Based on a new report by CBRE, overall vacancy in Asia in Q1, 2015 increased for the first time in two years rising to 9%, due to slower leasing activity and the large volume of new office supply scheduled for completion in 2015.
CBRE expects that oversupply will persist over the remainder of the year and vacancy will continue to rise. In Manila's CBD, vacancy was up by 5.1% quarter-on-quarter whilst in Bangkok, vacancy increased to 8.1%, however, demand in both of these markets remains healthy and vacancy is expected to fall. Vacancy also continued to increase steadily in several key Pacific markets as demand remained weak in the absence of any catalysts.
In spite of weaker leasing demand, the CBRE APAC Office Rental Index increased by 0.6% quarter-on-quarter, a similar rate growth as in Q4 2014. Tight availability and healthy occupier demand in key gateway cities such as Hong Kong and Tokyo resulted in solid rental growth of around 2.0% quarter-on-quarter, which helped offset weaker rents in Seoul and Perth.