Grade A office capital values fall 2.1% in Q3

Growth in the capital values of Grade A office buildings in Singapore fell 2.1 per cent to US$19,990 (S$25,700) per sq m in the third quarter of the year from the previous three months as investors became more cautious.

According to a report by Jones Lang LaSalle (JLL), corporate hiring sentiment and leasing demand weakened here amid market volatility and news of some companies shelving relocation and expansion plans.

Total investment volumes, which were at US$1.2 billion in the third quarter, were “made up of plenty of smaller sub US$100 million deals, with industrial being an active sector”, the JLL report also said.

Most major markets in the Asia-Pacific saw either stable or increasing capital values. Across the region, the average quarterly increase in capital values was 2.6 per cent, slightly higher than the 2.4 per cent recorded in the previous quarter.

Capital values in Jakarta and Beijing recorded the largest quarter-on-quarter increases of 14.2 per cent and 11.8 per cent, respectively, largely in tandem with rental growth. Sydney, Perth and Manila followed with quarterly increases of between 4 and 6.5 per cent.

“Many investors are shifting their attention to the less volatile office markets such as Australia and Japan, which is likely to continue to benefit from a flight to safety in the next 12 months, with investors attracted to the higher yield environment. There remains a solid interest in China Tier 1 Cities from domestic and international investors alike,” said Mr Stuart Crow, head of Asia-Pacific Capital Markets at Jones Lang LaSalle.

Source : Today – 12 Oct 2011

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