation period.
140
130
120
Index
110
100
SUPPLY INCREASES DUE TO STRONG DEMAND IN 1H16
Following strong sales volumes in 1H16, developers were encouraged to

continue launching new projects on the market. A total of 1,766 luxury
apartment units entered the market in 3Q16, up a remarkable 152% q-o-q.
However, 479 high-end villa units entered the market, down slightly q-o-q by
4%.
There was no new supply in the serviced apartment market; overall vacancy
in the market was stable at 10.6%.
CAPITAL VALUES FOR HIGH-END VILLAS SOAR

The more active leasing market spurred rental increases for both luxury
apartments and high-end villas, with respective q-o-q increases of 1.8% and
1.0%. Inventory shrinkage in the serviced apartment market gave some
landlords an opportunity to raise rents, which increased by 1.0% q-o-q in
3Q16.
5,000
One new serviced apartment project is expected to enter the market by end2016, driving up market vacancy. However, rents are expected to be stable as
the new projects are located outside of the mature downtown area.
Note: Beijing Residential refers to Beijings overall Luxury and High-end residential market.
4Q17
4Q15
4Q16
Capital Value Index
Physical Indicators
9,000
The policy released at end-3Q16 increased down payment rates and set up
stricter criteria for second-home buyers, which is expected to limit high-end
demand and cool the luxury housing market over the short term. Also, the
policy encouraged the development of mass market residential projects,
which may result in less new supply for high-end housing.
4Q13
4Q14
Rental Value Index

Source: JLL
Financial Indicators are for the Overall Luxury
market.
On the back of strong transaction volumes, but fewer newly launched units,
primary capital values for high-end villas increased a notable 5.2% q-o-q. The
abundant supply of luxury apartments in the quarter, however, restrained
primary capital values growth for luxury apartments at 1.8% q-o-q.
OUTLOOK: IMPACT OF LATEST HOUSING POLICY LIKELY TO BE FELT BY YEAR-END

90
4Q12
8,000
7,000
6,000
Units
51 RESIDENTIAL
RENTAL
GROWTH Y-O-Y
BEIJING
4,000
3,000
2,000
1,000
0
12
13
Completions
14
15
16F
17F
Future Supply
Source: JLL
is for 4Q16.
Policy tightening rumours lead to unexpected rise

in sales, but the short-term outlook
remains unchanged.
SHANGHAI
130
Growth
Slowing
In the leasing market, rents showed a minor correction for the first time since
2009, declining 0.5% q-o-q, due mainly to a seasonal slowdown in leasing
activity. The slowdown is unlikely to signal deterioration in the rental trend;
Shanghais attractiveness to global talent means that the medium- to longterm outlook remains positive.
115
Index
RMB 142.1
Rumours that September would bring further tightening in housing policy

spurred a round of panic buying in the final days of August, causing a sales
surge. Sales fell back in September after the rumour proved unfounded, but
the August spike caused quarterly mass market sales volumes to rebound by
32.7% q-o-q and high-end sales to rise by 70%.
120
110
105
100
95
4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
MASS MARKET SUPPLY DROPS

Mass market new supply dropped by 40.9% from 2Q16. In the high-end market,
seven projects launched a total of 1,126 units for sale in 3Q16, of which 238
units or 21.1% were purchased over the quarter.
In the land sales market, the local government accelerated sales of

residential-use land supply with 22 plots being put up for auction in the
quarter. Developers remained keen on land acquisitions in Shanghai. On
average, transaction prices achieved a premium of 112% over the reserve
price, as competition for plots remained.
Physical Indicators
7,000
6,000
Units
4.1%
STAGE IN CYCLE
125
52 RESIDENTIAL
SQM PER MONTH,

GROSS ON GFA
SALES SURGE IN AUGUST DUE TO RUMOURS OF FURTHER RESTRICTIONS
Financial Indices
90
4Q12
RENTAL
GROWTH Y-O-Y
5,000
PRICES RISE FURTHER AS SALES SURGE
4,000
Strong buying momentum strengthened developers pricing power. Primary

prices for high-end apartments accelerated in 3Q16, growing an average 1.5%
q-o-q on a like-for-like basis to RMB 103,126 per sqm, up from mild growth of
0.9% q-o-q in 2Q16.
In the secondary market, the price trend followed a pattern similar to the
primary market. Average secondary prices rose 3.0% q-o-q on a like-for-like
basis in 3Q16. The rise in capital values, coupled with the slight dip in rents,
led to a compression in investment yields.
3,000
2,000
1,000
0
12
13
Completions
14
15
16F
17F
Future Supply
Source: JLL
is for 4Q16.
OUTLOOK: MARKET LIKELY TO STABILISE AFTER UNEXPECTED REBOUND

Augusts rumours notwithstanding, the policy stance is expected to remain at

its current tight level, with some potential for further restrictions if the
government feels it necessary to tame price growth. As such, both sales
volumes and prices are likely to stabilise in the short term.
As evidenced by the record-high land prices, developers remain upbeat about

the medium- to long-term outlook. We also remain optimistic on long-term
growth, though prices may not quite match the loftier expectations of some
developers.
Note: Shanghai Residential refers to Shanghais High-end residential market.
Buying sentiment remains positive.

Ong Teck Hui, National Director Research, Singapore
SQ FT PER MONTH,
GROSS ON GFA
5.8%
SGD 4.85
STAGE IN CYCLE
Decline
Slowing
SALES VOLUMES CONTINUE TO RISE IN 3Q16
Financial Indices
Sales volumes of non-landed properties in prime districts increased

marginally on a quarterly basis despite the lunar seventh month when many
investors in Singapore avoid purchasing properties. Compared to the same
period last year, sales increased 69%, which reflects the sustained positive
market sentiment since early 2016.
Top selling projects in 3Q16 were completed developments with unsold stock
such as DLeedon (74 units sold) and OUE Twin Peaks (59 units sold). The
developers of these projects actively offered discounts of up to 15% and
deferred payment schemes to attract buyers.
110
100
90
Index
80
70
60
4Q12
SUPPLY OF NEWLY COMPLETED PROJECTS CONTINUES TO DECLINE

242 non-landed residential units obtained Temporary Occupation Permits in

prime districts during the quarter and this was circa half the 480 units of the
previous quarter. The reduced supply and weak leasing market caused the
vacancy rate to improve slightly to 8.8% in 3Q16 from 8.9% in the previous
quarter.
No new non-landed projects were launched in the prime residential districts
in 3Q16. However, unsold units in this market segment amounted to 3,621 units
at end-3Q16, significantly higher than the 2015 annual sales volume of 373
units in the primary market.
4Q13
4Q14
RV Index (Prime)
CV Index (Prime)
4Q15
4Q16
4Q17
RV Index (Luxury)
CV Index (Luxury)

Source: JLL
53 RESIDENTIAL
RENTAL
GROWTH Y-O-Y
SINGAPORE
Physical Indicators
5,000
4,000
LEASING MARKET REMAINS WEAK WHILE BUYING SENTIMENT POSITIVE
In 3Q16, gross rents of Luxury Prime properties declined 2.0% q-o-q while
rents in the Typical Prime segment fell at a slower pace of 1.6% q-o-q. Leasing
demand improved in the smaller-budget market while leasing activity was
limited in high-end properties.
Luxury Prime capital values fell 0.8% q-o-q while that of Typical Prime
improved 0.1% q-o-q after 12 continuous quarters of decline. Market
sentiment has improved since early 2016 but it is still too soon to conclude
that the market has reached its bottom. Property prices are expected to
experience further fluctuations before recovering.
OUTLOOK: SALES LIKELY TO IMPROVE BEFORE PRICES BOTTOM OUT

The residential leasing market continues to face headwinds from the

countrys lacklustre economic performance and the restricted inflow of
foreign workers into Singapore. Rents in Luxury and Typical Prime markets
are expected to fall 7% for full-year 2016.
Buying sentiment is expected to remain positive. The decline in property

prices has moderated and could bottom out in 2017.
Note: Singapore Residential refers to Singapores overall Prime and Luxury residential markets.
3,000
Units
2,000
1,000
12
13
Completions
14
15
16F
17F
Future Supply
Source: JLL
is for 4Q16.
Competition for rental tenants is fierce, leading to

limited rental increases and slowly
declining yields.
BANGKOK
120
THB 513
Growth
Slowing
Six new projects were launched during the quarter with a combined pre-sales
rate of 81%. One project, Rhythm Ekkamai, a 326-unit project on Sukhumvit
Road from AP Thailand PCL completely sold out on launch.
The number of new units sold in completed projects increased by almost 50%
in 3Q16 relative to the previous quarter, as newly completed projects with
high-presale rates successfully began transferring units to buyers.
110
105
Index
0.4%
STAGE IN CYCLE
115
100
95
90
CHANGES IN PROJECT TIMELINES CAUSE DELAYS IN COMPLETION
85
Eight condominiums one ultra-luxury, one luxury and six high-end - were
scheduled to complete in 3Q16, but three were delayed. The five prime grade
projects that were completed added 1,046 units to the existing stock, which
now stands at 35,875 units.
No new luxury apartment projects were launched nor converted to other uses
in 3Q16, thus stock remained unchanged. The vacancy rate in the apartment
market increased q-o-q to 8.1%, as the existing single-ownership stock faces
stiff completion from individual owners with condominium units for rent.
80
4Q12
4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
Physical Indicators
STABLE RENTS; HIGH-PROFILE DEVELOPERS ACQUIRE PRIME LAND PLOTS
9,000
Net effective condominium rents declined by 0.3% q-o-q while luxury

apartment rents held stable. Capital values rose to THB 113,166 per sqm with
market yields stable at 4.8%.
Origin Property PCL acquired a prime land plot on Naradhiwas Rajanagarindra

Road (4,675 sqm) for THB 1.17 billion to develop Knightsbridge Prime Sathorn.
Ananda Development PCL acquired land on Rama 4 Road (1,300 sqm) for
THB 390 million to develop a condominium. LPN Development PCL acquired
land on New Petchaburi Road (6,400 sqm) for THB 960 million to develop an
800-unit condominium.
8,000
7,000
6,000
Units
SQM PER MONTH,

GROSS ON NLA
DEMAND REMAINS STRONG IN EXISTING AND NEWLY-LAUNCHED PROJECTS
Financial Indices
54 RESIDENTIAL
RENTAL
GROWTH Y-O-Y
5,000
4,000
3,000
2,000
1,000
0
OUTLOOK: PRIME CONDO SEGMENTS EXPECTED TO SEE STABLE DEMAND

12
13
Completions
14
15
16F
17F
Future Supply
Source: JLL
is for 4Q16.
A total of 8,400 new prime segment condominium units from 26 projects in

Central Bangkok and the Central East are expected to complete by end-2016,
with a further 3,800 units expected to complete by end-2017.
Despite a weak overall economy and continued pressure on consumer

purchasing power from high household debt levels, demand for higher end
condo products is expected to remain strong, as most buyers and investors in
the prime segments are highly liquid and do not face the same debt servicing
requirements as mass-market buyers.
Note: Bangkok Residential refers to the High-end and Luxury residential markets in Bangkoks Central
Business Area (CBA).
Capital values grow further, contracting yields.

Claro dG. Cordero, Jr., Head of Research, Philippines
SQM PER MONTH,

GROSS ON NLA
3.6%
PHP 788
STAGE IN CYCLE
Growth
Slowing
EXPATRIATE EMPLOYEES REMAIN MAJOR SOURCE OF DEMAND
Financial Indices
The majority of residential units in the leasing market in Makati CBD and
Bonifacio Global City were taken up by expatriate employees from the
offshoring and outsourcing industry and by high-income Filipinos.
Leasing and sales enquiries during the quarter remained stable, supporting
healthy demand for residential units. Net absorption was approximately 1,500
units in 3Q16.
160
150
140
Index
130
120
TWO DEVELOPMENTS COMPLETE IN 3Q16
110
100
Nine developments are slated for completion by end-4Q16, contributing

another 3,000 units to the existing stock of residential units. Meanwhile,
reputable developers continue to launch luxury and mid-end residential
projects.
YIELDS CONTRACT AS CAPITAL VALUES GROW FASTER THAN RENTS

90
4Q12
8,000
7,000
6,000
5,000
4,000
3,000
OUTLOOK: PERFORMANCE OF REMITTANCES TO IMPACT DEMAND
2,000
1,000
The rise in residential prices, as reported by Bangko Sentral ng Pilipinas in its

Residential Real Estate Price Index, reflects sustained demand for residential
units. Demand is expected to continue posting positive growth in the coming
quarters on the back of continued investment interest.
The recent PHP depreciation against the US dollar may strengthen the
purchasing power of Overseas Filipino families, potentially increasing
Overseas Filipino demand for residential units.
Note: Manila Residential refers to the Makati CBD and Fringe residential condominium market.
4Q15
4Q16
4Q17
Capital Value Index
Physical Indicators
Rents were PHP 788 per sqm per month, an increase of 1.1% q-o-q and 3.6%
y-o-y, while capital values were PHP 161,900 per sqm, growing at 1.6% q-o-q
and 5.9% y-o-y. The faster growth of capital values continued to contract
yields to 5.8%.
The countrys economic outlook remained positive despite the change in
presidency in 3Q16. Investors remained keen to purchase residential units as
exhibited by the positive pre-selling performance of newly launched projects.
4Q13
4Q14
Rental Value Index

Source: JLL
Units
Completion of two developments in 3Q16, namely Arya Villas and Park

Terraces-Point Tower, added approximately 400 residential units to existing
stock. The vacancy rate was 4.0% in 3Q16, down 230 bps q-o-q.
55 RESIDENTIAL
RENTAL
GROWTH Y-O-Y
MANILA
12
13
Completions
14
15
16F
17F
Future Supply
Source: JLL
is for 4Q16.
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Jones Lang LaSalle
57 INDUSTRIAL
Industrial
Rental market posts mixed performance as

demand further slows.
HONG KONG
Denis Ma, Head of Research, Hong Kong
180
Index
140
HKD 12.9
Growth
Slowing
Against a backdrop of weak global trade, the value of exports and imports
declined by 2.2% y-o-y and 0.3% y-o-y, respectively, in JulyAugust. Container
throughput was down 7.1% y-o-y but airfreight cargo was up 4.1% y-o-y, over
the same two-month period.
Warehousing demand from 3PLs was thin, with new lettings being driven by
cost saving relocations. Larger requirements arose from retailers. Chinese
online retailer Vipshop leased 21,000 sq ft at Global Gateway in Tsuen Wan
while Tesla Motors leased 25,000 sq ft at ATL Logistics Centre in Kwai Chung.
120
100
VACANCY TRENDS HIGHER AS LEASING DEMAND SLOWS

4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
Capital Value Index
Slow take-up at Mapletree Logistics Hub Tsing Yi and rising vacancy in a

handful of buildings pushed the overall vacancy rate up to 2.9%. Ongoing
downsizing and relocation activity saw the vacancy rate of lift and ramp
access warehouses climb to 1.6% and 4.3%, respectively.
No new supply was completed in 3Q16. Projects in the supply pipeline include
China Merchants development (1.49 million sq ft) in Tsing Yi, with expected
completion in March 2017.

Source: JLL
Physical Indicators
RENTAL MARKET POSTS MIXED PERFORMANCE
500
450
With demand slowing, the rental market posted a mixed performance.

Reduced availability resulting from the governments revitalisation policies
supported rents in Kwun Tong to remain broadly stable whilst rents in Kwai
Chung and Fanling came under pressure amid the weak trading environment.
All-in-all, rents in the overall market grew 0.6% q-o-q in 3Q16.
The investment market was relatively subdued, with only one warehouse
sales transaction being recorded. A tin-shed on Wang Yip Street, Yuen Long
was reportedly sold to Star Properties for HKD 330 million (HKD 9,580 per sq
ft). In the broader industrial market, Lucky House, a 10-storey industrial
building in To Kwa Wan was sold to a local investor for HKD 700 million
(HKD 3,227 per sq ft).
400
350
Thousand sqm
2.2%
STAGE IN CYCLE
160
300
250
200
150
100
58 INDUSTRIAL
SQ FT PER MONTH,
NET ON GFA
LEASING ACTIVITY LARGELY DOMINATED BY RENEWALS
Financial Indices
80
4Q12
RENTAL
GROWTH Y-O-Y
50
0
12
13
Completions
14
15
16F
17F
Future Supply

is for 4Q16.
OUTLOOK: INVESTMENT MARKET TO REMAIN STRONG

Latest forecasts are pointing to a pick-up in global trade in 2017.

Nevertheless, the build-up of marketable space and the completion of China
Merchants warehouse development will likely limit the ability of landlords to
raise rents. As such, rents are expected to remain under pressure over the
near-term; down 05% in both 2016 and 2017.
Amid rising global economic uncertainties, we may see a rise in capital flows
into the city seeking safe-haven investments. The wide expectation gap
between buyers and vendors, however, could cap investment volumes. All-inall, capital values are expected to grow by 510% in 2016 and 05% in 2017.
Note: Hong Kong Industrial refers to Hong Kongs Industrial Warehouse market.
Fierce competition among investors and moderate

rental growth may lead to yield compression.
RENTAL
GROWTH Y-O-Y
SQM PER DAY,

2.0%
RMB 1.14
STAGE IN CYCLE
Growth
Slowing
DIVERSIFIED TENANT DEMAND DRIVES THE LEASING MARKET
Financial Indices
3PLs and e-commerce firms continued to be active; an e-commerce giant

leased 11,000 sqm in Tongzhou Logistics Park (TLP) with plans to expand by
roughly doubling its space at the small project to become its sole occupier
in 2017. Several small logistics companies also committed to a total of 18,000
sqm of space at Beijing Airport Logistics Park.
Some cost-sensitive companies relocated to low-end projects or surrounding
areas as their leases expired, freeing up space in the market. Some of this
space was absorbed by large e-commerce firms and 3PLs. This led net takeup to reach 9,700 sqm, demonstrating relatively strong demand considering
that there was no new supply for the market to absorb in the quarter.
120
115
110
Index
BEIJING
100
95
90
4Q12
TLP COOPERATES WITH TIANJIN TO BETTER LINK IT WITH BEIJING

With no new properties entering the market, vacancy dipped slightly to 2.4%,
down a 0.5 percentage point q-o-q. Total logistics stock was stable at
1.94 million sqm.
TLP announced plans to jointly develop a logistics park with Tianjins Baodi
Economic Development Zone. Limited logistics land in Beijing is creating
opportunities for the Tianjin government to benefit from cooperation with
the Beijing government, especially as spill-over demand from Beijing enters
Tianjin.
4Q15
4Q16
4Q17
Capital Value Index
Physical Indicators
500
450
400
350
Thousand sqm
Landlords took advantage of the relatively active quarter, using renewals or

relocations to raise rents, while those in mature submarkets leveraged
changes in tenancy to increase passing rents. This led chain-linked rental
growth to rise by 0.7% q-o-q.
4Q13
4Q14
Rental Value Index

Source: JLL
DUE TO THE SLIGHT PICK-UP IN LEASING ACTIVITY, RENTS EDGE UP

105
300
250
200
150
Investors continued to scour the market for opportunities, particularly

legacy warehouses or old factories suitable for conversion into high-end
warehouses. Market rumours in the quarter reported that a domestic
developer purchased an old factory in Yizhuang, while an international
developer bought a legacy warehouse in Shunyi.
OUTLOOK: PROJECTS WITH QUALITY FACILITIES TO RECORD BIGGEST GAINS

Zenith Logistics Park postponed its completion date to 2017, making GLP
Park Pinggu Phase II the only project left to open this year. We expect higher
vacancy rate by end-2016 considering the slow leasing progress for remote
projects.
Under the softer demand setting, moderate rental growth is still expected over
the next 12 months as the tight market suggests that the market remains
undersupplied. High-quality warehouses will be the biggest rent-winners as
3PLs and e-commerce firms seek projects with better facilities.
Note: Beijing Industrial refers to Beijings Prime non-bonded logistics market.
50
0
12
13
Completions
14
15
16F
17F
Future Supply
Source: JLL
is for 4Q16.
59 INDUSTRIAL
100
Solid demand from 3PLs and e-commerce drives

take-up to record high.
SHANGHAI
140
Index
110
Growth
Slowing
3PLs and e-commerce firms continued to drive demand. For example, a local
3PL leased the whole of Vailogs new project in Minhang to serve nearby
customers. Meanwhile, an online baby product retailer expanded 20,000 sqm
in GLPs Pudong Airport project. Manufacturers and automakers also
contributed to the quarters take-up of 194,000 sqm.
100
90
4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
Financial Indicators are for the Non-bonded
market.
ONE PROJECT BY VAILOG REACHES COMPLETION IN MINHANG

Vailog delivered its Xinzhuang project in Minhang in the quarter, adding 38,000
sqm to the popular West Shanghai market. The entire project was fully leased
to a local 3PL serving customers in a nearby industrial park.
Limited supply and strong take-up led to non-bonded vacancy declining from
14.1% in 2Q16 to 10.8% in 3Q16. With vacancy in West Shanghai limited to
small units, tenants seeking locations in Shanghai will need to consider space
in East Shanghai or emerging areas such as Baoshan and Jinshan, where
leasing activity has been rising over the past few quarters.
Physical Indicators
700
600
RENTAL GROWTH REMAINS MODERATE AS LANDLORDS SENTIMENT DIVERGES
500
Thousand sqm
RMB 1.29
Strong take-up vindicated our projection that the previous quarters low
absorption of 2,600 sqm and rise in vacancy would prove temporary. Most
space that opened up in 2Q16 was backfilled over the quarter, with space in
West Shanghai especially popular.
120
Rental growth picked up slightly compared to that of 2Q16 amid strong takeup and declining vacancy. However, quarterly growth still came in below 1%
as prospects diverged across submarkets. Landlords of projects with high
vacancy prioritised reducing vacancy by keeping rents flat.
Investment sentiment remained upbeat as new entrants sought to expand

their portfolios. Transactions are increasing as domestic developers such as
Vanke and Pingan have expanded their business into the industrial sector.
400
300
200
60 INDUSTRIAL
1.3%
STAGE IN CYCLE
130
100
0
SQM PER DAY,

NET ABSORPTION HITS A NEW RECORD OF 194,000 SQM
Financial Indices
80
4Q12
RENTAL
GROWTH Y-O-Y
12
13
Completions
14
15
16F
17F
Future Supply
Source: JLL
is for 4Q16.
OUTLOOK: RENTAL GROWTH TO REMAIN STABLE IN 2016

Two projects totalling 154,000 sqm are scheduled to be delivered in the last
quarter of 2016. Together with the four projects that were delivered earlier this
year, 2016 is on the track to be the largest year for supply. We expect nonbonded vacancy to fall further, as stable demand absorbs much of the existing
vacant space.
We expect rental growth in 2016 to come in at a level similar to 2015, a result

of limited tenant affordability and continued competition from satellite cities.
As rents in Kushan start to catch up with those of Shanghai, there is rising
potential for spill-over demand from Shanghai instead looking south, to
projects along the G60 expressway.
Note: Shanghai Industrial refers to high-quality modern warehouses in Shanghai City.
As the level of new supply has come down, rents

have started to rise, driven by the Tokyo Bay area.
TOKYO
TSUBO PER MONTH,

GROSS ON NLA
1.4%
JPY 4,139
STAGE IN CYCLE
Growth
Slowing
NET TAKE-UP IN THE FIRST NINE MONTHS SURPASSES FULL-YEAR 2015 LEVEL
Financial Indices
Key performance indicators relating to the industrial logistics sector were

patchy in the first two months of 3Q16. In August, industrial production
increased 1.5% m-o-m while exports decreased 9.6% y-o-y.
With third-party logistics players and e-commerce retailers taking space in
new supply in the Tokyo Bay area and relatively new facilities in the Tokyo
Inland area, net absorption totalled 213,000 sqm in 3Q16. As at YTD September
2016, net take-up reached 893,000 sqm, surpassing the previous years fullyear total by 20%.
150
140
130
Index
In 3Q16, new supply totalled 284,000 sqm and increased stock by 3.9% q-o-q.
Two distribution centres entered the market MFLP Funabashi 1 (GFA 198,000
sqm) in the Bay area and GLP Sayama Hidaka 2 (GFA 86,000 sqm) in the Inland
area. The former achieved a forward commitment rate at completion of 85%.
The vacancy rate stood at 8.0% at end-3Q16, increasing 60 bps q-o-q and 520
bps y-o-y. The Tokyo Bay area saw an increase in vacancy of 140 bps q-o-q,
while the Tokyo Inland area increased 40 bps. The increase was largely
attributable to the new supply in the quarter.
110
100
90
NEW SUPPLY PUSHES UP THE VACANCY RATE

120
80
4Q12
Physical Indicators
1,400
1,200
Capital values increased 2.3% q-o-q and 0.9% y-o-y in 3Q16. This was the first
rise in three quarters, reflecting rent growth and cap rate compression. Cap
rates are at record lows in both the Tokyo Bay and the Tokyo Inland areas. A
noteworthy sales transaction during the quarter was GLP J-Reits acquisition
of GLP/MFLP Ichikawashiohama at an NOI cap rate of 4.6%.
OUTLOOK: RENTS AND CAPITAL VALUES TO GROW MODERATELY

According to the economic outlook of Oxford Economics, industrial production

is expected to be stable in 2017 while exports are projected to increase 1.0%.
However, soft external demand remains a downside risk.
The vacancy rate is likely to decline in 2017 despite record new supply, as
3PLs continue to look for modern facilities that better meet their requirements.
Investment yields will likely compress amid ongoing investor interest, and this,
coupled with rent growth, should support further capital value growth.
Note: Tokyo Industrial refers to Greater Tokyos Prime logistics market.
1,000
Thousand sqm
4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
CAPITAL VALUES GROW FOR THE FIRST TIME IN THREE QUARTERS

Rents averaged JPY 4,139 per tsubo per month in 3Q16, increasing 0.3% q-o-q
but decreasing 1.4% y-o-y. Positive growth was recorded for the first time in
four quarters as rents rose in the Tokyo Bay area. Rents in the Inland area
continued to decline.
4Q13
4Q14
Rental Value Index
800
600
400
200
0
12
13
Completions
14
15
16F
17F
Future Supply
Source: JLL
61 INDUSTRIAL
RENTAL
GROWTH Y-O-Y
Muted supply allows demand to play catch up,

easing rental correction.
SINGAPORE
Tay Huey Ying, Head of Research, Singapore
120
Index
100
95
Lacklustre demand drivers resulted in only modest gain in net absorption

for business parks, contributed largely by industrialists moving into their
newly fitted-out single-user premises which received Temporary Occupation
Permits in the earlier quarters.
90
85
4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
Physical Indicators
300
24
250
20
200
16
150
12
100
50
VACANCY INCHES DOWN ON MUTED GROWTH IN SUPPLY

The supply of business park space in the pipeline has started to taper down
following the strong completion of 109,000 sqm in 2Q16. No new project
was completed in 3Q16 while only a mere 14,000 sqm from a purpose-built
business park development along Vista Exchange is expected to come on
stream in 4Q16.
As a result, vacancy for 3Q16 inched down marginally from 19.0% in 2Q16 to
18.5% amid modest positive net absorption.
TAPERING SUPPLY EASES DOWNWARD PRESSURE ON RENTS

Weak demand continued to weigh on rents, although underpinned by the

tapering of supply, the pace of rental decline moderated to 0.6% q-o-q in 3Q16
from 0.9% in 2Q16. Capital values declined in tandem, by 0.6% q-o-q in 3Q16,
maintaining yields at 6.4%.
After a dry spell in 1H16, 3Q16 witnessed the sale of three business park
blocks in Mapletree Business City I for SGD 1.21 billion. Taking this lone deal
out of the investment tally, the industrial market recorded a 64.7% fall in
sales, suggesting that investors and industrialists are still cautious amid the
uncertain economic environment.
Percent
Thousand sqm
Decline
Slowing
105
62 INDUSTRIAL
SGD 3.72
Industrial output contracted an average 1.7% y-o-y in July and August with
the biomedical sector shrinking 6.2% y-o-y, dragged down by an 11.5% y-o-y
contraction in pharmaceuticals. Other demand drivers such as information
& communications, finance & insurance and business services sectors also
recorded anaemic growth of 0.2% to 1.2% y-o-y in 2Q16.
110
0
13
3.0%
STAGE IN CYCLE
115
12
SQ FT PER MONTH,
MODEST GAIN IN NET ABSORPTION AMID WEAK DEMAND DRIVERS
Financial Indices
80
4Q12
RENTAL
GROWTH Y-O-Y
14
15
16F
17F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
OUTLOOK: PACE OF RENT AND CAPITAL VALUE CORRECTION TO DECELERATE

The governments commitment to direct the economy as well as the

manufacturing sector towards one that is focussed on value creation and
innovation is expected to help prop up demand for business park space.
Muted near-term supply in the pipeline should provide an opportunity for

demand to play catch up, allowing vacancy to improve alongside the gradual
occupation of space in recently completed developments. The pace of rent
and capital value correction is expected to continue to ease.
Note: Note: Singapore Industrial refers to Singapores island-wide Business Park market.
Limited quality stock available has seen some

institutions maintain low gearing, while others
look to development for higher yields.
SYDNEY
Nicholas Crothers, Director - Research, Australia
RENTAL
GROWTH Y-O-Y
SQM PER ANNUM,

NET ON GFA
0.4%
AUD 112
STAGE IN CYCLE
Rents
Stable
BROAD-BASED DEMAND UNDERPINS STRONG OCCUPIER MOVEMENT
Financial Indices
Following a reduction in take-up the previous quarter, occupier activity

increased in 3Q16. Gross take-up of 258,000 sqm was recorded across 18
occupier moves reported over the quarter. Occupier activity continues to be
focused in the new build market.
Occupier activity in 3Q16 continued to be supported by traditional market
drivers. Take-up activity was driven by tenants from the manufacturing sector
(33.6%), closely followed by transport and warehousing sector (31.2%) and
retail sector tenants (23.5%).
140
130
120
Index
110
100
90
INCREASING SUPPLY PIPELINE
Thirteen projects totalling 221,845 sqm reached practical completion in 3Q16,

of which 77.5% was pre-committed. The largest facility to complete was a
30,000 sqm Hyundai Mobis warehouse at 77 Peter Brock Drive, Eastern Creek
(Outer Central West).
As at YTD September 2016, supply additions to the market totalled 432,300 sqm
and are already above the full-year 2015 result. Another 146,860 sqm of supply
is under construction and targeted to complete in 2016.
80
4Q12
Physical Indicators
900
800
Four off-market sales transactions totalling AUD 286.9 million were recorded
in the Inner West, North and South Sydney precincts. Of these transactions,
81% by value was accounted for by foreign buyers.
OUTLOOK: MORE OCCUPIER AND CONSTRUCTION ACTIVITY

New land estates entering the market in 2016 are expected to result in more
development activity and competition. There is 146,860 sqm of supply under
construction and due to complete in the remainder of 2016.
Investment market demand is still tight and there is demand for prime assets
with long WALEs. However, there is still a lack of quality stock available on
the market.
Note: Sydney Industrial refers to Sydneys industrial market (all grades).
700
Thousand sqm
4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
Financial Indicators are for Outer Central West.
RENTS STABILISE WITH BALANCED MARKET CONDITIONS

Rents were stable across the western precincts, with the exception of the
Outer North West, which recorded minor growth. Despite the lack of rental
growth, incentives in pockets of the west have tightened over the quarter.
4Q13
4Q14
Rental Value Index
600
500
400
300
200
100
0
12
13
14
Take-Up (gross)
15
16F
17F
Completions
Future Supply
Source: JLL
63 INDUSTRIAL
Significant investor demand for Melbournes

industrial assets.
MELBOURNE
140
125
120
Index
AUD 85
Rents
Stable
Gross take-up slowed to 62,900 sqm in 3Q16. However, 2016 is likely to be

another year above the long-term average, with take-up of 501,525 sqm as at
YTD September 2016.
In a reversal of the trend earlier in the year, 70% of take-up in the quarter was
for existing space.
130
115
110
A MAJOR NEW FACILITY FOR CEVA LOGISTICS COMPLETES IN 3Q16
105
100
Five new projects totalling 111,900 sqm completed in the quarter. The Frasers
Property group developed facility for CEVA logistics (74,000 sqm) is one of
the largest warehouse facilities to be completed in Melbourne over the last
decade.
Large industrial projects (50,000 sqm) are typically focused in the North and
West as land supply has become limited in the South East.
95
4Q13
4Q14
Rental Value Index
4Q15
4Q16
4Q17
Capital Value Index

Source: JLL
Financial Indicators are for South East.
INVESTMENT VOLUMES LED BY TWO (AUD 100 MILLION+) SALES

Sales volumes for the first nine months of 2016 totalled AUD 1.15 billion and
are already substantially higher than the ten-year annual average.
Prime investment yields compressed at the lower end to 6.25%6.75% in

the South East and remained stable in the North (6.25%7.50%) and West
precincts (6.25%6.75%).
Physical Indicators
800
700
600
Thousand sqm
4.0%
STAGE IN CYCLE
135
500
OUTLOOK: FIRM DEMAND FOR QUALITY LEASE COVENANTS AND LONG WALES
400
300
Supply levels are anticipated to be strong in 2016, remaining in line with

2014 and 2015 levels. Melbournes Industrial sector should be supported by
a number of major infrastructure projects that will complete over the next
decade.
The pace of yield compression is slowing as the market reaches the bottom of
the yield cycle.
200
100
64 INDUSTRIAL
SQM PER ANNUM,

NET ON GFA
LEASING ACTIVITY MODERATES IN 3Q16 AFTER A STRONG 1H16
Financial Indices
90
4Q12
RENTAL
GROWTH Y-O-Y
0
12
13
14
Take-Up (gross)
15
16F
17F
Completions
Future Supply
Source: JLL
Note: Melbourne Industrial refers Melbournes industrial market (all grades).
65 HOTELS
Hotels
Some early signals that the market may be

nearing a bottom, with Mainland Chinese
visitors returning.
HONG KONG
4,000
100
3,500
90
60
2,000
50
1,500
40
30
1,000
Occupancy (%)
70
2,500
2.9%
HKD 2,473
Decline
Slowing
On a brighter note, the Mainland China market has shown signs of recovery.
In July 2016, overnight visitor arrivals from Mainland China were up 5.3%
y-o-y. Meanwhile, as at YTD July 2016, both the long haul and short haul
markets (excluding Mainland China) experienced growth in overnight visitors,
recording growth of 2.9% and 9.8% y-o-y, respectively.
10
0
Feb 11
Aug 11
Feb 12
Aug 12
Feb 13
Aug 13
Feb 14
Aug 14
Feb 15
Aug 15
Feb 16
Aug 16
MIDSCALE AND ECONOMY HOTELS ACCOUNT FOR MAJORITY OF NEW SUPPLY
RevPAR
Occupancy (%)
As at YTD August 2016, approximately 406 rooms have been added to the
market, including the Cruise Hotel, Metro Winner Hotel and Eco Tree Hotel.
With the exception of the Cruise Hotel, which provided 161 rooms, all had
fewer than 100 rooms.
An additional 2,725 rooms are expected to enter the market before the end of
2016. Some of the notable future hotel openings are Kerry Hotel by Shangri-La
(545 rooms), Hilton Garden Inn (263 rooms) and Hotel 108 (61 rooms).
Source: STR Global, JLL

Note: MAA - Moving Annual Average
Major Additions to Hotel Supply

6,000
5,500
TRADING PERFORMANCE STILL IN DECLINE
5,000
As at YTD August 2016, the midscale and economy hotel segment saw a
decline in Revenue Per Available Room (RevPAR) of 5.2% y-o-y due to the
decline in visitor arrivals from Mainland China. Upscale hotels also recorded
a 4.5% y-o-y decline in RevPAR, primarily driven by a 4.8% y-o-y decrease in
Average Daily Rate (ADR).
As at YTD August 2016, occupancy for luxury hotels declined by 0.8% to 75.1%,
while ADR dipped 2.2% y-o-y to HKD 3,292. Luxury hotels are compromising on
their rates to sustain occupancy, and as a result, RevPAR declined by 2.9%.
4,500
4,000
No. of rooms
STAGE IN REVPAR CYCLE
Visitor arrivals to Hong Kong fell 6.0% y-o-y to 32.2 million as at YTD July 2016,
primarily due to the decline in visitors from Mainland China. Mainland Chinese
visitors declined by 8.8% y-o-y to 24.3 million, a result of socio-political tension
and an appreciating Hong Kong Dollar.
20
500
3,500
3,000
2,500
2,000
1,500
1,000
500
0
12
13
14
Additions to Supply
Source: Industry sources, JLL
66 HOTELS
YTD AUGUST 2016
80
3,000
ADR
REVPAR
GROWTH Y-O-Y
VISITOR ARRIVALS DECLINING, BUT SHOWING SIGNS OF BOTTOMING
Luxury Hotel Trading Performance
ADR / RevPAR (HKD)
Frank Sorgiovanni, Senior Vice President, Strategic Advisory,

Asia Hotels & Hospitality Group
15
16F
17F
Future Supply
OUTLOOK: NEW SUPPLY AND ECONOMIC UNCERTAINTY IMPACT PERFORMANCE

New supply represents around 3% of total existing stock. The expected

recovery of visitors from Mainland China and the growth of other key source
markets should somewhat help offset the projected increase in new rooms.
As a major financial hub, Hong Kong is likely to be affected by global

economic uncertainty with a reduction in long haul business trips. In addition,
investment banks are cutting jobs in Hong Kong, resulting in less corporate
demand.
Note: Hong Kong Hotels refers to Hong Kongs Luxury hotel market.

REVPAR
GROWTH Y-O-Y
YTD AUGUST 2016
4.5%
RMB 708
RevPar
Rising
CONTINUED DECREASE IN INTERNATIONAL VISITATION IN 3Q16
Beijing Innovation Research Institute recently established cooperation with

France in areas of innovation technology, electronics technology and energy.
A stronger relationship may lead to more visitations from France in the future.
Upscale Hotel Trading Performance

1,200
In 4Q16, JLL expects the opening of the 360-room Parkview Hotel Beijing. The
total number of room additions by end-2016 is expected to be 1,346 rooms,
registering 2.0% y-o-y growth.
REVPAR GROWTH DRIVEN BY IMPROVEMENT IN OCCUPANCY

OUTLOOK: ENHANCED INFRASTRUCTURE TO DRIVE DEMAND

Beijing will enhance its transportation system by adding two more highways,
namely Beijing-Qinhuangdao Expressway (Beijing-Hebei) and Xingyan
Express (Beijing-Yanqing), with completion expected in 2017 and 2018
respectively. These highways will enhance accessibility to tourism
destinations such as Chongli, Yanqing and Qinhuangdao.
70
60
600
50
40
400
30
20
10
0
0
Feb 11
Aug 11
Feb 12
Aug 12
Feb 13
Aug 13
Feb 14
Aug 14
Feb 15
Aug 15
Feb 16
Aug 16
ADR
RevPAR
Occupancy (%)


3,500
As at YTD August 2016, occupancy increased by 4.5 percentage points y-o-y

to 70%. During the same period, Average Daily Rate (ADR) remained
unchanged at RMB 1,011. As a result, Revenue Per Available Room (RevPAR)
demonstrated a 4.5% y-o-y growth, continuing on an upward trend.
On a moving annual average basis, ADR was recorded at RMB 993 in August
2016, increasing 5.2% y-o-y. As a result, RevPAR registered RMB 705,
increasing by 3.6% y-o-y.
80
800
200
3,000
2,500
No. of rooms
Room additions continued to be limited in 3Q16. The 300-room InterContinental

Beijing City Center was the only opening in the quarter. As at YTD September
2016, a total of 986 rooms have entered the market.
90
1,000
MODERATE NEW SUPPLY EXPECTED TO ENTER IN 2016

100
Occupancy (%)
As at YTD July 2016, Beijing Statistics Bureaus data showed that international
visitor arrivals to Beijing decreased 0.8% y-o-y to 2.4 million. Major Asian
markets saw decline, with South Korea and Japan falling 5.0% and 4.2% y-o-y
respectively. Western markets saw improvement, with arrivals from the UK
and Spain growing at 13.3% and 28.4% y-o-y respectively.
2,000
1,500
1,000
500
0
12
13
14
Additions to Supply
15
16F
17F
Future Supply
Source:Yearbook of China Tourism Statistics,

Industry sources, JLL
Hongkong Land Holdings Limited recently announced the 2017 opening of

their commercial complex in the Wangfujing Area, comprising retail and hotel
components Mandarin Oriental Wangfujing (2018). The addition should
prompt tourism development and stimulate demand in the Wangfujing Area.
Note: Beijing Hotels refers to Beijings Upscale hotel market.
67 HOTELS
BEIJING
ADR/RevPAR (RMB)
Stable trading performance amid moderate

new supply.
Further pressure on ADR due to large

supply additions.
SHANGHAI
100
ADR/RevPAR (RMB)
60
600
40
50
30
Occupancy (%)
70
800
10
0
Feb 11
Aug 11
Feb 12
Aug 12
Feb 13
Aug 13
Feb 14
Aug 14
Feb 15
Aug 15
Feb 16
Aug 16
ADR
RevPar
Rising
NEW SUPPLY IN 3Q16 CONCENTRATED IN HONGQIAO AREA

In 3Q16, three hotels with 1,127 rooms started operations. New hotels
included the 543-room InterContinental Shanghai National Exhibition and
Convention Center, 224-room Mercure Shanghai Hongqiao Airport and 360room Sofitel Shanghai Macorlink Hotel.
As at YTD September 2016, a total of 5,337 rooms have entered the Shanghai
market, amounting to 10% of total stock. Large supply additions have exerted
downward pressure on ADR performance. Disneyland has had limited benefit
for upscale hotels and several projects have been postponed.
RevPAR


9,000
ADR CONTINUES TO STRUGGLE DUE TO LARGE SUPPLY
8,000
As at YTD August 2016, Revenue Per Available Room (RevPAR) increased by

6.1% y-o-y to RMB 743, driven by occupancy growth. Occupancy continued
to improve, increasing by 6.4% percentage points y-o-y to 71%. Average Daily
Rate (ADR) slightly dropped by 0.5% y-o-y, registering RMB 1,051.
On a moving annual average basis, ADR has remained relatively stable,

reaching RMB 1,061 as at August, a slight decline of 1.1% y-o-y. Occupancy
continued to improve, reaching a moving annual average of 71.5% through
August. This improvement helped push up RevPAR by 2.6% y-o-y to RMB 762.
7,000
6,000
No. of rooms
RMB 743
Major source markets showed strong growth. Visitors from Korea, the USA
and Canada increased by 14.6%, 8.1% and 8.0% y-o-y, respectively. In
contrast, travellers from Japan decreased 2.0% y-o-y.
Occupancy (%)
5,000
4,000
3,000
2,000
1,000
0
12
13
14
Additions to Supply
15
16F
17F
Future Supply
OUTLOOK: SOME UPCOMING PROJECTS MAY BE DELAYED

All new additions in 3Q16 were located in the Hongqiao Area. These hotels
may exert more pressure on trading performance, especially on ADR
performance in this area.
The Shanghai government has started to issue 144 hours transit visa
exemption for foreign citizens from 51 countries, enabling longer visa-free
stay in Shanghai, ZheJiang and Jiangsu province. The recent extension of
visa exemption to 15 days for international tourist groups arriving by cruise
ships should also help generate more travel demand to Shanghai.
Source: Yearbook of China Tourism Statistics,

Industry sources, JLL
68 HOTELS
6.1%
20
200
Based on data from the Shanghai Statistics Bureau as at YTD August 2016,
international visitor arrivals to the city reached approximately 5.5 million,
registering an increase of 6.1% y-o-y. The rate of growth in international
arrivals has shown a continuous upward trend.
80
1,000
400
YTD AUGUST 2016
90
1,200
REVPAR
GROWTH Y-O-Y
INTERNATIONAL ARRIVALS CONTINUE TO IMPROVE

1,400

Note: Shanghai Hotels refer to Shanghais Upscale hotel market.
Tokyos hotel trading performance continues to

grow at a modest pace.
TOKYO
Tom Sawayanagi, Managing Director Hotels & Hospitality Group,

Japan
3.4%
JPY 44,108
RevPar
Rising
INBOUND VISITORS BUILD A SOLID BASE FOR LODGING DEMAND

A total of 25 million visitor nights were spent in Tokyo as at YTD June 2016,
representing 12.8% of all visitor nights across Japan. International
accommodation guests, which account for 32.4% of total accommodation
guests in Tokyo, increased by 1.8% y-o-y to 8.1 million while domestic
accommodation guests dropped by 6.8% y-o-y to 16.8 million.

55,000
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
ADDITIONS OF TWO MAJOR LUXURY HOTELS IN 3Q16

Two hotels opened in the luxury segment in the quarter. Hoshinoya, a known
Ryokan operator, opened the 84-room Hoshinoya Tokyo - their first hotel in a
urban location. The 250-room Prince Gallery Tokyo Koicho, a redevelopment
of the former Akasaka Prince Hotel, reduced the key count from 715 to 250
and repositioned the hotel as a 5 star.
There will be no other major hotel openings in 2016, and there is only one new
luxury property addition expected in 2017. Ascott Marunouchi Tokyo is
scheduled to open in April 2017 as a 129-key luxury serviced apartment with a
hotel licence.
FURTHER GAINS IN REVPAR DESPITE A SLIGHT DROP IN OCCUPANCY

There was a sustained improvement in the Tokyo hotel market with Revenue
per Available Room (RevPAR) increasing 3.4 % y-o-y as at YTD August 2016.
This advance is attributed to growth in Average Daily Rate (ADR) of 7.8%
y-o-y, despite occupancy dropping by 4.0%. On a moving annual average
basis, RevPAR has been on a growth trajectory since 2Q12.
While there were no hotel investment transactions in the luxury sector in
Tokyo during 3Q16, an 884-key four-star full service hotel, Grand Pacific le
Daiba was sold in May at JPY 66 billion (JPY 75 million per key).
90
80
70
60
50
40
30
20
10
0
ADR
RevPAR
Occupancy (%)


500
400
No. of rooms
100
Occupancy (%)
A relatively stronger Japanese Yen and inflation have made Japan more
expensive for foreign visitors, resulting in a slowdown of visitor arrival growth
compared to last year. As at YTD August 2016, inbound arrivals to Japan
reached 16.1 million, representing an increase of 24.7% y-o-y, lower than the
49.1% y-o-y growth recorded for the same period a year earlier.
Feb 11
Aug 11
Feb 12
Aug 12
Feb 13
Aug 13
Feb 14
Aug 14
Feb 15
Aug 15
Feb 16
Aug 16
YTD AUGUST 2016
ADR/RevPAR (JPY)
REVPAR
GROWTH Y-O-Y
300
200
100
12
13
14
Additions to Supply
15
16F
17F
Future Supply
Visitor arrivals will continue to increase but at a slower pace as Japan is

becoming a more expensive destination for inbound visitors. Room rates
should also increase at a slower pace, and this will result in modest RevPAR
growth.
With regard to the hotel investment market, the trend of cap rate compression
is anticipated to be modest as a result of slower NOI growth.
Note: Tokyo Hotels refers to Tokyos Luxury hotel market.
69 HOTELS
OUTLOOK: REVPAR GROWTH TO CONTINUE BUT AT A SLOWER PACE
Growth in tourism numbers supported by

increasing arrivals from top source markets.
SINGAPORE
450
100
400
90
350
80
60
250
50
200
40
150
30
100
Occupancy (%)
70
300
0
Feb 11
Aug 11
Feb 12
Aug 12
Feb 13
Aug 13
Feb 14
Aug 14
Feb 15
Aug 15
Feb 16
Aug 16
10
SGD 317
RevPar
Stable
Improvements in air connectivity between Singapore and second-tier

Mainland Chinese cities has helped boost visitation from China. Other top
source markets also contributed to the increasing visitor arrivals including
Indonesia (+6.8%), India (+9.4%) and Thailand (+14.9%).
RevPAR
SIGNIFICANT SUPPLY PIPELINE WITH NEW BRANDS ENTERING THE MARKET

Recent hotel openings in Singapore include the 131-room Hotel Indigo

Singapore Katong and the 300-room Premier Inn Singapore Beach Road, both
representing debut openings for the brands in Singapore. In addition, a new
JW Marriott is expected to open at South Beach before the end of 2016,
adding a further 634 rooms.
Looking ahead, there is still a significant amount of new supply in the pipeline.
Expected openings in 2017 include the 157-room The Patina, Capitol
Singapore, the 222-room Sofitel Singapore City Centre, the 225-room
Intercontinental Robertson Quay and the 340-room Andaz Singapore.

6,000
5,500
STEADY PERFORMANCE AS IMPROVING VISITOR ARRIVALS BOOST OCCUPANCY
5,000
4,500
4,000
No. of rooms
0.4%
Occupancy (%)
As at YTD August 2016, occupancy for luxury hotels in Singapore increased by

0.9% y-o-y to 79.8%. Average Daily Rate (ADR) reached SGD 398, a marginal
fall of 0.5% y-o-y.
As a result of improving occupancy, Revenue Per Available Room (RevPAR)

increase by 0.4% y-o-y to SGD 317. On a moving annual average basis,
RevPAR fell marginally by 0.5% from SGD 325 in August 2015 to SGD 323 in
August 2016.
3,500
3,000
2,500
2,000
1,500
1,000
500
12
13
14
Additions to Supply
70 HOTELS
International visitor arrivals continued to steadily rise as at July 2016,

increasing by 11.5% y-o-y to reach 9.8 million. This improvement can primarily
be attributed to strong growth from Mainland China which enjoyed growth of
49.2% y-o-y and made up 18.2% of visitor arrivals.

YTD AUGUST 2016
20
50
ADR
REVPAR
GROWTH Y-O-Y
GROWTH IN VISITOR ARRIVALS SUPPORTS IMPROVING HOTEL PERFORMANCE
ADR/RevPAR (SGD)

15
16F
17F
Future Supply
OUTLOOK: STRONG VISITOR ARRIVALS TO SUPPORT HOTEL PERFORMANCE

Strong growth in international visitor arrivals, supported by good growth from

top source markets such as China and India, should help to support the hotel
industry in Singapore. The Singapore Tourism Board recently signed a
Memorandum of Cooperation with the Seoul Metropolitan Government to help
drive tourism traffic between the two cities.
Existing tourism promotional efforts as well as major events such as the

Singapore Airlines Formula 1 Grand Prix in September and the WTA tennis
finals in October will help to attract visitor arrivals and support hotel
performance.
Note: Singapore Hotels refers to Singapores Luxury hotel market.
YTD AUGUST 2016
6.9%
THB 4,379
RevPar
Rising
VISITOR ARRIVALS SEE GROWTH ACROSS ALL KEY SOURCE MARKETS

Other key source markets included Japan, Korea, and India, grew at 2.6%,
11.5%, and 12% y-o-y respectively, collectively accounting for 16.3% of
international arrivals. While Russia has fallen out of the top ten source
markets to Bangkok, Russian arrivals improved as at YTD July 2016, with
visitation picking up 6.3% y-o-y.

7,000
As at YTD August 2016, 1,197 new rooms have opened in the Bangkok
market. A notable recent opening was the full opening of the 248-room Avani
Riverside Bangkok Hotel in August; there were no other key openings during
3Q16. The debut entry of the 159-room The Bangkok Edition hotel by RitzCarlton is anticipated in 2Q17.
The upcoming supply pipeline comprises 347 rooms expected by end-2016.
Future supply is concentrated in the upscale segment and expected to
account for 40.6% of future supply till 2019. The midscale segment makes up
29.5% of future supply and the luxury segment 24.4%.
70
4,000
60
3,000
40
On a moving annual average basis, RevPAR has continued on a growth trend

since 3Q14, reaching THB 4,295 in August 2016, largely supported by growth in
occupancy and ADR.
OUTLOOK: INTERNATIONAL RECOGNITION LIKELY TO FUEL ARRIVALS GROWTH

Bangkok ranked first in the latest Mastercard Global Destinations Cities Index,
third in the Euromonitor Internationals 100 Top City Destinations Ranking, and
was awarded the most popular tourist destination in Asia by the German
travel group Go Asia. These recognitions are likely to fuel further growth and
visitor confidence.
The continued development and expansion of Suvarnabhumi and Don Meung

International Airports will increase Suvarnabhumis capacity up to 65 million
arrivals by 2019, and add a new passenger terminal and skytrain connection
at Don Meung by 2022.
Note: Bangkok Hotels refers to Bangkoks Luxury hotel market.
50
30
2,000
20
10
0
ADR
RevPAR
Occupancy (%)


6,000
5,000
4,000
No. of rooms
As at YTD August 2016, trading performance of the Bangkok luxury market

saw Revenue Per Available Room (RevPAR) growth of 6.9% y-o-y to
THB 4,379, driven by a strong increase in occupancy alongside an
improvement in Average Daily Rates (ADR). Occupancy rose 3.0 percentage
points to 73.5%, while ADR improved 2.5 % y-o-y to THB 5,957.
80
1,000
STRONG INCREASE IN OCCUPANCY DRIVES REVPAR GROWTH

90
5,000
SUPPLY PIPELINE REMAINS CONCENTRATED IN THE UPSCALE SEGMENT

100
6,000
Occupancy (%)
International visitor arrivals have steadily risen as at YTD July 2016,

increasing by 10.4% y-o-y to reach 12.6 million. This rise can primarily be
attributed to strong growth from Mainland China which enjoyed growth of
17.9% y-o-y and accounted for 30.8% of total visitor arrivals.
3,000
2,000
1,000
0
12
13
14
Additions to Supply
15
16F
17F
Future Supply
71 HOTELS
REVPAR
GROWTH Y-O-Y
BANGKOK
Feb 11
Aug 11
Feb 12
Aug 12
Feb 13
Aug 13
Feb 14
Aug 14
Feb 15
Aug 15
Feb 16
Aug 16

ADR/RevPAR (THB)
Record luxury hotels performance driven by

occupancy growth.
Strong supply pipeline and falling tourist arrivals

put pressure on hotel performance.
JAKARTA
90
160
80
140
70
120
60
100
50
80
40
60
30
40
20
20
10
0
Feb 11
Aug 11
Feb 12
Aug 12
Feb 13
Aug 13
Feb 14
Aug 14
Feb 15
Aug 15
Feb 16
Aug 16
ADR / RevPAR (USD)
100
180
Occupancy (%)
200
YTD AUGUST 2016
14.0%
USD 84
RevPar
Falling
As at YTD August 2016, international visitor arrivals to Jakarta were recorded

at 1.4 million, registering a decline of 7.2% y-o-y. Top source markets included
Mainland China, Malaysia and Singapore. Visitor demand was affected by
the bombing attacks in Jakarta in January 2016, which resulted in an overall
decline in visitation.
However, visitor arrivals picked up in April 2016, showing a 17.8% y-o-y

growth during the month, but dipped by 13.4% y-o-y in June 2016 due to the
fasting month of Ramadan. Continued concerns over terrorism and global
economic uncertainty affected demand to the city.
NEW INTERNATIONAL BRANDS CONTINUE TO ENTER THE MARKET
RevPAR
Occupancy (%)
Major openings as at YTD September 2016, comprised international brands

including the 119-room Days Hotel & Suites Jakarta Airport, the 121-room
Four Points by Sheraton Jakarta, Thamrin, the 125-room Four Seasons Hotel
Jakarta and the 207-room Mercure Cikini.
Several new international brands will be introduced over the next few years
including luxury hotel brands such as Park Hyatt, Waldorf Astoria, St. Regis
and upscale/midscale brands including Indigo and Radisson Red. These
additions will offer a wider range of options for corporate and leisure
clientele.


4,000
3,500
No. of rooms
REVPAR
GROWTH Y-O-Y
SECURITY CONCERNS CONTINUE TO DAMPEN TOURIST ARRIVALS
ADR
Frank Sorgiovanni Senior Vice President, Strategic Advisory,

3,000
CONTINUED PRESSURE ON REVPAR AS OCCUPANCY FALLS FURTHER
2,500
As at YTD August 2016, occupancy for upscale hotels in Jakarta declined by

6.1% y-o-y to 50.6%. Average Daily Rate (ADR) also continued to decline,
falling by 8.4% y-o-y to USD 165. In Indonesian Rupiah terms, ADR fell by 7.5%
y-o-y.
As a result of the falling occupancy and ADR, Revenue per Available Room
(RevPAR) declined significantly by 14.0% y-o-y to USD 84. With regard to the
moving monthly average, RevPAR declined from USD 111 in August 2015 to
USD 93 in August 2016.
2,000
1,500
1,000
500
0
12
13
14
Additions to Supply
72 HOTELS
15
16F
17F
Future Supply
OUTLOOK: VISA EXEMPTIONS SHOULD HELP ATTRACT MORE TOURISTS

Indonesias visa exemption policy has been extended to a total of 169

countries and this should help the country reach its target of 12 million
tourists in 2016. Furthermore, the country has adopted a single destination,
single management concept to develop ten priority tourist destinations.
While the new supply of upcoming hotels will add to the diversity of Jakartas
hotel landscape, the significant additions will put pressure on existing hotels.
Demand will be reliant on the performance of the global economy as many
visitors to Jakarta are corporate travellers.
Note: Jakarta Hotels refers to Jakartas Upscale hotel market.

REVPAR
GROWTH Y-O-Y
YTD AUGUST 2016
6.2%
AUD 216
RevPar
Rising
STEADY CORPORATE AND LEISURE DEMAND
Demand has held relatively stable throughout the year, buoyed by Sydneys
extensive events calendar and this is expected to continue for the remainder
of the year.
MODEST LEVEL OF NEW SUPPLY EXPECTED
Room stock growth is anticipated to average 3.7% per annum between 2016
and 2021, with major additions including the Sofitel Sydney Darling Harbour
(590 rooms), Crown Hotel at Barangaroo (352 rooms) and the extension of Four
Points by Sheraton Darling Harbour (an additional 209 rooms).
No new hotels opened in Sydney in 3Q16, with the only addition so far this
year being The Sydney Hotel CBD (76 rooms) which entered the market in
1Q16, while the 227-room Mercure Potts Point also closed for residential
redevelopment in the same quarter. Further, the Aloft Hotel (136 rooms) that
was under construction was cancelled due to the government compulsorily
acquiring the land it was being built on.
Stable occupancy coupled with continued ADR increases are expected to

further push RevPAR upwards.
Whilst a moderate amount of supply is due to enter the Sydney market over
the next 1224 months, it is anticipated that demand generated by current
infrastructure developments including the International Convention Centre
Sydney and Barangaroo will absorb these new rooms with no material effect
on hotel trading performance. A reduction in stock through the closure of
some hotels should further offset these new additions.
Note: Sydney Hotels refers to all grades of accommodation and includes both hotels and serviced
apartments.
60
50
40
30
20
10
0
RevPAR
700
OUTLOOK: ACCOMMODATION MARKET EXPECTED TO STRENGTHEN FURTHER
70

600
No. of rooms
The moving annual average recorded in Sydney for RevPAR for the 12 months
to August 2016 was AUD 219, which is a record high.
80
Occupancy (%)
800
90
ADR
POSITIVE TRADING PERFORMANCE SUPPORTED BY HEALTHY FUNDAMENTALS

As at YTD August 2016, occupancy levels increased by 1.2% y-o-y to a
historically high level. When coupled with Average Daily Rate (ADR) growth of
5.0% y-o-y, this saw Revenue Per Available Room (RevPAR) levels increase by
6.2% over the same period last year to AUD 216.
100
Feb 11
Aug 11
Feb 12
Aug 12
Feb 13
Aug 13
Feb 14
Aug 14
Feb 15
Aug 15
Feb 16
Aug 16
300
275
250
225
200
175
150
125
100
75
50
25
0
Occupancy (%)
Marketwide Hotel Trading Performance
Sydney maintained a high occupancy rate of 88.2% as at YTD August 2016, in

line with strong corporate and leisure performance.
ADR/RevPAR (AUD)
SYDNEY
500
400
300
200
100
0
12
13
14
Additions to Supply
15
16F
17F
Future Supply
Source: Australian Bureau of Statistics, JLL
73 HOTELS
Sydneys accommodation market performing at

record trading levels.
JLL Research - Asia Pacific
ASIA PACIFIC
Dr Megan Walters
Head of Research - Asia Pacific
+65 6494 3649
megan.walters@ap.jll.com
Shenyang
Alex Wang
Associate Director - Strategic Consulting
+86 24 3109 1300
chuan.w@ap.jll.com
Indonesia
James Taylor
Head of Research - Indonesia
+62 21 2992 3888
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Silvia Zeng
Head of Research Guangzhou
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Note: All physical indicators charts are based on the local measurement standard - GFA or NLA.
Office rental figures at the top of each market page refer to the main submarket in each city.
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Asia Pacific Property Digest q3 2016

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Domestic demand buffers

Asia Pacific Economy and

Tokyo multifamily an unrivaled

Race for office space in the

Riding out Hong Kongs retail

What mass entrepreneurship

Domestic policies bolster Asia Pacific

Global trade remains challenging

Japan, the strong currency is hurting competitiveness with exports

Retail sales paint mixed picture

Governments continue to support growth

AP to remain global growth engine

economy continue to grow at a respectable pace of around

Figure 1: Outlook for Major Economies

Real GDP Growth (%)

Slowdown in growth amid ongoing weakness in global trade environment.

Household consumption and government spending on infrastructure to be main drivers.

Ongoing challenges on both domestic and external fronts.

Stronger-than-expected growth in 3Q, but growth outlook remains lacklustre.

Source:Oxford Economics, November 2016

ASIA PACIFIC PROPERTY MARKET

Investors active, corporates cautious

of available space in Central curbed leasing activity, while a tight

revamped its policy framework to target interest rates rather than

Supply additions similar to a year ago

Steady rental growth; Melbourne & Sydney outperform

Experience-oriented retail on the rise

Home sales rise in some markets; new policy measures

Commercial investment holds up

Investor demand underpins capital value growth

Figure 3: Direct Commercial Real Estate Investment

Figures relate to the major submarket in each city

saw an increase of 12% y-o-y on mixed trends; high rentals in

2015 YTD 2016

Figure 4: Rental Property Clocks, 3Q16

Auckland, Hong Kong

*Logistics (Hong Kong, Shanghai, Beijing, Greater Tokyo)

Source: JLL (Real Estate Intelligence Service), 3Q16

Occupier and investor demand to sustain momentum

ABOUT THE AUTHOR

Tokyo multifamily an unrivaled investment

For more information on Tokyos multifamily sector, please visit our

ABOUT THE AUTHOR

Race for office space in the Sydney CBD

Close to three quarters of the tenants to be displaced in the Sydney

Data compiled by the JLL Leasing team suggests that as many as

Source: JLL Research, JLL Leasing, Esri

ABOUT THE AUTHOR

Riding out Hong Kongs retail downturn

Diversifying offerings: The collapse in luxury goods sales has

Cityplaza in Quarry Bay brought in Eslite Spectrum, a

Harbour City in Tsimshatsui opened an Adidas Sportswear

Pacific Place Mall in Admiralty increasing its F&B

Introducing new brands: Landlords are increasingly turning to

Leveraging on pop-ups: Incorporating pop-up stores is

within the mall after it was able to demonstrate its potential to

Focusing on youths: With housing prices moving beyond the

Recent visits to some of these malls would suggest that these

ABOUT THE AUTHOR

What mass entrepreneurship means for China

From incubator to office tenant

7 businesses registered per minute

The spectrum of office demand

ABOUT THE AUTHOR