Asia Pacific Property Digest 3q 2015

Real estate investment
flying high
Asia Pacific Property Digest | Q3 2015
Dear Reader,
Asia Pacific investment volumes are at $88 billion year-to-date and are on track for a record level in
2015. Increased space requirements from corporates have been reflected in a 33% surge in leasing
activity over the same period.
You can view this report online at http://www.jllapsites.com/research/appd-online/.
We hope you enjoy our new-look report and as always, welcome your feedback.
Best regards,
4
8
9
10
11
Asia Pacific Economy and

Property Market
The impact of online retailing on

Australian industrial demand
Women are critical to Japans

economic success
Navigating the patent-cliff:

the role of corporate real estate
in the life science industry
Net absorption in Shanghais

Grade A office market to hit
record high in 2015
Office
Feature Articles
Dr Jane Murray
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
Bangalore
30
Sydney
31
Melbourne
32
Brisbane
33
Auckland
34
Industrial
35
Hong Kong
Beijing
Shanghai
Singapore
Bangkok
Manila
Residential
36
37
38
39
40
41
42
43
44
45
46
47
49
Hong Kong
Beijing
Shanghai
Tokyo
Singapore
Sydney
Melbourne
58
59
60
61
62
63
64
Hong Kong
Beijing
Shanghai
Tokyo
Singapore
Bangkok
Jakarta
Sydney
66
67
68
69
70
71
72
73
57
50
51
52
53
54
55
Hotels
Retail
Hong Kong
Beijing
Shanghai
Chengdu
Tokyo
Singapore
Bangkok
Jakarta
Delhi
Mumbai
Sydney
Melbourne
65
4 FEATURES
ASIA PACIFIC ECONOMY
A rather sluggish economic environment...

By regional standards, economic growth was rather sluggish in the third quarter, prompting a number of
governments to implement further supportive measures.
China continues its economic transformation, moving to a greater focus on services and domestic
consumption a profound structural change that is reverberating throughout the rest of Asia Pacific,
particularly Chinas major trading partners. Japan, the regions second biggest economy, fell into
recession in the third quarter, with the governments huge stimulus measures yet to be reflected in a
meaningful uplift in consumption or corporate capex. Meanwhile, Indias economy has held up relatively
well and growth is projected to overtake that of China this year.
Despite various challenges, the Asia Pacific economy is still expanding at a decent pace indeed more
than twice as fast as the rest of the world.
Retail sales performance remains mixed
Further rate cuts while deflation emerges in some markets
Encouragingly, retail sales in China have been trending higher since

April (+11% y-o-y in October), supported by solid wages growth
and providing a cushion against weakness in other parts of the
economy. However, the performance of retail sales in other areas of
Asia Pacific has been less robust. In Hong Kong, a slowdown in
Mainland Chinese visitor arrivals has impacted sales which fell
almost 5% y-o-y in 3Q. Retail sales growth in Japan remains weak
as households hold back on spending, while in Singapore, retail
sales have improved but remain subdued. In Australia, a buoyant
housing sector has supported retail sales over the last year.
During the quarter, various governments continued to cut interest

rates to shore up growth in their economies. India and New Zealand
cut rates by 50 bps, China by 25 bps, while Taiwan lowered the
policy rate for the first time in six years by 12.5 bps. Low prices for
oil and other commodities are flowing through to falling inflation.
Singapore and Thailand have seen declining consumer prices, while
producer prices have been falling for at least six months in major
markets including China, India and Japan.
Ongoing weakness in regional trade

Weaker global demand for Chinese goods saw exports from China
decline in each month of 3Q. However, devaluation of the Chinese
Yuan may provide a boost going forward. Economic restructuring in
China is impacting trade throughout the region with exports
remaining weak in most AP markets.
Stable growth expected for this year and next

Oxford Economics expects 2015 regional growth of 5.3% and a
similar outcome next year, with a gradual recovery in global demand
to underpin growth. Most major economies in the region are
forecast to see modest improvements with the exception of China as
it continues to transition to new growth drivers. Although stable
performance is anticipated for AP, there are downside risks to the
outlook including ongoing uncertainties related to the impact of
Chinas slowdown and the timing of US interest rate hikes.
Country
Real GDP Growth (%)
201516 Outlook
2015F
2016F
China
6.9
6.3
Slower growth as government continues with structural reforms. Services sector an area of strength
in part due to robust consumption.
Japan
0.6
1.5
Modest recovery supported by gradual improvement in domestic demand. More stimulus may be on
the way.
India
7.2
7.4
Domestic demand and fixed investment to underpin growth. Improved growth trajectory to depend
on progress on reforms.
South Korea
2.5
3.0
Gradual improvement in trade and consumption amid loose fiscal and monetary policy.
Australia
2.4
2.8
Growth supported by residential sector and lower AUD which will improve export competitiveness.
Mining investment a drag.
Indonesia
4.8
5.3
Modest pick-up in growth underpinned by infrastructure investment and private consumption.
Singapore
1.8
2.8
Rise in government spending and investment, but export performance to remain patchy.
Hong Kong
2.3
2.7
Subdued growth as sluggish Mainland demand impacts exports and inbound tourism spending.
Asia Pacific
5.3
5.4
Gradual recovery in global demand and ongoing policy support to aid solid performance.
World
3.0
3.5
Pick-up in global growth expected to be driven by improvements in advanced economies including

the US (from 2.4% in 2015 to 2.7% in 2016) and the Eurozone (from 1.5% to 1.8%).
Note: India revised its GDP methodology (including historical growth rates) in January 2015.
Source: Oxford Economics, November 2015
ASIA PACIFIC PROPERTY MARKET
while leasing and investment maintain

good momentum
In 3Q15, occupier demand surged for a second successive quarter and we are optimistic that regional
leasing volumes for the full year will finish up at least 20% higher than the 2014 level. On the commercial
real estate investment front, investor interest remains strong with ample liquidity and low borrowing
costs supporting demand for assets. 2015 investment volumes are expected to reach the record level
achieved in 2014.
Office leasing demand continues to strengthen, but still not
consistent
Overall leasing activity continued to improve in 3Q, with gross
leasing volumes rising by a strong 27% y-o-y, following 40% growth
in 2Q. However, the improvement was not consistent: activity was
strongest in India and China, but still subdued in some other markets
including Singapore. The most active occupier types across the
region were domestic financial institutions and technology-related
firms.
The Indian markets of Delhi, Mumbai and Bangalore contributed
half of total regional leasing volumes in 3Q, underpinned by both
domestic expansion and offshoring by MNCs. Chinas shift to a
service based economy is being seen through the growth in office
leasing in its Tier 1 markets. Shanghai is on track to achieve its

strongest ever year of take-up. Consistent with this, occupier
demand in Hong Kong is being bolstered by Mainland Chinese firms.
In Australia, Sydney is leading the leasing recovery while the cities
more dependent on the resources sector remain weak.
Healthy office supply additions. Occupancy levels up slightly

Asia Pacific stock additions were up 38% y-o-y to 1.2 million sqm in
3Q, with more than one-third of the total in India. In spite of the large
volume of new supply, vacancy declined in many markets including
Beijing, Hong Kong and Seoul, with Hong Kong Central falling to
1.2%, the lowest vacancy in over seven years. Vacancy rates held
stable in Shanghai, Tokyo and Sydney but rose in most Southeast
Asian markets.
5 FEATURES
Figure 1: Outlook for Major Economies
Net effective rents declined in about one-third of major Asia Pacific

markets in 3Q. On average, rents grew 0.5% q-o-q, slowing from
0.8% in 2Q. The strongest quarterly growth was in Sydney (3.9%)
and Hong Kong (3.5%). Despite the recent financial market ructions
in China, rents increased in Shanghai and Beijing on the back of
sustained demand from financials and IT firms.
Rents fell furthest in Singapore (5.2% q-o-q) as landlords continued
to take pre-emptive steps to retain and attract occupiers ahead of
a large wave of supply due to be completed in 2016. Declines were
also seen in Kuala Lumpur, Ho Chi Minh City and some Australian
cities.
Over the 12 months ending 3Q15, average rents in aggregate were
up 2.1%. Already with the highest rents in the region, Hong Kong
was the market leader with 11.1% y-o-y growth, followed by
Shanghai and Sydney which both recorded growth of 8.2%.
Bangalore, Bangkok and Tokyo also recorded strong growth. At the
opposite end of the spectrum, Singapore and most Australian cities
have seen rents fall over the past year.
Mid-tier brands are the most active retailers

During the quarter, retailer demand in China continued to be
supported by fast fashion retailers and F&B. However, new supply
and ongoing caution by the luxury segment have created a more
challenging operating environment. Market conditions in Hong Kong
have continued to weaken and some retailers have reduced their
store footprint and/or secured rental reductions. Retailer demand in
Singapore continued to be subdued as consumer caution prevailed,
while the economic backdrop in Australia remained largely
supportive of trend growth in retail spending.
During 3Q, there was limited rental growth in most markets and
average growth edged down. Over the short term, we see limited
scope for significant rental gains in most markets, while in
Hong Kong, high street rents are likely to fall further.
Generally healthy leasing activity for logistics facilities

Across the region, 3PL and e-commerce firms continued to underpin
leasing activity. Rents were generally flat, with the highest quarterly
growth seen in Hong Kong (1.4%) amid a tight vacancy environment.
However, leasing demand in Hong Kong was impacted by falling
exports and airfreight cargo. Strong tenant expansion demand

continued to be evident in Tokyo, supporting a modest rise in rents.
Strong residential sales momentum in China while some

markets see lacklustre sales
Policy restrictions remained in place in various markets across
Asia. In China, high-end sales activity strengthened on the back of
a more accommodative policy stance, including a cut in interest
rates. However the high-end markets in Hong Kong and Singapore
remained sluggish. Leasing activity in these two cities was stronger
the third quarter being the traditional peak season in Hong Kong,
while Singapore leasing volumes were supported by tenants
moving to newly completed units. Most markets across the region
saw stable or small increases in rents and prices, a trend that is
expected to continue over the short term.
Buoyant commercial real estate investment market

Investment volumes for 3Q15 came in at USD 32 billion, relatively
stable y-o-y but with growth partly impacted by a stronger USD, the
reporting currency. Year-to-date, investment volumes total
USD 88 billion, up 1% on the same period last year. During the
quarter, cross-border Asian investors and global funds were
active. There were also more portfolio and platform transactions,
as investors sought to acquire assets that are difficult to acquire
directly.
Japan (+11% y-o-y), Australia (+13%) and China (+81%) performed
strongly in 3Q as investors continued to focus on large and liquid
markets. Japan remained the largest market in AP with investment
volumes totalling USD 8.9 billion. Other markets saw a mixed
performance with Hong Kong up 25% y-o-y, buoyed by a major hotel
deal, while volumes in South Korea were down 24%, in part due to a
lack of tradeable assets.
Capital value growth slows

Capital value growth moderated across all sectors and most
markets in the region. In the office sector, average capital value
growth slowed to 1.5% q-o-q but continued to outpace rental
growth. Quarterly growth was strongest in Osaka (+6.4%) and
Sydney (+6.3%), with Melbourne, Brisbane and Auckland all
recording growth of between 35%. Capital values in Jakarta and
Singapore declined.
Figure 3: Direct Commercial Real Estate Investment

20073Q15
20
150
15
125
10
100
USD Billion
y-o-y %
Figure 2: Office Rental & Capital Value Changes

Yearly % Changes, 3Q15
ba
i
ng
ap
or
e
rta
2007
2008
2009
2010
2011
2012
2013
2014
YTD 2015
Si
um
M
ka
Ja
ne
ur
Figures relate to the major submarket in each city

Source: JLL (Real Estate Intelligence Service), 3Q15
Se
bo
el
M
Capital Values
ou
g
ijin
Be
an
M
ky
ko
To
gh
ng
Ba
an
Sh
dn
Ko
g
Sy
ila
10
ai
25
ey
ng
50
Rental Values
YTD 2015
$88.1bill
1% y-o-y
75
Ho
n
6 FEATURES
Office rental growth slows in most markets
Japan
China
Australia
Hong Kong
South Korea
Other
Singapore
Figures refer to transactions over USD 5 million in office, retail, hotels and industrial
Grade A Office
Prime Retail
Guangzhou
Kuala Lumpur
Guangzhou
Jakarta
Jakarta, Singapore
Hong Kong^
Singapore
Beijing
Kuala Lumpur
Shanghai
Growth
Slowing
Taipei,
Bangkok
Manila
Tokyo
Rents
Falling
Growth
Slowing
Rents
Falling
Rents
Rising
Decline
Slowing
Bangkok
Hong Kong
Tokyo, Beijing
Rents
Rising
Auckland,
Bangalore
Manila
Decline
Slowing
Perth
Delhi
Mumbai
Chennai, Sydney
Wellington
Shanghai, Melbourne
Osaka
Canberra
Brisbane
Hanoi
Seoul, Ho Chi Minh City
Mumbai, Adelaide
Delhi
Auckland, Bangalore
Chennai
Sydney*, Melbourne*, Brisbane*
Wellington
*Regional
^High Street Shops
Prime Residential
Industrial
Singapore (Logistics),
Shanghai
Guangzhou, Kuala Lumpur
Singapore (Business Park)
Bangkok
Growth
Slowing
Rents
Falling
Hong Kong
Growth
Slowing
Rents
Falling
Rents
Rising
Decline
Slowing
Tokyo
Manila
Shanghai
Rents
Rising
Decline
Slowing
Auckland, Manila
Jakarta
Wellington
Beijing
Hong Kong
Singapore*
*For Luxurious Residential Properties
Beijing
Sydney
Melbourne
Brisbane
*Logistics space (Hong Kong, Shanghai, Beijing, Greater Tokyo)

Note: Clock positions for the office sector relate to the main submarket in each city.
Continued optimism on leasing and investment activity

Office leasing volumes should continue to improve in 4Q15 and into
2016, with India and Tier I cities in China (particularly Shanghai)
expected to see the strongest activity. Moderate rental growth is
generally expected over the next year, with Sydney, Tokyo and
Bangalore leading the way in the office sector. Singapore, Jakarta
and Brisbane may see further declines due to lacklustre tenant
demand and/or upcoming supply.
Meanwhile, 2016 should be another strong year for investment
activity. At this stage, volumes are expected to be similar to this
years estimate of USD 130 billion, on par with the record in 2014.
ABOUT THE AUTHOR

Dr Jane Murray joined JLL in 1998 and in 2005
was appointed as Head of Research Asia
Pacific. In this role, Jane leads a team of
140 professional researchers in the region,
which forms part of a network of over 400
researchers in 65 countries around the globe.
7 FEATURES
Figure 4: Rental Property Clocks, 3Q15
8 FEATURES
The impact of online retailing on Australian

industrial demand
Online retailing has grown rapidly over the last decade. Traditional
retail operators are being challenged by technological advances,
however many have adapted and now offer a multichannel sales
approach. Here, we look at how online retailing is impacting the
Australian industrial sector.
According to National Australia Banks latest online retail sales
index, Australian online retail spending increased to AUD 17.5 billion
in the year to August 2015, a year-on-year increase of 7%. Online
retailing now represents around 7.1% of traditional retail spending
excluding cafes, restaurants and takeaway food, up from 4.9% in
2011.
Over the past two years, there has been a strong correlation (0.7)
between online retail turnover growth and gross take-up of
industrial space by the retail and wholesale trade sectors. This
supports the need for industrial expansion from retailers moving to
or expanding their online presence.
Traditionally, warehouse space utilised by the retail trade sector
was stocked with products for sale at store-based retailers.
However, with the ongoing advances in technology and the
increasing number of retailers with an online presence, there is a
growing trend to deliver goods direct from warehouses to the
consumer. As the retail market becomes more competitive,
Online retail turnover growth vs retail and wholesale trade gross take-up
50.0%
350,000
40.0%
300,000
30.0%
250,000
20.0%
200,000
especially given the recent weakening of the Australian dollar,

domestic retailers incorporating online platforms are likely to
require more flexible industrial property solutions that incorporate
non-traditional stock picking (selection of stock as per orders) and
delivery methods. These may include higher staff ratios, smaller
delivery vehicle access, returns areas and direct customer access.
Online retailers need to locate in areas that will provide an efficient
movement of goods to their consumers, as well as close proximity to
major postal centres. In Sydney, the Outer West (OW) precincts
centred on major transport routes (M2, M4, M5 and M7) have
proven to be key areas for retail occupiers. The OW precincts have
accounted for 76% of total retail and wholesale trade gross take-up
annually between 2010 and 2014. These precincts are highly sought
after due to the relative simplicity of receiving and distributing stock.
Between 2006 and 2010, retail and wholesale trade accounted for
26% of gross industrial take-up nationally. Since then (2011 to YTD
2015), the retail and wholesale trade sectors recorded an additional
750,000 sqm of activity, and represented 32% of total take-up.
Logistics has also benefitted from the increase in online retailing
and retailer demand as distribution operations get outsourced to
third-party logistics (3PL) providers. The transport and storage
sectors percentage of total gross take-up increased from 25% to
34% over the same period.
Despite the rapid growth in online retailing in Australia, it still
comprises a small percentage of total retail sales (the majority of
which is through domestic retailers), indicating that there is further
room for expansion. It is likely that more traditional retailers will
expand into and increase their exposure to the online retailing
market and subsequently increase their requirements directly or
indirectly through 3PLs for distribution space that can accommodate
the special needs of online retailers.
10.0%
150,000
0.0%
100,000
10.0%
50,000
20.0%
30.0%
Ju
3
n1
3
p1
Se
3
c1
De
4
r1
Ju
4
n1
4
p1
Se
De
4
c1
5
r1
5
n1
Ju
Gross take-up (sqm): Retail & Wholesale Trade
Online retail turnover growth
Multi-channel online retail trade
Pure-play online retail trade
Source: ABS, JLL Research
ABOUT THE AUTHOR

Alison Spiteri is a Senior Analyst in the JLL
Research team in Australia. She specialises
in industrial research for the Sydney and
Melbourne markets and office research for
the Sydney Metro markets.
9 FEATURES
Women are critical to Japans economic success

Japan has regained some of its lost momentum under Abenomics,
a three-pronged set of policies aimed at rejuvenating and reforming
the Japanese economy. While consumer sentiment has remained
fragile over the past few years, corporate profits have continued
to rise and the unemployment rate has declined to 3.4%, the lowest
level in 18 years. Should private consumption recover along with
rising real wages, the stagnation that has characterised Japans
economy since the Lost Decade might at last be giving way.
There is a blip on this bright horizon, however. Japans declining
birth rate and rapidly ageing population threatens the working
capacity of its labour force, and therefore the long-term viability of
the nations growth. Fertility rates are below replacement level, and
over one-fourth of Japans current population is over the age of 65.
Current demographic predictions by Japans Health Ministry put the
Japanese labour force at 55 million by 2050, down 10 million from
this year. Without a consistent supply of labour, Abenomics cannot
succeed, and so to forestall this damaging shortfall, Abe has turned
to a chronically underutilised demographic Japans women.
Japanese women are among the most highly educated in the world,
but female participation in the Japanese workforce ranks among
the lowest in OECD countries, especially in the late 20s to early 30s
age bracket, when most women have their first child. The reason
for this lies in the entrenched corporate mind-set, which penalises
maternity leave, prioritises long hours and ultimately clashes with
sociocultural expectations for Japanese motherhood. In addition,
90
80
70
60
50
40
30
20
10
0
The Abenomics structural reform strategy aims to encourage a

radical change in this paradigm and establish woman-positive
corporate environments and policies. The most recent results are
encouraging; already female employment has increased by 930,000
workers since Abe took office in 2012. Given Japans tradition
of lifetime employment, which limits re-entry of workers into
well-paid, permanent positions, much of the new female workforce
has been relegated to low-benefit, low-wage, temporary positions
with little to no chance of advancement. Furthermore, there is
still a wealth of untapped potential; according to a 2013 survey by
the Ministry of Internal Affairs, as many as 3.15 million currently
unemployed women could return to work if given the opportunity.
The economic effect of such a change is nothing to sneeze at;
closing the workforce gender gap could boost Japans GDP by as
much as 12.5%, according to a report by Goldman Sachs.
For Japan to truly see returns from an influx of women in the
workforce, its critical that initiatives are put in place to incentivise
women to return to work and furthermore, remain employed
throughout their childbearing years. Revising antiquated legislation,
building day care facilities, and promoting a culture that promotes,
rather than demeans, womens empowerment, will be instrumental
in deciding the future of both the gender gap and the country as a
whole. The extraordinary growth potential of Japanese women is
already there it is just a question of providing the right environment
for them to flourish. This is also an important driver of demand within
Japans real estate markets which should reap the benefits of a
revitalised labour force along with other structural reforms.
ABOUT THE AUTHOR

Iceland
Sweden
Switzerland
Norway
Denmark
Canada
New Zealand
Netherlands
Finland
Germany
UK
Lithuania
Latvia
Estonia
Austria
Australia
Portugal
Spain
Israel
Russian Fed.
France
Slovenia
US
Japan
Czech Rep.
(%)
Female labour force participation rates, top 25 countries 2014
restrictive Japanese labour laws, low numbers of women in

managerial positions, a lack of childcare facilities, and the spousal
tax deduction, which incentivises a sole-breadwinner household, all
stand in the way of womens participation in the labour force.
OECD aveage: 62.8
Source: OECD Employment Outlook 2015
Emma Saraff was an intern for JLLs research

team in Tokyo.
Japan female labour force participation rates

Japan
2000
2007
2014
59.6%
61.9%
66.0%
Source: OECD Employment Outlook 2015
Takeshi Akagi is the Head of Research in

Japan. His responsibilities include primary
real estate research, economic and
investment analysis, and forecasting. He
regularly contributes to JLLs publications
as well as provides commentary on issues
related to Japan.
10 FEATURES
Navigating the patent-cliff : the role of corporate

real estate in the life science industry
The life science industry is standing on the edge of a patent cliff.
In 2015, the worlds biggest pharmaceutical firms stand to lose up
to USD 47.5 billion in revenues from the expiry of the patents of
some of their biggest blockbuster drugs. For example, Celebrex
an arthritis drug which contributed almost USD 3 billion to Pfizers
revenues in 2014 is set to see its patent expire later this year,
opening it up to competition from generic alternatives which are
often sold at much cheaper prices.
This has triggered a wave of consolidation activity within the
industry as firms look to replace best-selling drugs whose patents
are expiring with newer drugs that have the potential to grow
revenues. According to the Thomson Reuters Full Year Mergers &
Acquisitions Review, the life science industry saw more than
USD 390 billion in transactions in 2014, and transactions are
expected to remain at similarly high levels throughout 2015.
With revenue streams becoming more uncertain, many firms are
also focusing on reining in costs to maintain overall profitability.
While these cost pressures impact all aspects of a firms operations,
they are being felt more keenly in corporate real estate (CRE). In the
2015 Global Corporate Real Estate Survey conducted by JLL, 92% of
CRE executives from the life science industry felt that the demand
from their senior leadership for them to reduce operating expenses
had increased. This represents a marked increase from the already
substantial 85% of executives from the industry who felt the same
way in the last survey conducted in 2013.
At the same time, a substantial proportion of CRE executives also
reported rising demand from their senior leadership for them to
deliver across the following areas that could help to further manage
costs:

Increasing portfolio flexibility (71%)
Challenging the business about presumed space needs (71%)
Reducing portfolio size (71%)
Correspondingly, CRE teams in the life science industry now say that
they feel more empowered within their organisations, with 88% of
life science industry respondents reporting that they have stronger
or much stronger mandates now compared to three years ago.
Life science firms are also making plans to aggressively outsource
the delivery of many CRE services over the coming years. According
to the survey, significant outsourcing activity is expected to take
place from now to 2018 (see figure). In particular, CRE services
like lease administration, facilities and property management, and
transaction management, which are more transactional in nature,
are expected to be outsourced at the quickest pace.
How would you best describe the current delivery of the following CRE
services?
39%
Lease Administration
65%
43%
Facilities and Property Management

Transaction Management
41%
Transaction Execution
42%
20%
Energy Management
50%
45%
15%
Supply Chain Management
57%
55%
40%
43%
35%
Project and Construction Management
27%
32%
Technology
15%
Worlplace Strategy
14%
Occupancy Planning
Capital Budget Planning & Management 0%
31%
27%
23%
14%
PMO
23%
23%
23%
22%
18%
Portfolio Strategy
Change Management
Now
3 Years Time
*Percentages represent proportion of respondents who selected 4 or 5, on a scale

where 1=fully in-house and 5=fully outsourced
Source: JLL
Notably, the increased demands being placed on CRE teams in

the industry appears to have significantly stretched their current
capabilities: three out of four CRE executives indicated that they
were not confident of meeting all the demands that were being
placed on them.
To learn more, click here to download the Global Corporate Real
Estate Trends 2015, and also look out for upcoming industry specific
content!
ABOUT THE AUTHOR
Clarence Goh is a Senior Manager of APAC
Corporate Research for JLL in Singapore. He
is involved in global and regional research
projects for JLLs Corporate Solutions
business.
11 FEATURES
Net absorption in Shanghais Grade A office

market to hit record high in 2015
Over the past few months, one of the most common questions we
hear in China from clients has been what effect the gyrations in
Chinas stock market might have on the performance of the office
market in Shanghai. Some investors have assumed perhaps
drawing a connection between Shanghais status as a financial
centre and the stock market crashs disproportionate impact on
financial services that the stock markets post-June slump will
negatively impact the office leasing market. The numbers do not
bear this out, however: net absorption for the year through 3Q15 has
already exceeded 1 million sqm , and we believe Shanghais Grade
A take-up is on track to reach a record high in 2015.
Three factors are driving the record high absorption. First, domestic
financial service firms have increased leasing activity in both the
CBD and decentralised markets. Encouraged by ongoing financial
reform and liberalising policies in the Shanghai Free Trade Zone,
both traditional domestic finance firms (like retail banks and
insurers) along with non-traditional internet finance companies
have been active in setting up new offices and expanding their
office space in Shanghai.
Leasing deals by domestic financial services companies in Shanghais
Grade A office market
Category in
Finance
Services
Subsector
Tenant
Submarket
Size
(sqm)
Traditional
Finance
Services
Insurance
Company
Shanghai Life
Insurance
Pudong CBD
3,000
Non-traditional
Internet
Finance
Services
E-commerce,
Third-party
payment
Wanda
Finance
Group
Decentralised
Pudong
11,500
Leasing deals by MNCs in Shanghais Grade A office market

Industry
Subsector
Tenant
Submarket
Size
(sqm)
Retailer
Luxury brand
retailer
Richemont
Puxi CBD
5,600
Professional
Services
Consulting
and Auditing
PwC
Puxi CBD
16,720
Source: JLL (Real Estate Intelligence Service), CREIS
The third main driver of take-up this year has been firms self-using
space that they build or acquire. In the decentralised market,
several companies notably domestic financial institutions have
acquired or developed buildings, and have reserved large shares of
space for their own use.
Owner-occupation in Shanghais Grade A office market
Industry
Self-occupier
Property
Submarket
Size
sqm
Financial
Services
Pingan
Group
Greenland Center
Phase 2
Decentralised
Puxi
78,300
Food
Ting Hsin
International
W Square Tower
A&B
Decentralised
Puxi
53,700
A second key driver is MNC tenants, who have demonstrated

particularly strong leasing demand in decentralised areas.
Recognising that Chinas middle class population is expanding the
countrys consumer potential, MNCs in the retailing and media
sectors are actively expanding their business, and many have
found they require more office space in Shanghai. The large
volume of new supply in the decentralised market has tapped into
pent-up demand from MNCs that seek large contiguous spaces for
consolidation and expansion. In addition, many MNC professional
services firms such as consulting companies have retained a
positive outlook toward their China business, and have shown
strong interest in office expansion.
Aside from the three main demand types discussed above, other
tenant types have also contributed to this years robust demand,
including domestic retailers and professional services firms.
We expect leasing momentum to remain strong through the
remainder of the year. As a result, Shanghais overall net take-up is
expected to reach a record high of above 1.4 million sqm in 2015.
The Shanghai stock index may have taken a dive, but the take-up in
the citys Grade A office market is heading skyward.
ABOUT THE AUTHOR

Grace Lv is a Senior Manager in JLLs
research team in Shanghai, specialising in the
office sector in Shanghai and major Yangtze
River markets. She regularly contributes to
quarterly publications and is also involved in
market consultancy studies.
Need Asia Pacific rents and

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2015 Jones Lang LaSalle IP, Inc. All rights reserved.
89 OFFICE
Office
Demand recovery pushes monthly rents in

Central back up to HKD 100 per sq ft for the first
time since 4Q11.
HONG KONG
110
11.1%
HKD 100.0
STAGE IN CYCLE
Rents
Rising
The recent volatility in the local and Mainland Chinese stock markets had a
limited impact on PRC demand, with a number of PRC securities trading firms
and mid-tier banks actively securing office space in 3Q15. PRC demand
accounted for about 60% of all new lettings (in terms of floor area leased), up
from 25% in 2Q15.
A tight vacancy environment entering the quarter saw headline net absorption
moderating in most of the citys five major office submarkets. Leasing demand,
nonetheless, remained intact with a handful of shadow space being
backfilled, including AIAs lease on three floors at 633 Kings Road in North
Point.
100
Index
SQ FT PER MONTH,
NET EFFECTIVE ON NLA
105
95
90
85
80
4Q11
RENTAL
GROWTH Y-O-Y
STOCK MARKET ROUT HAS LIMITED IMPACT ON PRC DEMAND
Financial Indices
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index
TOWER 535 IN CAUSEWAY BAY RECEIVES OCCUPATION PERMIT
Arrows indicate 12-month outlook

Index base: 4Q11 =100
Source: JLL
Financial Indicators are for Central.
Phoenix Property Investors office/retail development, Tower 535, in

Causeway Bay was issued its Occupation Permit in 3Q15, adding 128,300 sq ft
to the market. About 20% of the building has already been leased to a fitness
centre and a club house operator.
Physical Indicators
In Central, robust leasing demand drove the vacancy rate down to 1.2%its
lowest level since March 2008 just prior to the Global Financial Crisis.
300
250
CENTRAL RENTALS BACK AT HKD 100 PER SQ FT PER MONTH
200
Rents in Central grew by 3.5% q-o-q in 3Q15 to reach HKD 100 per sq ft per
month for the first time since the Eurozone Crisis in 4Q11, as the vacancy rate
further tightened. All of the citys major office submarkets recorded rental
growth.
With rents in Central experiencing a broad-based recovery, investors showed

renewed interest in the submarket despite strong pricing levels, as evidenced
by several non-Grade A en bloc office buildings changing hands in 3Q15. The
interest in office properties prompted more developers and owners to
consider selling properties in their portfolio.
150
100
50
50
Percent
Thousand sqm
90 OFFICE
Denis Ma, Head of Research, Hong Kong
1
11
12
13
14
15F
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
For 2011 to 2014, take-up, completions and
vacancy rates are year-end annual. For 2015,
take-up, completions and vacancy rates are YTD,
while future supply is for 4Q15.
Physical Indicators are for the Overall market.
OUTLOOK: CENTRAL RECOVERY HAS YET TO RUN ITS COURSE

Despite an uncertain economic outlook, leasing activity should remain intact

with most companies still looking to increase headcount over the near term.
Strong policy support from China should translate into ongoing demand from
PRC firms. Central rentals are likely to continue to edge higher, supported by
an ultra-tight vacancy environment.
Steady rental growth should enhance the investment appeal of office

properties over the near term, enabling pricing across the market to hold firm.
However, capital values are likely to face increasing downside risks amid a
moderating rental market and rising interest rates.
Note: Hong Kong Office refers to Hong Kongs Overall Grade A office market.
Despite slow economic growth and volatility in

the stock market, finance firms remain
highly active.
BEIJING
Steven McCord, Head of Research, North China
SQM PER MONTH,

NET EFFECTIVE ON GFA
2.6%
RMB 382.6
STAGE IN CYCLE
Rents
Rising
DOMESTIC FINANCE AND IT FIRMS CONTINUE TO DRIVE DEMAND
Financial Indices
Due to the supply-constrained market, net absorption in the first nine months
of 2015 reached just 104,500 sqm, down 34% y-o-y. IT remained one of the
most active sectors in Zhongguancun and Wangjing, accounting for more
than 30% of the overall net absorption in 3Q15.
A handful of projects in Finance Street achieved 100% occupancy in the
quarter due to strong demand from domestic finance companies such as
state-owned banks, and private equity and securities firms. Expansion plans
from existing tenants in the CBD and Finance Street were put on hold due to
limited availability of space in these areas.
140
130
120
Index
Raycom Infotech Park Tower B obtained a 60% commitment rate at end-3Q15

a quarter after opening; most new tenants came from IT or IT-related sectors.
Dreamsfounts 35th, another new completion in Finance Street from 2Q15,

achieved a 70% commitment rate in the quarter, with state-owned banks and
private investment companies making up a large presence at the project.
RENTS RISE ACROSS MOST SUBMARKETS AMID LOW VACANCY
90
80
4Q11
OUTLOOK: FUTURE SUPPLY PROJECTED TO RELIEVE PENT-UP MARKET DEMAND

Physical Indicators
Landlords at buildings with very low vacancy were able to focus more on
tenant profile and exert greater power during rental negotiations. Landlords at
recently completed projects charged higher rents as occupancy stabilised.
Singaporean-listed GuocoLand sold its Dongzhimen mixed-use project for
RMB 10.5 billion to China Cinda Asset Management Co. after the property was
kept vacant for years. Slated for completion by end-2015 in Wangjing, Kuntai
Garry Center, owned by Beijing developer Kuntai, sold to Alibaba for
2.84 billion RMB.
Net take-up is expected to climb as Grade A office space becomes available

in the CBD and Finance Street, where absorption and company expansion
have been muted due to a lack of leasable space. Rents are likely to rise as
tenants compete for space at quality buildings.
Investors remain interested in Beijing, but there continues to be a disconnect
with sellers on pricing. Wangjings popularity is climbing; one property sold
here in the quarter, making it the third of five Beijing office buildings to be
transacted in the submarket this year. Due to strong government support,
Tongzhou is set to become a hot spot for investment opportunity.
Note: Beijing Office refers to Beijings Overall Grade A office market.
4Q14
4Q15
4Q16
Capital Value Index
700
14
600
12
500
10
400
300
200
100
Percent
4Q12
4Q13
Rental Value Index

Source: JLL
Financial Indicators are for the CBD.
Thousand sqm
110
100
MARKET VACANCY DECLINES TO 3.8% DUE TO STEADY LEASING PROGRESS

91 OFFICE
RENTAL
GROWTH Y-O-Y
0
11
12
13
14
15F
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
Net take-up to hit record high in 2015.

Daniel Yao, Local Director - Research, Shanghai
130
SQM PER DAY,

7.3%
RMB 10.1
STAGE IN CYCLE
Rents
Rising
Domestic retail banks and wealth management companies were active in

setting up branch offices in Pudong in 3Q15. Changchun Rural Commercial
Bank set up its Shanghai branch office in Jin Mao Tower (500 sqm), while a
domestic wealth management firm set up a new branch office in Hong Jia
Tower (1,800 sqm).
Domestic financial services companies were seeking space in Puxi as well.

Meanwhile, multi-national companies (MNC) in retailing and professional
services were also active in Puxi.
120
Index
110
100
90
80
4Q11
RENTAL
GROWTH Y-O-Y
NEW SET-UP DEMAND FROM DOMESTIC FINANCIAL SERVICES ON THE RISE
Financial Indices
LETTABLE SPACE REMAINS TIGHT IN PUDONG

4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
For the fourth consecutive quarter, no new supply was delivered in the
Pudong CBD. In the Puxi CBD, Soho Bund (87,248 sqm) in Huangpu District
was the only project reaching completion in the quarter.
In the Decentralised market, three Grade A projects with a total GFA of

151,220 sqm were completed, including Oriental One Tower 3 (30,831 sqm) in
Pudong, as well as Hongqiao Vanke Center Phase 1 (58,385 sqm) and Soho
Hongkou Plaza (62,004 sqm) in Puxi.
Physical Indicators
600
12
SEVERAL MAJOR INVESTMENT DEALS CLOSE; RENTS RISE
500
10
400
Underpinned by strong leasing momentum, Pudong Grade A rents increased

by 2.2% q-o-q to RMB 11.0 per sqm per day, and Puxi Grade A rents rose by
2.3% q-o-q to RMB 9.4 per sqm per day.
300
200
100
Positive sentiment about rental growth prospects in the CBD market led
domestic and foreign institutional investors to become increasingly active in
seeking en bloc investment opportunities. Notable investment deals closed in
the quarter included Corporate Avenue 1 & 2 (RMB 6.6 Billion), Hongjia Tower
(RMB 2.6 Billion) and GC Tower (RMB 2.2 Billion).
Percent
Thousand sqm
92 OFFICE
SHANGHAI
0
11
12
13
14
15F
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
Physical Indicators are for the CBD.
OUTLOOK: STRONG LEASING DEMAND EXPECTED TO CONTINUE THROUGH 2016

It is expected that financial and professional services enterprises

particularly domestic firms should remain active in the CBD market.
Meanwhile, many MNC manufacturers are likely to continue to show interest
in relocating operations to decentralised areas.
The strong demand and rental outlook should further boost institutional
investors confidence. We expect more core investors, who tend to have
longer investment horizons, to become active in the market.
Note: Shanghai Office refers to Shanghais Overall Grade A office market consisting of Pudong, Puxi and
the decentralised areas.
Robust leasing activity as landlords employ

various measures to boost occupancy.
Frank Ma, Head of Research, West China
SQM PER MONTH,

4.7%
RMB 94.7
STAGE IN CYCLE
Rents
Falling
LARGE LEASING DEALS PUSH UP QUARTERLY NET TAKE-UP
Financial Indices
Net absorption significantly improved q-o-q in 3Q15, underpinned by several

large lease deals. The most notable transaction was Tianfu International
Funds Business Park committing to about 14,000 sqm in Taifeng International
Plaza in the City Centre submarket. The tenant was introduced to the landlord
by the district government.
Leasing activity was concentrated in the City Centre and New South Area
submarkets. The City Centre mainly appeals to MNCs and financial services/
professional services companies due to the maturity of its business
environment and quality office buildings. New South Area is attractive to
small- to medium-sized local tenants because of its lower rents.
120
110
Index
80
4Q11
In 3Q15, overall vacancy edged down by 1.8 percentage points to 38.5%.

However, vacancy marginally increased in the South Renmin Road submarket
as tenants of older buildings relocated out of the submarket.
HIGH VACANCY PROMPTS LANDLORDS TO LOWER RENTS
A high vacancy environment led many landlords to lower rents in a bid to

improve occupancy and as such, net effective rents declined 1.4% q-o-q to
RMB 94.7 per sqm per month.
Chinese Estates Center was acquired by Evergrande Real Estate Group when
it purchased all of Chinese Estates Groups projects (two residential, one
mixed-use) in Chengdu for a total consideration of HKD 6.5 billion
(CNY 5.3 billion).
OUTLOOK: NEW LEASING STRATEGIES EXPECTED TO SPUR ACTIVITY

In addition to lowering rents, various measures are being undertaken by

landlords to spur leasing activity, including offering higher commissions to
leasing agents and co-operating with government agencies to encourage
more company setups. As vacancy is forecast to remain high in the near term,
more landlords are expected to adopt the aforementioned methods to fill
vacant space.
A low interest rate environment and business diversification strategies are

expected to see more domestic real estate funds/companies explore the
purchase of quality commercial property assets in core locations.
Note: Chengdu Office refers to Chengdus Overall Grade A office market.
4Q14
4Q15
4Q16
Capital Value Index
Physical Indicators
700
70
600
60
500
50
400
40
300
30
200
20
100
10
0
0
11
12
13
14
15F
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
vacancy rates are year end annual. For 2015,
take-up, completions and vacancy rate are YTD,
Percent
4Q12
4Q13
Rental Value Index

Source: JLL
Thousand sqm
International Financial Square (Tower 3, IFS) in the City Centre was the only
Grade A completion in 3Q15. After being fully fitted out, the office portion of
this mixed-used development was subleased to MFG, a serviced office
operator, by developer Wharf Group. MFG had 20% of the space committed by
end-3Q15.
100
90
ONE PROJECT RECEIVES OCCUPANCY PERMIT

93 OFFICE
RENTAL
GROWTH Y-O-Y
CHENGDU
Record third quarter net take-up but largely due

to pre-commitments to new completions.
Jamie Chang, Head of Research, Taiwan
150
2.3%
NTD 3,039
STAGE IN CYCLE
Growth
Slowing
In the past three years, net take-up in 3Q averaged around 3,000 ping
(9,915 sqm). However, net take-up in 3Q15 reached 10,800 ping, a notable
improvement and largely driven by strong pre-commitments to supply
completed in the quarter.
Demand mainly came from firms in the technology, IT and financial services
industries.
130
Index
PING PER MONTH,

NET ON GFA
140
120
110
TWO BUILDINGS COMPLETE
100
90
80
4Q11
RENTAL
GROWTH Y-O-Y
ACTIVITY STRONGEST AMONG MID-TO-LARGE SIZED UNITS
Financial Indices
4Q12
4Q13
Rental Value Index
Cathay Landmark Square and Hung Shen International Financial Centre

reached completion in the quarter and added 31,575 ping to stock. As result of
the new supply, the vacancy rate increased by 2.8 percentage points q-o-q to
10.6%.
Cathay Landmark Square (27,333 ping) is located in the Xinyi submarket and
features direct access to public transport, a shopping arcade and premium
building characteristics. Hung Shen International Financial Centre which is
located in the Non-core submarket, added 4,242 ping to market stock and has
direct access to the Metro system.
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Financial Indicators are for Xinyi.
Physical Indicators
180
18
RENTALS GENERALLY STABLE DESPITE STRONG TAKE-UP
150
15
120
12
90
In spite of healthy demand, overall rents edged down slightly by 0.2% q-o-q to
NTD 2,582 per ping per month. It was observed that many leasing deals signed
in the quarter had lengthy negotiation periods and in some circumstances,
with rentals agreed upon in prior quarters as early as 4Q14.
60
30
Overall market yields remained flat at 3.3% due to sluggish investment activity
and slow rental growth. Investment volumes for all real estate asset classes
totalled NTD 9.7 billion in 3Q, a decrease of 9.0% q-o-q or 71% y-o-y.
Percent
Thousand sqm
94 OFFICE
TAIPEI
0
11
12
13
14
15F
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
OUTLOOK: MODERATE RENTAL GROWTH EXPECTED

Taiwanese businesses have reduced their intentions to increase staffing

levels and as a result, office demand may be impacted. Finance, professional
services and transport & utility sectors are expected to be the primary drivers
of demand.
A further 32,000 ping of new Grade A office space is planned to be completed

by year end, with around 85% planned for owner occupancy. As such,
vacancy is likely to increase moderately in 4Q15.
Note: Taipei Office refers to Taipeis Overall Grade A office market.
Rent growth moderates despite low vacancy, as

corporates are cautious about a global
economic slowdown.
TOKYO
Takeshi Akagi, Head of Research, Japan
TSUBO PER MONTH,

GROSS ON NLA
4.3%
JPY 34,688
STAGE IN CYCLE
Rents
Rising
IT AND MANUFACTURING FIRMS MAIN DRIVERS OF DEMAND
Financial Indices
According to the Financial Statements Statistics of Corporations by Industry,

corporate profits reached a record high in the April-June period (+21.6%
y-o-y). However, global economic uncertainty weighed on corporate
sentiment. Net absorption tipped slightly into negative territory in 3Q15.
In 3Q15, demand was largely driven by tenants in the information &
communication and manufacturing industries. A notable leasing deal
announced in the quarter was mobile app developer Lines expansion to JR
Shinjuku Miraina in January 2016.
150
140
130
Index
95 OFFICE
RENTAL
GROWTH Y-O-Y
120
110
100
VACANCY REMAINS STABLE
The vacancy rate at end-3Q15 was 3.3%, remaining stable q-o-q but down 60
bps from a year earlier. Vacancy in mature buildings continued to be below
the market average, while commitment rates for recently completed buildings
was only around 60%. By submarket, Shibuya saw a decrease in vacant
space while Toranomon recorded an increase.
The Tokiwabashi District Redevelopment Project was announced in 3Q15.
Located on a 3.1 hectare site adjacent to Tokyo Station, the complex will
comprise four buildings offering a total floor area of 680,000 sqm (GFA). Office
space will be offered in Building A (140,000 sqm, GFA) which is due for
completion in 2021 and Building B (490,000 sqm, GFA) which is scheduled to
be finished in 2027.
Rents at end-3Q15 averaged JPY 34,688 per tsubo per month, increasing 0.7%
q-o-q. Rents have grown for 14 consecutive quarters, although the rate of
increase moderated in 3Q15. Growth was driven by Otemachi/Marunouchi,
Akasaka/Roppongi and Hibiya submarkets.
Capital value growth slowed to 0.2% q-o-q (15.2% y-o-y), in part reflecting
weaker rental growth. However, the investment market remained active. Mori
Hills Reit acquired a stake (1.4%) in Roppongi Hills Mori Tower for
JPY 12 billion (NOI cap rate of 3.8%).
OUTLOOK: MODEST RISE IN RENTS AND CAPITAL VALUES EXPECTED

The Japanese economy is expected to see a modest recovery in 2016, with

Oxford Economics forecasting real GDP growth of 1.5%. However, increased
uncertainty surrounding the global economy is a downside risk.
Vacancy is expected to remain stable amid steady demand and healthy take
up of new supply. The low vacancy environment should support moderate
growth of rents. Persisting investor interest is expected to see cap rates
compress further, and this, in combination with rent growth, should support a
rise in capital values.
Note: Tokyo Office refers to Tokyos 5 Kus Grade A office market.
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Physical Indicators
600
500
400
300
200
100
Percent
RENT AND CAPITAL VALUE GROWTH SLOWS
90
4Q11
Thousand sqm
0
11
12
13
14
15F
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
Rents continue to edge up as vacancy declines and

corporate sentiment improves.
140
130
TSUBO PER MONTH,

GROSS ON NLA
3.2%
JPY 16,125
STAGE IN CYCLE
Rents
Rising
According to Septembers Greater Osaka Tankan Survey, business conditions

for large manufacturers and non-manufacturers continued to improve.
Leasing demand in 3Q15 was driven by sectors such as professional services,

finance and insurance. Net absorption slowed q-o-q to 7,500 sqm; however,
total net take-up for the first nine months of the year recorded a strong
increase from the same period last year. Notable tenant movements in the
quarter included Asatsu-DK and Daicels relocation to Grand Front Osaka
Tower B.
120
Index
RENTAL
GROWTH Y-O-Y
DEMAND STEADY AMID RECOVERING ECONOMY
Financial Indices
110
100
90
80
4Q11
VACANCY CONTINUES TO DECLINE AND REACHES 5.5%

4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
There were no completions in the quarter and the Shin Daibiru Building which
completed in 1Q is expected to be the only addition to market stock in 2015.
With no new supply entering the market and steady demand, vacancy in the
overall market declined by 40 bps q-o-q (310 bps y-o-y) to 5.5%. This was the
fourth consecutive quarter of decline. By submarket, decreases were
recorded in Umeda and Midosuji. Grand Front Osaka continued to see an
improvement in occupancy, reaching 80% in the quarter.
Physical Indicators
180
12
RENT GROWTH PICKS UP SLIGHTLY
150
10
120
90
Rents at end-3Q15 averaged JPY 16,125 per tsubo per month, increasing
0.6% q-o-q. The rate of growth accelerated slightly and rents maintained an
uptrend for the fifth consecutive quarter. Growth was driven by Dojima and
Midosuji submarkets.
60
30
Capital values in 3Q15 increased 6.4% q-o-q (25.4% y-o-y) and this marked
the eighth straight quarter of growth. Strong growth was sustained as yields
continued to compress, reflecting strong investor interest in regional office
assets. Mori Trust Reit sold Osaka Marubeni Building for JPY 11 billion.
Percent
Thousand sqm
96 OFFICE
OSAKA
0
11
12
13
14
15F
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
OUTLOOK: RENT GROWTH AND YIELD COMPRESSION PUSH UP CAPITAL VALUES

Japans economy is expected to continue a slow recovery, but the slowdown

in the global economy and volatility in financial markets is a concern.
According to the latest Greater Osaka Tankan Survey, business conditions
are expected to improve for large manufacturers, while those for large nonmanufacturers are likely to soften in 4Q15.
Leasing demand is expected to remain resilient and this coupled with no new
supply over the next 12 months should place continued downward pressure
on vacancy and support moderate rent growth. In the investment market,
capital values are expected to grow while cap rates compress.
Source: JLL
Note: Osaka Office refers to Osakas 2 Kus Grade A office market.
Absorption reaches the highest level since 1Q14

amid a modest pick-up in demand, in particular
in the CBD.
SEOUL
Yongmin Lee, Head of Research, Korea
PYUNG PER MONTH,

0.3%
KRW 95,245
STAGE IN CYCLE
Rents
Stable
CBD LEADS REBOUND IN ABSORPTION
Financial Indices
101 Pine Avenue reached full occupancy on move-ins by Hana Tour (3,860
pyung, gross), ABC Mart Korea (2,300 pyung) and Hanwha S&C (2,200 pyung),
while Hanwha Finance Center Taepyungro and D-Tower witnessed the
arrivals of Hanwha Total (2,200 pyung) and a local taskforce team (1,300
pyung), respectively.
In Yeouido, Yello Finance Group (2,000 pyung, gross) commenced business at
IFC Three. Gangnam activity was bouyed by the relocation of Amway (2,200
pyung) and Daehan Real Estate (930 pyung) to Asem Tower from Textile
Building due to the increased occupancy requirements of Yulchon, Textile
Buildings anchor tenant.
140
130
120
Index
110
100
90
4Q11
MODEST DECLINE IN VACANCY ACROSS ALL THREE DISTRICTS

A lack of new supply aided a 60 bps q-o-q drop in overall vacancy, the largest
decline since 2Q14.
The decline in vacancy was largest in the CBD and Yeouido, where tenant
demand was focussed on recently completed stock. Despite having a low
vacancy rate, Gangnam continued to struggle to attract new tenants to the
district and to stem the outflow of tenants to newer stock in other districts.
97 OFFICE
RENTAL
GROWTH Y-O-Y
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Physical Indicators
RENTS DECLINE MARGINALLY FOR THE THIRD CONSECUTIVE QUARTER
300
12
250
10
200
150
100
50
Rents declined by 0.5% q-o-q due to increasing incentives in recently

completed stock and buildings with sizeable backfill vacancy. Rent declines
were largest in Yeouido reflecting attractive deals concluded at IFC.
Investment deal volume was muted in the quarter; however, a strong pipeline
of deals indicates that transaction volumes should pick-up by year end. The
largest deal in 3Q was Hana Financial Groups acquisition of Grace Tower
(GFA 7,420 pyung) in Gangnam for owner-occupation. The property was sold
by Kormaco on behalf of National Pension Service for KRW 159.5 billion.
OUTLOOK: SAMSUNG AFFILIATES MAY RELOCATE TO NEW SUBURBAN PROJECT

The only Grade A supply expected over the coming 12 months is Parnasse
Tower (GFA 44,460 pyung) in Gangnam which is scheduled for completion in
3Q16. However, the completion of Samsung Electronics Umyeondong R&D
Center (GFA 99,800 pyung) on the south fringe of Seoul in 4Q15 may lead to the
relocation of several Samsung affiliates to this project from Grade A stock.
The investment market is forecast to remain robust with 2016 pricing levels
likely to be benchmarked off the closing prices for a large number of deals
expected to conclude in 4Q15.
Note: Seoul Office refers to Seouls Grade A office market.
Thousand sqm
14
50
Percent
350
2
11
12
13
14
15F
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
Weak global economic conditions and large

impending supply put pressure on office rents.
Dr Chua Yang Liang, Head of Research, Southeast Asia
130
SQ FT PER MONTH,
GROSS EFFECTIVE ON NLA
7.1%
SGD 9.61
STAGE IN CYCLE
Rents
Falling
Demand for CBD office space remained lacklustre in 3Q15 with economic
uncertainty and expectations for further rental declines having an effect on
leasing activity.
Despite overall demand being subdued, there were still some firms that
looked to leverage on Singapores position as a regional hub and set up new
offices in the city during the quarter. These tenants were from a wide range
of industries and included the South Korea National Pension Service, ZS
Associates and ECommPay.
120
Index
110
100
90
80
4Q11
RENTAL
GROWTH Y-O-Y
SUBDUED ECONOMIC ENVIRONMENT IMPACTS OFFICE DEMAND
Financial Indices
FLIGHT-TO-QUALITY PUSHES VACANCY UP IN OLDER STOCK

4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index
In 3Q15, tenants looking to relocate continued to show a preference for deals

which offered lower rents in higher quality buildings in Raffles Place and
Marina Centre submarkets. These deals were especially attractive to tenants
who occupied space in older buildings - usually in the Shenton Way
submarket.
The overall CBD vacancy rate increased slightly in 3Q15 to 6.1%. Vacancy is
expected to increase gradually over the next few quarters as select
occupiers, mainly in the financial sector, give up space. With much of this
space large in size, landlords may find it difficult to re-lease vacated space
given that most demand is currently for smaller requirements. This may
prompt some landlords to subdivide space.

Source: JLL
Physical Indicators
300
12
250
10
200
150
100
50
Percent
Thousand sqm
98 OFFICE
SINGAPORE
0
11
12
13
14
15F
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
Physical Indicators are for the CBD.
INVESTOR DEMAND REMAINS RESILIENT DESPITE DECLINING RENTS

In 3Q15, overall CBD rents fell by 4.5% q-o-q to SGD 9.61 per sq ft per month,
declining at a similar pace as in 2Q15. Landlords continued to take preemptive steps to retain and attract occupiers ahead of a large wave of supply
(3.07 million sq ft) due to be completed in 2016.
The en bloc sales of 158 Cecil Street and Thong Sia Building for
SGD 240 million and SGD 380 million, respectively, signalled the strength of
investors confidence. Investors appear to be focused on the longer term
fundamentals of the office market rather than the short-term outlook and
potential impact of an interest rate hike.
OUTLOOK: OCCUPIERS MAY DELAY DECISIONS IN HOPE OF LOWER RENTS

In the short term, rents across all submarkets are likely to continue trending
lower due to lacklustre demand and pressure from the large supply pipeline
in 2016.
Pre-leasing activity is likely to remain challenging as existing occupiers are

hesitant to sign new leases until shortly before the expiration of their existing
contracts due to the expectation of further rental declines.
Note: Singapore Office refers to Singapores CBD Grade A office market in Marina Bay, Raffles Place,
Shenton Way and Marina Centre.
Limited occupier movement but a number of

significant relocation deals inked that will be
reflected in upcoming quarters.
BANGKOK
Andrew Gulbrandson, Head of Research, Thailand
SQM PER MONTH,

GROSS ON NLA
4.9%
THB 783
STAGE IN CYCLE
Growth
Slowing
ROBUST LEASING ACTIVITY BUT NET TAKE-UP NEGATIVE
Financial Indices
Net absorption moved into negative territory (4,000 sqm) in 3Q15 amidst small
amounts of churn, consolidations and a lack of major tenant movements.
The leasing market remained active with a large number of deals signed in the
quarter. However, most deals represent relocations to projects currently
under construction and thus, will not be reflected in demand figures until
these buildings complete in 2016.
160
140
120
100
Index
80
60
NO NEW SUPPLY COMPLETES WHILE VACANCY RISES
40
20
Grade A office stock remained unchanged in 3Q15 at 1,824,000 sqm, while

vacancy increased by 0.2 percentage points q-o-q to 9.2%.
Several projects are expected to complete in the next 12 months including
The Metropolis Building in 4Q15 (13,000 sqm), located on Sukhumvit Road, and
FYI Center (48,000 sqm) on the Ratchadaphisek and Rama IV intersection,
which is scheduled to open in 1Q16.
99 OFFICE
RENTAL
GROWTH Y-O-Y
0
4Q11
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
RENTS AND CAPITAL VALUES RISE, WHILE YIELDS REMAIN STABLE

Gross rents increased by 0.4% q-o-q to THB 783 per sqm per month in 3Q15.
Capital values increased by 0.5% q-o-q to THB 106,507 per sqm in 3Q15. The
increase was at the same pace as rent growth and as such, market yields
remained at 6.8%.
More than 65,000 sqm are in the pipeline due to complete in the next 12
months in the Central Business Areas (CBA). An estimated 50% of this space
was pre-committed at end-3Q15, suggesting strong demand for new, high
quality space. We believe these projects will be taken up quickly upon
completion and generating robust demand throughout 2016.
Despite relatively limited available space and a fairly small supply pipeline,
new Grade A office supply outside of the CBA has provided alternative
choices for office tenants, pressuring rental growth for Grade A office
space in the CBA. We believe this trend should continue into 2016. While all
submarkets should achieve positive rental growth over the next 12 months,
growth in the CBA will likely lag market-wide figures.
Note: Bangkok office refers to Bangkoks Central Business Areas Grade A office market.
180
18
150
15
120
12
90
60
30
Percent
OUTLOOK: HEALTHY SUPPLY PIPELINE AND STRONG PRE-COMMITMENT LEVELS
Physical Indicators
Thousand sqm
0
11
12
13
14
15F
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
Demand remains relatively thin amid slow

economic growth and continued
rupiah depreciation.
JAKARTA
300
Index
150
IDR 4,370,094
Rents
Falling
The oil and gas and mining sectors were relatively inactive in 3Q15 and
some smaller, local operations were contracting or closing down. However,
firms which feed off Jakartas most dependable resource a large, growing
population - remained relatively strong with several e-commerce firms looking
for space.
100
50
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Physical Indicators
18
250
15
200
12
150
100
50
AIA CENTRAL THE SECOND NEW COMPLETION IN AS MANY QUARTERS

AIA Central (42,999 sqm), developed by Selaras Group, is located at the

Sudirman end of the main Thamrin/Sudirman thoroughfare which dissects
Jakartas CBD and will form the route of the future MRT line; earmarked for
completion at the end of this decade. AIA moved in during the quarter,
relocating from the Greater Jakarta area.
Vacancy rates broke the double-digit barrier in 2Q15 on the back of the
completion of Sahid Sudirman Center and rose further in the third quarter. The
two new completions in successive quarters are the forerunners of a packed
supply schedule.
RENTS DECLINE AMID ECONOMIC HEADWINDS AND RISING VACANCY

Percent
300
Historically, many landlords of Grade A buildings in Jakarta quoted rents in

US dollars. New government regulations, effective July 1st, stipulated that all
domestic business transactions must be conducted in Indonesian Rupiah.
Rental growth turned negative (1.6% q-o-q) as landlords offered more

attractive terms in the face of rising vacancy rates and relatively thin demand.
No en bloc sales transactions were closed in 3Q15 although some
international investors continued to show interest in developing mixed-use
projects in prime locations.
0
12
2.6%
STAGE IN CYCLE
Relatively slow economic growth, rupiah depreciation against the US dollar,

low commodity prices and global economic headwinds continued to impact
the Jakarta office market. Demand remained relatively thin in 3Q15 and the
overriding sentiment in the market was one of cost-saving and consolidation.
200
11
SQM PER ANNUM,

250
0
4Q11
RENTAL
GROWTH Y-O-Y
NET TAKE-UP PICKS UP DUE TO NEW SUPPLY BUT ENQUIRIES REMAIN LOW
Financial Indices
Thousand sqm
100 OFFICE
James Taylor, Head of Research, Indonesia
13
14
15F
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
OUTLOOK: VACANCY RATES TO RISE FURTHER; MORE RENTAL DECLINES LIKELY

Although pre-commitment deals have been agreed in projects with

completion dates as far ahead as 2018, demand is likely to remain relatively
thin in the short term. We expect continued inactivity from oil and gas firms,
while e-commerce companies are likely to expand. Given the volume of
pipeline supply, we expect vacancy rates to rise further.
With some landlords facing vacancy pressure and demand remaining

relatively thin, we expect further rental declines in IDR terms in the coming
quarters. A pick up in government spending and GDP growth as well as
currency stabilisation are vital in terms of boosting demand and sentiment.
Note: Jakarta Office refers to Jakartas CBD Grade A office market.
Continued political and economic uncertainty

puts a dampener on office leasing activity.
SQ FT PER MONTH,
GROSS ON NLA
0.9%
MYR 6.32
STAGE IN CYCLE
Rents
Falling
SUBDUED DEMAND WITH DOWNSIZING BY OIL & GAS AND FINANCIAL FIRMS
Financial Indices
Leasing enquiries declined on the back of the recent political issues and
difficult economic situation caused by low commodity prices and a weakened
Malaysian ringgit. Oil & gas companies and large financial institutions
continued to downsize in terms of headcount and occupied space. Despite
weak demand, net absorption was positive in 3Q15.
Leasing demand was led by domestic business services firms flightto-quality. The decentralisation trend continued with the Decentralised
submarket gaining popularity - especially within KL Sentral, Mid Valley City
and Bangsar South - due to its access to quality public transportation and
affordable rents.
130
120
110
Index
100
90
80
4Q11
VACANCY STABLE AMID NO NEW SUPPLY

No new supply was completed during the quarter and vacancy held firm at
13.3%.
There are rising concerns over the large amount of supply due in the KLC
submarket from 2019 onwards. This supply is largely being driven by major
government-led projects including KL 118, Tun Razak Exchange and Bukit
Bintang Commercial Centre.
101 OFFICE
RENTAL
GROWTH Y-O-Y
KUALA LUMPUR
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Financial Indicators are for the Kuala Lumpur City.
Physical Indicators
350
20
280
16
210
12
140
70
Investment yields remained stable amid a muted investment market. While

some property owners lowered their pricing expectations, prices are still
relatively high due to the limited availability of quality assets.
OUTLOOK: RENTAL DECLINE LIKELY TO CONTINUE

Landlords are expected to prioritise occupancy over rents and this in

combination with softening demand is expected to lead to a further decline in
rents.
The leasing market should continue to favour tenants, with vacancy rates
lingering in double digits. Demand is expected to be more concentrated within
the Decentralised submarket due to its quality infrastructure and relatively
congestion-free roads.
Note: Kuala Lumpur Office refers to Kuala Lumpur Citys Grade A office market consisting of the Golden
Triangle and CBD submarkets.
Percent
Softer leasing market conditions resulted in rents declining marginally as

some landlords opted to focus on occupancy over rents. Select landlords of
older buildings within the CBD submarket increased rental incentives
including offering longer rent-free periods.
Thousand sqm
RENTS DECLINE ON THE BACK OF A SUBDUED LEASING MARKET
0
11
12
13
14
15F
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
Rents expected to grow at a slower pace due to

competition from new supply.
Claro dG. Cordero, Jr., Head of Research, Philippines
150
3.5%
PHP 895
STAGE IN CYCLE
Growth
Slowing
Net absorption in Makati CBD and Bonifacio Global City (BGC) rose from
12,000 sqm in 2Q15 to 86,400 sqm in 3Q15, mainly driven by off-shoring and
outsourcing (O&O), technology-related and other services firms. The increase
in net absorption was partly due to take-up of office space in newly
completed developments.
Notable lease transactions in 3Q15 included an O&O firm renewing its lease in
a built-to-suit development in Makati CBD, an e-services firm taking up
2,100 sqm in newly completed Net Park and a business services firm precommitting to 2,000 sqm in Uptown Tower 3 in BGC.
130
Index
SQM PER MONTH,

140
120
110
100
90
4Q11
RENTAL
GROWTH Y-O-Y
OUTSOURCING AND TECHNOLOGY FIRMS LEAD OFFICE DEMAND
Financial Indices
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
NEW SUPPLY AND EXISTING AVAILABLE SPACE PUSH UP VACANCY

Four office developments, MDI Corporate Center, Net Park, 8 Rockwell and
Cocolight were completed in 3Q15, adding 102,800 sqm of office space. All of
these developments, except for 8 Rockwell, are located in BGC.
The vacancy rate increased slightly to 4.8% in 3Q15 from 4.3% in 2Q15 as
newly completed developments were not fully leased out upon completion.
Despite the increase in the vacancy rate, Grade A developments in Makati
CBD and BGC continued to enjoy high occupancy.
Physical Indicators
8
600
CAPITAL VALUES INCH UP SLOWLY AFTER PREVIOUS ROBUST GROWTH

450
300
150
Rents registered a modest growth of 0.2% q-o-q, supported by stable O&O

office demand. Likewise, capital values saw minimal movement, inching up by
0.1% q-o-q and consequently, investment yields remained relatively stable at
9.2%.
Strata-title office units in existing Grade A developments in Makati CBD

continued to be traded in the secondary investment market, fuelled by
demand from investors and occupiers. Meanwhile, demand for pre-selling
strata-title office units, mostly located in BGC, was driven by retail investors
and small and medium-sized enterprises.
Percent
Thousand sqm
102 OFFICE
MANILA
0
11
12
13
14
15F
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
OUTLOOK: SLOWER RENT GROWTH EXPECTED AS SUPPLY EXPANDS FURTHER

A total of 200,000 sqm of office space is scheduled to be completed in the next

two quarters from eight office developments. Vacancy rates are likely to rise,
given the incoming supply.
Rents are expected to maintain positive growth, albeit at a slower pace, while
capital values are expected to increase further supported by the favourable
investment outlook of the country.
Note: Manila Office refers to the Makati CBD and BGC Grade A office market.
Net absorption reaches a record high with strong

activity in new supply.
Joseph Yee, Regional Director Valuation Advisory Services,
Singapore
SQM PER MONTH,

3.5%
USD 37.7
STAGE IN CYCLE
Decline
Slowing
RECORD HIGH NET ABSORPTION DRIVEN BY NEW COMPLETION
Financial Indices
In 3Q15, net absorption rose to over 28,000 sqm, the highest quarterly net
absorption recorded in the Ho Chi Minh City office market. However, nearly
15,000 sqm was from the subsidiaries of a landlord of a newly completed
building.
Many large-sized leasing deals (greater than 1,000 sqm) were recorded at the
newly completed building Vietcombank Tower. Relocation from lower grade
buildings to Grade A buildings and new market entrants were key drivers of
leasing deals during 3Q15. Renewals accounted for a minor percentage of
total leasing activity in the quarter.
110
105
100
Index
Vietcombank Tower completed in 3Q15, adding approximately 37,000 sqm of

office space to the market, resulting in total Grade A office stock increasing to
192,000 sqm, an increase of 19.3% q-o-q.
The vacancy rate remained lower than 10% as Vietcombank Tower had a high
occupancy rate at launch. Most existing Grade A office buildings enjoyed an
occupancy rate of more than 90% in 3Q15. However, Times Square continued
to have an above market average vacancy rate as the landlord remained
highly selective about tenants.
85
80
4Q11
The investment market remained quiet in 3Q15 and valuation-based yields

were stable at around 9%.
OUTLOOK: RENTS TO INCREASE SLIGHTLY AMID NO NEW SUPPLY

Given the good performance and increasing rents in the Grade B sector, and
higher asking rents at some Grade A office buildings in 3Q15, we expect a
slight increase in rents over the next 12 months. Demand is likely to come
from financial and banking institutions and Vietcombank Tower should
continue to lead in leasing performance in the coming quarters.
No new supply is expected between now and 2017, supporting the upward
trend in rents for the remaining vacant space at Vietcombank Tower and
Times Square.
Note: Office market refers to the Grade A Office market in Ho Chi Minh City.
4Q14
4Q15
4Q16
Physical Indicators
Thousand sqm
40
40
35
35
30
30
25
25
20
20
15
15
10
10
Percent
The average rent of Grade A office space was USD 37.7 per sqm per month, a
decline of 3.5% q-o-q. The quarters downward trend emanated mainly from
Vietcombank Tower, as most landlords of existing buildings kept their rents
stable from 2Q15.
4Q12
4Q13
Rental Value Index

Source: JLL
RENT DECLINE MAINLY DRIVEN BY LOWER RENT AT NEW SUPPLY

95
90
VACANCY REMAINS BELOW 10% DESPITE LARGE NEW SUPPLY

103 OFFICE
RENTAL
GROWTH Y-O-Y
HO CHI MINH CITY
0
11
12
13
14
15F
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
Despite net absorption remaining robust, vacancy

remains high due to large volume of new supply.
Ashutosh Limaye, Head of Research, India
130
SQ FT PER MONTH,
GROSS ON GFA
0.7%
INR 146
STAGE IN CYCLE
Rents
Rising
Strong leasing activity saw net absorption recorded at 1.4 million sq ft in 3Q15,
with occupiers looking for space for expansion. However, occupier exits and
tenant relocation/consolidation activity resulted in net take-up declining from
the previous quarters level.
Demand was led by the IT/ITeS sector, with support from consulting,
professional and financial services firms. Notable deals in 3Q15 included Bank
of Tokyo & Mitsubishi, GMR and Bharti Softbank all leasing space in the SBD;
IBM, Mercer and Olympus leased space in Gurgaon and Vivo Mobiles and
Reliance Jio in Noida.
120
Index
110
100
90
80
4Q11
RENTAL
GROWTH Y-O-Y
STRONG LEASING ACTIVITY; HOWEVER, NET TAKE-UP DECLINES Q-O-Q
Financial Indices
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Financial Indicators are for the SBD.
VACANCY RISES AMID LARGE NEW SUPPLY

New completions added 2.9 million sq ft of space in the quarter. Four projects
were completed in Gurgaon, three in Noida and one in the SBD.
Vacancy rose by 80 bps q-o-q to 31%.
RENTS RISE IN SBD AND MARGINALLY IN NOIDA

Physical Indicators
800
40
700
35
600
30
500
25
400
20
300
15
200
10
100
Percent
Thousand sqm
104 OFFICE
DELHI
Rents in the SBD rose in 3Q15, after remaining stable for eight straight
quarters. A slight rise was also recorded in the Noida-Greater Noida
Expressway corridor of the Noida submarket.
Capital values rose largely in line with rents and a result, yields remained
stable.
OUTLOOK: DEMAND TO REMAIN STRONG AS OCCUPIERS PLAN EXPANSION

Large IT occupiers are likely to retain their preference for space in existing
and planned SEZs. However, there is also likely to be demand for quality
space in emerging office corridors due to low vacancy and limited supply in
established office precincts.
Limited, quality future supply in established office corridors may fuel faster
rent increments. Investor interest in leased assets is likely to contribute
towards a rise in capital values, with yields expected to remain generally
stable.
0
11
12
13
14
15F
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
Note: Delhi Office refers to Delhi NCRs Overall Grade A office market.
High leasing volumes in well-situated, under

construction buildings highlights importance of
quality infrastructure.
MUMBAI
SQ FT PER MONTH,
GROSS ON GFA
4.3%
INR 221
STAGE IN CYCLE
Rents
Stable
LEASING VOLUMES REACH RECORD HIGH
Financial Indices
A total of 2.7 million sq ft of office space was transacted in 3Q, mostly in

under-construction buildings. However, net absorption was recorded at
1.0 million sq ft, a decrease of 52% q-o-q.
Healthcare and IT/ITeS companies drove demand for office space during the
quarter, with upcoming office supply in the SBD BKC and Thane submarkets
attracting pre-commitments.
140
130
120
Index
RENTS RISE IN SELECT SUBMARKETS

90
In 3Q15, seven projects commenced operations with modest levels of precommitments and as a result, the vacancy rate in the overall Mumbai market
increased slightly by 30 bps q-o-q to 20.1%.
Mumbais total stock grew by 1.7% q-o-q and surpassed 100 million sq ft.
In 3Q15, rents in SBD Central, SBD North and Eastern Suburbs rose in the
range of 12% q-o-q. In the SBD BKC submarket, rents stabilised after
declining for four straight quarters.
80
4Q11
It is expected that institutional investors will gain confidence to purchase

income-generating and strategically located office assets that are expected
to attract good demand and high rents.
Thousand sqm
200
12
150
100
50
50
Percent
4Q14
4Q15
4Q16
Capital Value Index
Physical Indicators
Market yields were generally stable across most submarkets of the city.
Leasing demand is likely to come from established businesses expanding and

new foreign firms entering the market. About 1 million sq ft of office space
requirements were circulating in the market at end-3Q15.
4Q12
4Q13
Rental Value Index

Source: JLL
Financial Indicators are for the SBD BKC.
OUTLOOK: ROBUST LEASING ACTIVITY EXPECTED IN NEXT 12 MONTHS

110
100
SEVEN NEW BUILDINGS ADD 1.7 MILLION SQ FT

105 OFFICE
RENTAL
GROWTH Y-O-Y
3
11
12
13
14
15F
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
Note: Mumbai Office refers to Mumbais Overall Grade A office market.
Corporate expansions drive leasing activity

in Bangalore.
140
SQ FT PER MONTH,
GROSS ON GFA
6.8%
INR 55
STAGE IN CYCLE
Rents
Rising
Leasing activity in the Bangalore office market was relatively stable in 3Q15
with about 3.0 million sq ft of office space transacted and net absorption was
recorded at 2.8 million sq ft. The SBD remained the most preferred submarket
and most absorption came from occupier expansions and pre-commitments to
newly completed buildings.
IT/ ITES companies were the most active occupiers that leased space over
the quarter and key tenants leasing space in the quarter included Accenture,
Infosys, Citix and HP.
130
120
Index
RENTAL
GROWTH Y-O-Y
LEASING ACTIVITY REMAINS ROBUST
Financial Indices
110
100
90
80
4Q11
1.1 MILLION SQ FT OF NEW SUPPLY

4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Financial Indicators are for the SBD.
Four office buildings commenced operations in 3Q15, adding 1.1 million sq ft

and increasing total Grade A office stock to 90.9 million sq ft.
Stable leasing activity and high occupancy at newly completed buildings

pushed the vacancy rate down to 4.2% in 3Q15 from 6.1% in 2Q15.
SHARP DECLINE IN VACANCY CONTINUES TO DRIVE SBD RENTS UP

Physical Indicators
800
16
700
14
600
12
500
10
400
300
200
100
Percent
Thousand sqm
106 OFFICE
BANGALORE
In 3Q15, average rents increased in the CBD and SBD submarkets, while
remaining unchanged elsewhere. The SBD witnessed a 2.0% q-o-q increase
in rents, and the CBD growth of 1.0%.
Capital values increased q-o-q in the range of 12% in the CBD and SBD, with
other submarkets remaining unchanged. Market yields remained relatively
stable in 3Q15.
OUTLOOK: DEMAND LIKELY TO REMAIN STRONG

Demand for office space is expected to remain strong across all submarkets
through 1H16 as corporate occupiers continue to expand. The limited
availability of space in the SBD-east and south-east stretch of the Outer Ring
Road is likely to push demand for space towards the northern part of the city
and to projects along Bellary Road.
Rents and capital values are also likely to increase across the city due to
steady leasing activity. Yields are likely to compress along some stretches of
the SBD Outer Ring Road given the good occupancy rates of buildings in this
area.
0
11
12
13
14
15F
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
Note: Bangalore Office refers to Bangalores Overall Grade A office market.
The demand recovery is broadening with

increased activity from financial services and
education sector tenants.
SYDNEY
Andrew Ballantyne, National Director - Research, Australia
SQM PER ANNUM,

6.2%
AUD 654
STAGE IN CYCLE
Rents
Rising
DEMAND RECOVERY GATHERS MOMENTUM IN SYDNEY CBD
Financial Indices
The Sydney CBD office market recorded a seventh positive quarter of net
absorption (25,600 sqm) and 148,000 sqm was recorded for the 12 months
ending September 2015. Education institutions and finance & insurance firms
were the main drivers of growth.
The Sydney CBD leasing recovery continued into 3Q15. The bulk of leasing
activity was tenants moving into new developments, in particular Westpac
relocating to International Towers Sydney Tower 2 (ITS2; 59,385 sqm).
150
140
130
Index
Positive take-up pushed vacancy down to 7.7%, the lowest level since
1Q11. There are signs of a leasing recovery in the Premium Grade leasing
market; vacancy has fallen 1.5 percentage points over the 12 months ending
September 2015.
There were three office completions totalling 109,300 sqm in 3Q15. This
included the first stage completion of ITS2. A further 295,900 sqm equating
to 5.9% of total Sydney CBD office stock was under construction at end3Q15. Seven assets were withdrawn from the CBD stock (77,700 sqm) in the
quarter. Three of the assets will be converted to residential use.
80
4Q11
There were two investment transactions totalling AUD 276.0 million in 3Q15.
Investor demand for core assets continued to push prime yields down to
range between 5.25%6.25%. However, the improvement in leasing activity
and prospect of effective rental growth has resulted in stronger demand for
core plus assets and a compression in secondary yields.
OUTLOOK: STRONG EMPLOYMENT GROWTH SHOULD DRIVE LEASING ACTIVITY

Office completions in the Sydney CBD over the next two years will be the
highest since the early 1990s. Completions over 2015/16 are expected to reach
394,000 sqm or 7.8% of 3Q15 total stock.
Business confidence is highest in the non-mining states of New South Wales

(NSW) and Victoria. NSW has accounted for over 50% of job growth in
Australia over the past 12 months. Positive lead indicators from the labour
market are supportive of increasing leasing activity and positive net
absorption.
Note: Sydney office refers to Sydneys CBD office market (all grades).
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Physical Indicators
Thousand sqm
250
15
200
12
150
100
50
50
3
11
12
13
14
15F
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
vacancy are year-end annual. For 2015, take-up,
completions and vacancy rates are YTD, while
future supply is for 4Q15.
Percent
Strong demand for prime space and an increase in face rents resulted in
effective rents increasing by 2.7% q-o-q in 3Q15 to AUD 654 per sqm per
annum. Office withdrawals and limited options for quality secondary stock
have pushed secondary gross effective rents up 9.9% y-o-y.
110
90
INVESTOR APPETITE FOR CBD ASSETS PERSISTS

120
100
A NUMBER OF ASSETS WITHDRAWN FOR RESIDENTIAL CONVERSION IN 3Q15

107 OFFICE
RENTAL
GROWTH Y-O-Y
Strong investor demand as leasing market

continues to recover.
Dr David Rees, Head of Research, Australasia
140
130
Index
SQM PER ANNUM,

4.0%
AUD 405
STAGE IN CYCLE
Rents
Rising
Solid demand from professional services, finance and insurance, and

technology firms.
The completion of 567 Collins Street contributed 29,700 sqm to the absorption
figure in 3Q15, with major tenants Jemena (12,700 sqm) and Leighton (12,700
sqm) centralising from suburban and fringe locations.
120
110
SUPPLY PIPELINE LIMITED OVER THE NEXT 12 MONTHS
100
90
80
4Q11
RENTAL
GROWTH Y-O-Y
PRE-LEASING ACTIVITY GAINS MOMENTUM IN 2015
Financial Indices
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
567 Collins Street was the only office development to reach completion in the
quarter. Four office assets are under construction totalling 132,000 sqm, of
which 86,100 sqm is pre-committed.
Additional space in the new building and some sublease availability

contributed to vacancy remaining at 10.1%.
YIELDS CONTINUE TO TIGHTEN

Nine major investment transactions occurred in 3Q15, totalling

AUD 685.7 million. Sales in 3Q15 represent 39% of total sales for the past 12
months. The two largest sales in the quarter were 222 Exhibition Street and
114 William Street which sold for AUD 231.0 million and AUD 125.0 million,
respectively.
Yields for prime assets have tightened by 25 bps to 5.25%7.00%, with the
upper end of the range being tighter than the 2007 peak. Secondary assets
yields have tightened by 75 bps to 6.00%8.00%.
Physical Indicators
200
12
150
100
50
50
Percent
Thousand sqm
108 OFFICE
MELBOURNE
OUTLOOK: YIELDS ARE EXPECTED TO STABILISE OVER THE SHORT TERM

Demand in the CBD is expected to remain positive with continued growth in

IT and professional services such as bankers, lawyers, real estate agents and
accountants that are benefiting from strong population growth.
Effective rental levels are expected to increase as landlords reduce incentive

levels to match improving business sentiment.
3
11
12
13
14
15F
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
Note: Melbourne Office refers to Melbournes CBD office market (all grades).
Substantial upcoming supply likely to push up

vacancy and apply further downward pressure on
office rents.
BRISBANE
SQM PER ANNUM,

4.8%
AUD 399
STAGE IN CYCLE
Decline
Slowing
SMALL TENANTS ARE LEADING TAKE-UP IN THE CBD
Financial Indices
Net absorption has been positive in Brisbane CBD for three consecutive
quarters following nine quarters of negative results.
Small tenants (<1,000 sqm) that were priced out of the CBD during the mining
boom have been taking advantage of the current low rents to centralise their
operations. Additionally, large contractions and downsizing by resource
related companies has been slowing in the CBD.
120
115
110
105
Index
100
95
VACANCY TRENDS LOWER IN PART DUE TO SEVERAL STOCK WITHDRAWALS
90
85
Vacancy declined to 14.5% at end-3Q15 after peaking at 16.8% in 4Q14. This

was due to positive absorption, office stock withdrawals (38,800 sqm) and no
new supply additions.
Although no projects have reached completion as at YTD September, the
supply pipeline is substantial with 192,300 sqm of stock anticipated to
complete within the next 12 months. However, this large supply is expected to
be partially offset in future by a number of possible stock withdrawals.
OCCUPIER AND INVESTMENT MARKETS REMAIN DISCONNECTED

OUTLOOK: FUTURE SUPPLY TO PUSH UP CBD VACANCY TOWARDS 20% IN 2016

During 2016, Brisbane CBD vacancy is forecast to reach a historical high of

just over 20% due to the large development pipeline. Consequently, effective
rents are expected to continue their decline until 2017. Possible stock
withdrawals such as the 58,300 sqm to be withdrawn for the Queens Wharf
redevelopment in 2017 should soften the impact.
Despite the projected weakness in the rental market, further mid-point
yield compression is expected as the lower end tightens under the weight
of capital. Transaction volumes are anticipated to be supported by several
assets coming to the market before the end of 2015.
Note: Brisbane Office refers to Brisbanes CBD office market (all grades).
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Physical Indicators
Despite a steady fall in effective rents since 2013, the weight of capital from
both international and domestic investors in the last 12 months has
compressed the upper yield of the prime and secondary ranges by 50 bps and
100 bps, respectively.
Following a highly active 2Q15 in which Brisbane recorded its highest ever
single asset sale, Waterfont Place (AUD 592 million), 3Q15 was very quiet with
only one asset transacting for AUD 20 million.
4Q12
4Q13
Rental Value Index
200
20
150
15
100
10
50
50
100
10
150
15
11
12
13
14
15F
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
Percent
80
4Q11
Thousand sqm
109 OFFICE
RENTAL
GROWTH Y-O-Y
Investor demand drives capital values to new

record high.
Justin Kean, Head of Research, New Zealand
150
7.0%
NZD 459
STAGE IN CYCLE
Rents
Rising
A healthy performance of the services sector has translated into strong

leasing activity in the Auckland Office market. Centralisation remains a
significant driver of leasing demand with business actively securing space in
the CBD, resulting in 9,500 sqm of net absorption during 1H15.
Service industries including information and communication, technology and

professional services have been the primary drivers of take-up of space in the
CBD during the first six months of 2015.
130
Index
SQM PER ANNUM,

NET ON NLA
140
120
110
100
NEW SUPPLY TO SHORTLY ENTER THE MARKET
90
80
4Q11
RENTAL
GROWTH Y-O-Y
GROWING SERVICE INDUSTRIES SUPPORT ROBUST DEMAND
Financial Indices
4Q12
4Q13
Rental Value Index
Physical Indicators
40
12
30
20
10
Percent
15
0
12
13
Vacancy in the Auckland CBD market has fallen to a new record low,
declining by 0.8 percentage points in 1H15 to 4.9%. The short supply of high
quality space has forced occupiers to the secondary end of the market, with
both Grades B & C experiencing a significant fall in vacancy.
Construction of the 18,600 sqm office development at 151 Victoria Street is in

its final stages. This new supply will help ease pressure in the tight Prime
market, providing some relief for occupiers.
HIGH DEMAND FOR QUALITY OFFICE STOCK PUSHES RENTS UP
50
11

4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Thousand sqm
110 OFFICE
AUCKLAND
14
15F
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
Limited available space underpins healthy growth in Prime rents. In 3Q15,

average rents for Prime space increased 1.3% q-o-q to NZD 459 per sqm per
annum, with renewals and new leases pushing values higher. Incentives
remained steady during 3Q15.
Core office assets continue to be highly sought after by investors. Prime yields
tightened by 25 bps q-o-q at the lower end of the range to now range between
6.5% and 7.5%. Capital values are now above the peak set before the global
financial crisis.
OUTLOOK: DEMAND FROM INVESTORS AND OCCUPIERS LIKELY TO CONTINUE

Corporate expansion and space consolidation are expected to keep landlords

in a dominant position relative to occupiers over the next 12 months, despite
concerns of lower economic growth. This should support upward pressure on
rents.
Capital values for office assets are forecast to increase over the next 12
months, with no sign of buyer interest subsiding.
Note: Auckland Office refers to Aucklands CBD and Viaduct Harbour office markets.
35 RETAIL
Retail
High street shop rents under greatest pressure as

retailing conditions worsen amid tourism slump.
HONG KONG
Cathie Chung, Director - Research, Hong Kong
140
Index
Rents
Falling
The lacklustre retail market pushed some retailers to terminate their leases
early to cut losses, with those in Central and Causeway Baywhere rents
had outperformed in recent yearsshowing the greatest interest to break
leases. Faced with increased vacancy pressure, landlords of high street
shops were generally more flexible in lease negotiations.
110
100
90
4Q12
4Q13
4Q14
4Q15
4Q16
RV Index (High Street Shop)
CV Index (High Street Shop)
RV Index (Premium Prime Shopping Centres)
RV Index (Overall Prime Shopping Centres)

Source: JLL
Physical Indicators
70
SPOTLIGHT ON NEW SHOPPING CENTRE OPENINGS IN 3Q15

Sun Hung Kai Properties Grand Century Place (rebranded as MOKO) in

Mongkok added 65,455 sq ft to Prime Shopping Centre stock. The upgraded
shopping centre is now anchored by Yata supermarket, Food Opera and
Prologue Book Store.
The retail podium of Yoho Midtown and the previous Sun Yuen Long Shopping
Centre were officially opened to the public in 3Q15. These two malls, along
with Yoho Mall Extension (2016)collectively branded as Yoho Mallwill
be the largest shopping mall complex (about 1.1 million sq ft of retailing floor
space) in the North-West New Territories when complete.
60
50
Thousand sqm
HKD 603.8
The recent stock market rout along with devaluation of the RMB further
weighed on already weak tourism and retail markets. Dragged by a 17.7%
y-o-y contraction in Individual Visit Scheme visitors from Mainland China,
total tourist arrivals plunged by 7.4% in July-August. Meanwhile, total retail
sales have fallen for eight months straight as of August, the longest downturn
since 2009.
120
36 RETAIL
18.9%
STAGE IN CYCLE
130
40
RENTS ON HIGH STREET SHOPS UNDER GREATEST PRESSURE
30
With more landlords significantly lowering rents to keep their premises

tenanted, market rents on the high streets plunged by 12.5% q-o-q in 3Q15.
Retailers preference towards shopping centres, which enjoy relatively higher
foot traffic and lower upfront rental outlays, rendered support to rents.
Market yields remained largely flat during the quarter, amid a quiet investment
market. The focus of investors continued to be on street shops and retail
podiums with lowered asking prices in non-core locations.
20
10
0
SQ FT PER MONTH,
NET ON GFA
RETAILING CONDITIONS WORSEN AMID TOURISM SLUMP
Financial Indices
80
4Q11
RENTAL
GROWTH Y-O-Y
11
12
Completions
13
14
15F
16F
Future Supply
Source: JLL
For 2011 to 2014, completions are year-end annual.
For 2015, completions are YTD, while future supply
is for 4Q15.
OUTLOOK: RENTAL CORRECTION TO MODERATE IN 2016

Downward pressure on high street shop rents is expected to moderate over

the next 12 months after the realisation of major corrections in 2015. We
should continue to see a gradual change in the tenant profile of high streets in
core shopping locations as more luxury retailers are replaced with mid-priced
brands.
We may see more long-term owners of non-core retail assets looking to lower
asking prices to realise capital gains accumulated over the past few years.
Note: Hong Kong Retail refers to Hong Kongs Overall Prime Shopping Centres and High Street retail
markets.
Landlords continue to adjust tenant mixes to

optimise rental income during period of
slow growth.
BEIJING
SQM PER MONTH,

2.7%
RMB 854
STAGE IN CYCLE
Growth
Slowing
FAST FASHION POPULAR AT NEWLY OPENED COMMUNITY-BASED MALLS
Financial Indices
Net absorption turned positive as several new malls entered the market with
healthy commitment rates. However, small, newer, and centrally located
projects continued to struggle to fill up space under fierce competition from
established projects nearby.
Mid-market F&B retailers continued to drive demand; ice cream snack brands
Dairy Queen and Haagen-Dazs added stores in the quarter. Fast fashion
brands dominated new community projects, with Uniqlo underscoring its
presence as a staple of the mid-market while Old Navy expanded.
140
130
120
Index
110
100
90
THREE PROJECTS OPEN, ADDING TO CORE, URBAN, AND SUBURBAN MARKETS

Core project Jinbao Place Phase II opened near Wangfujings ever-popular

Beijing APM. Attached to Jinbao Place, the small 17,700 sqm-project defied
the market trend of entering as a small and centrally located new mall with
leasing challenges, boasting a strong commitment rate of 90%.
Aeon Beijing Fengtai entered the Urban market with an impressive
commitment rate of 99% in the decentralised Urban market. Meanwhile,
Gem Mall came online slightly earlier than expected in the Suburban market.
Though its physical occupancy was only at 65% upon opening, 90% of
leasable space was committed.
80
4Q11
Physical Indicators
400
350
Yields were flat as the pricing standoff between buyers and sellers continued
and the outlook for rental growth weakened.
OUTLOOK: NEW POLICY IS SET TO REDIRECT URBAN RETAIL DEVELOPMENT

Landlords are likely to readjust floor plans due to the new rule prohibiting
malls within the six core districts from allowing new F&B tenants to open in
the basement or in units smaller than 60 sqm regardless of which floor they
are located on. The policy aims to nudge new development towards higherend F&B.
The Suburban supply boom takes off at the end of the year; with future supply
in this market to outpace the Urban market over the forecast horizon.
Note: Beijing Retail refers to Beijings Urban retail market.
300
Thousand sqm
Rents continued to grow at a slower pace, with Urban rents recording 0.4%
q-o-q growth and Core rents registering 0.6% q-o-q growth.
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
RENTAL GROWTH STILL SLOW; YIELDS STABLE

4Q12
4Q13
Rental Value Index
250
200
150
100
50
0
11
12
Completions
13
14
15F
16F
Future Supply
Source: JLL
is for 4Q15.
37 RETAIL
RENTAL
GROWTH Y-O-Y
Luxury brands focus on experience-oriented

offerings to enhance brand influence.
SHANGHAI
Joe Zhou, Head of Research, China
130
RMB 51.8
Growth
Slowing
Luxury brands expanded their reach by embracing experience-oriented

offerings and other non-traditional approaches. Gucci opened its first
restaurant in China, 1921Gucci, at iapm, while Burberry and Chanel opened
new cosmetic boutiques. Lower pricing points for products in these stores
means spending per customer tends to be less than at their traditional stores,
allowing them to appeal to a wider range of customers.
Meanwhile, luxury watch and accessory brands responded to stagnating

sales by shrinking the operating space of their existing stores. In 3Q15,
several high-end watch retailers such as Chopard and Piaget trimmed their
operating space in ifc Mall, while Loewe closed its store on the second floor
of Kerry Centre.
Index
110
100
90
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

4Q10 =100
Index base: 4Q11
Source: JLL
Financial Indicators are for the Core market.
THREE NEW PROJECTS OPEN, WHILE TWO DEPARTMENT STORES CLOSE

Soho Fuxing Plaza in Xintiandi, The Place North in Hongqiao and Hall of the
Stars in Hongkou added a total of 94,400 sqm to the market. These malls
are relatively small and all have mid-range positioning. Meanwhile, Oriental
Department Store on Huaihai Road and Tianshan Parkson closed; both will be
renovated into boutique shopping malls.
Vacancy decreased slightly to 9.5% in the core areas as several existing malls
in East Nanjing Road and Hongqiao made progress filling vacant space. Noncore vacancy also fell, declining to 6.8% as several malls filled empty spaces
on upper floors with experience-oriented tenants.
Physical Indicators
500
450
400
350
Thousand sqm
4.6%
STAGE IN CYCLE
120
38 RETAIL
SQM PER DAY,

NET ON NLA
LUXURY RETAILERS SHIFT STRATEGY TO BROADEN CUSTOMER BASE
Financial Indices
80
4Q11
RENTAL
GROWTH Y-O-Y
300
250
RENTS EDGE UP WHILE INVESTMENT MARKET REMAINS QUIET
200
In the core area, open-market ground floor base rents increased by 4.6%
y-o-y to RMB 51.8 per sqm per day. Non-core rents rose 6.0% y-o-y to
RMB 20.6 per sqm per day. In both markets, successful malls undergoing
tenant adjustment outperformed the market and drove rental growth.
There were no en bloc sales transactions in the quarter.
150
100
50
0
11
12
Completions
13
14
15F
16F
Future Supply
Source: JLL
is for 4Q15.
Physical Indicators are for the Core market.
OUTLOOK: SLOWER RENTAL GROWTH EXPECTED IN NON-CORE AREAS

Luxury retailers are expected to stay cautious amid limited sales growth. In
the mass market, continued strong demand is expected from fast fashion
brands as they further expand their presence in newly opened projects
around the city. Meanwhile, children-related brands are becoming a new
growth point, and are highly sought after by landlords.
Forecast non-core supply for 2016 is large, especially around the Hongqiao
Transportation Hub. As a result, rents of malls in such areas are expected
to grow more slowly. There is also a rising risk that slow leasing may lead
to delayed openings of several projects. Meanwhile, mature malls in key
precincts should continue to drive rental growth in the core area.
Note: Shanghai Retail refers to Shanghais Overall Core and Non-core retail markets.
Direct import goods retailers rapidly expand to

address consumers demand for quality goods.
Frank Ma, Head of Research, West China
SQM PER MONTH,

NET ON NLA
1.7%
RMB 394.2
STAGE IN CYCLE
Rents
Stable
ACTIVE LEASING MARKET ACROSS THE CITY
Financial Indices
In 3Q15, new-to-market brands continued to debut at premium malls across

the city. For instance, Agent Provocateur and Tesla opened stores at SinoOcean Taikoo Li, while New Look and Cath Kidston secured space in Raffles
City.
Cross-border Offline to Online operators (O2O) and direct import goods firms
opened stores/sales centres in the quarter. Foshan-based Meijoybest.com
opened in Perennial Qingyang Mall and D.I.G, which operates in the Shanghai
Waigaoqiao Free Trade Zone, opened in Shihao Mall.
140
130
120
Index
110
100
90
VACANCY RISES AS SEVERAL LARGE TENANTS VACATE SPACE

Two prime retail projects opened in 3Q15, adding a total of 112,300 sqm to
prime retail stock. The One opened in the Chunxi Road-Yanshikou submarket
and Diamond Plaza in Jianshe Road submarket.
Some large tenants were observed to have closed stores in shopping malls
during the quarter. Central Department Store from Thailand closed its last
store in China in MixC, while Dagexing KTV, a part of the Wanda Group, also
closed two stores in two Wanda Plazas. These store closures were the main
contributors to a rise in vacancy in the quarter.
80
4Q11
Physical Indicators
800
600
The One, the retail portion of Chinese Estate Plaza, was sold by Chinese
Estate Group to Evergrande Group when they purchased the mixed-use
project in early July. The total consideration for the deal was around
RMB 2.5 billion.
OUTLOOK: MORE PROJECT DELAYS EXPECTED

Joy City and Paradise Walk (North) in the Shuangnan submarket are expected
to open in 4Q15. The high quality of these buildings and strong tenant mixes
should help broaden the customer base of this submarket.
Intensifying competition in part due to a large supply pipeline is likely to cause

further delays in project openings and some landlords may explore converting
retail space to other use. Premium malls are expected to continue to
outperform; however, landlords of other prime malls may find the challenging
operating environment puts further pressure on rents.
Note: Chengdu Retail Market refers to the Urban retail market.
Thousand sqm
700
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
PREMIUM MALLS CONTINUE TO PUSH UP RENTS

Average ground floor effective rent in Chengdus prime retail market
marginally increased by 0.4% q-o-q to RMB 394.2 per sqm per month. Premium
malls continued to record rental growth, given that most of these malls have
long waiting list of brands looking to enter. However, landlords of the majority
of malls held rents steady.
4Q12
4Q13
Rental Value Index
500
400
300
200
100
0
11
12
Completions
13
14
15F
16F
Future Supply
Source: JLL
For 2011 to 2014, completions are year end annual.
For 2015 completions are YTD, while future supply
is for 4Q15.
39 RETAIL
RENTAL
GROWTH Y-O-Y
CHENGDU
Rents and capital values continue to grow

moderately amid resilient retail sales in Tokyos
prime areas.
TOKYO
170
Index
140
130
Growth
Slowing
Healthy demand in 3Q15, with luxury retailers and F&B operators taking up
space. Ginza Chuo-dori saw the opening of Pandora and Seiko Premium
Boutique as well as the relocation of Damiani from Namiki-dori. The Ginza
6-chome Project which is located at the Sukiyabashi crossing and due for
completion in 2016, announced that Bally would be one of the occupiers of its
street level space.
120
110
100
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
DAI 22 GINZA POLESTAR BUILDING COMPLETES BUT VACANCY REMAINS TIGHT

Dai 22 Polestar Building on Kojunsha-dori at Ginza 6-chome was completed

(GFA 1,200 sqm) in the quarter. Brunello Cucinelli and Versace have taken
ground floor space in this building.
The Fred Perry Flagship store is under construction in Omotesando and

scheduled for completion in March 2016.
Retail Sales
10
RENTS AND CAPITAL VALUES CONTINUE TO GROW
8
6
Rents at end-3Q15 averaged JPY 74,737 per tsubo per month, increasing 1.1%
q-o-q and marking the eighth consecutive quarter of growth. The growth rate
in 3Q15 remained mostly in line with the previous quarter and was driven by
ground floor rents in Ginza.
Capital values in 3Q15 increased 3.3% q-o-q and 20.6% y-o-y. Although growth
remained strong, it slowed from the previous quarter as cap rate compression
moderated. Investor interest persisted with a noteworthy sales transaction
being sovereign wealth fund SOFAZs acquisition of Kirarito Ginza (GFA 16,000
sqm) for JPY 52.3 billion.
4
y-o-y (%)
JPY 74,737
Retail sales continued to grow in August, rising for a fifth straight month.
Department stores led the way in higher sales, with luxury goods sales in
Tokyo increasing 25.9% y-o-y in August, while duty-free sales in Japan
increased 260% y-o-y.
150
40 RETAIL
8.1%
STAGE IN CYCLE
160
2
0
2
4
6
8
TSUBO PER MONTH,

GROSS ON NLA
DEMAND REMAINS SOLID AMID HEALTHY RETAIL SALES
Financial Indices
90
4Q11
RENTAL
GROWTH Y-O-Y
2Q10
2Q11
2Q12
2Q13
2Q14
2Q15
Sales Growth of Large-Scale

Retail Stores in Tokyo
Source: Ministry of Economy, Trade and Industry
OUTLOOK: RENTS AND CAPITAL VALUES TO GROW, ALBEIT MODERATELY

Private consumption is expected to pick-up underpinned by improving

employment and wage conditions. Oxford Economics is forecasting for private
consumption to grow by 1.8% in 2016. Record tourist arrivals should provide
further support to retail sales.
Availability of prime space is likely to remain tight amid firm demand and high
pre-commitment to new supply. As such, an uptrend for rents should persist.
Capital values are expected to grow, in part reflecting rent growth, while cap
rates are likely to hold relatively stable.
Note: Tokyo Office refers to Ginza and Omotesando Prime retail markets.
Weak consumer sentiment and tepid retail sales

weigh on rents.
SQ FT PER MONTH,
1.8%
SGD 37.30
STAGE IN CYCLE
Rents
Falling
F&B OVERTAKES FASHION RETAILERS AS TOP DRIVER OF RETAIL DEMAND
Financial Indices
Retail sales slightly improved in July and August after recording negative
y-o-y growth (excluding auto sales) in 2Q. Sales of consumer goods, which
include watches and jewellery, rebounded moderately in both months.
Meanwhile, a recovery in international visitor arrivals gained momentum,
supported by tourist arrivals from mainland China.
Leasing activity in the Marina submarket increased in the quarter. The
refurbished Suntec City Mall and recently completed Capitol Piazza leased
space to several new-to-market entrants, mainly restaurants. However,
overall occupier demand was generally subdued.
120
115
110
Index
100
95
90
4Q11
STORE CLOSURES INCREASE SUBURBAN VACANCY

Vacancy levels in the Suburban submarket continued to edge up due to the

ongoing consolidation and contraction of retailers. Exits by large-space
occupiers in less popular malls were the primary cause of higher vacancy.
Landlords of the once-popular but apparently less prestigious malls have

begun to upgrade their malls through large-scale renovation or space
reconfiguration in an effort to attract more exclusive retailers and F&B
tenants to shore up foot traffic.
105
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Financial Indicators are for Orchard Road.
Physical Indicators
200
CHALLENGING LEASING CONDITIONS DAMPEN INVESTMENT CLIMATE
Prime retail rents witnessed a steeper decline than in the previous quarter. As
retailers were hesitant to take up space in view of subdued consumer buying
sentiment, some landlords adopted more flexible leasing terms by offering
lower base rents with higher variable components (e.g. turnover rent).
In addition to the difficult leasing environment, concerns over rising interest
rates and a potential oversupply of retail space kept potential investors on the
side-lines. This, coupled with declining strata-titled retail property sales,
weighed on prime retail capital values.
OUTLOOK: RENTAL DECLINE TO CONTINUE IN THE NEAR TERM

Retail sales are likely to improve underpinned by a gradual recovery in the

economy and tourist arrivals. Mirroring the optimistic outlook for tourism,
retailers business confidence is forecast to improve.
However, as the retail sector is still adjusting to labour market challenges and
weak consumer sentiment, occupier demand in the near term is projected to
remain subdued, resulting in further rental and capital value corrections.
Note: Singapore retail refers to Singapores Primary, Marina and Suburban retail markets.
150
Thousand sqm
100
50
11
12
Completions
13
14
15F
16F
Future Supply
Source: JLL
is for 4Q15.
41 RETAIL
RENTAL
GROWTH Y-O-Y
SINGAPORE
New market entrants and expansions by

international retailers continue to drive demand
in the market.
BANGKOK
120
Index
105
Rents
Rising
A number of large foreign retailers are known to be looking to enter Thailand,

while some existing international brands are expanding their footprints
including Ikea, which will open its second location in Thailand next to
CentralPlaza Westgate in 2017. Lotte Duty Free, which is expected to open its
first location in Bangkok in 2016.
100
95
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
CENTRALPLAZA WESTGATE OPENS

CentralPlaza Westgate was the only new prime grade mall to open its doors in
3Q15, with its leasable space of 140,000 sqm bringing market-wide prime stock
to 2,858,000 sqm. Despite new supply, prime grade vacancy declined to 6.1%
in 3Q15 from 6.3% in the previous quarter.
The newly-formed business group Siam Synergy, which includes the

developers of Siam Paragon, Siam Center and MBK Center, has announced
plans to make substantial investments in existing retail assets near BTS Siam
and pedestrian infrastructure nearby, including new walkways and
connections to skytrain stations, to further enhancing the areas
attractiveness and competitiveness.
Physical Indicators
500
400
Thousand sqm
THB 2,431
Prime grade retail space was in demand in 3Q15, with positive net absorption
being driven by strong pre-commitment (95%) at the newly opened
CentralPlaza Westgate. In 3Q15, four internationally recognised retailers
opened their first locations in Thailand in the city.
110
42 RETAIL
6.0%
STAGE IN CYCLE
115
RENTS AND CAPITAL VALUES RISE AMID HEALTHY DEMAND
300
Rents increased by 0.6% q-o-q in 3Q15, a more modest rise than in recent
quarters.
Capital values increased 0.6% q-o-q in 3Q15 amidst healthy investor demand
for retail assets. While transaction activity in the retail sector has been
limited, demand from both local and foreign investors is strong, as investors
seek the relatively higher returns offered by the retail sector.
200
100
SQM PER MONTH,

GROSS ON NLA
CENTRALPLAZA WESTGATE CONTRIBUTES TO SURGE IN DEMAND
Financial Indices
90
4Q11
RENTAL
GROWTH Y-O-Y
11
12
Completions
13
14
15F
16F
Future Supply
Source: JLL
is for 4Q15.
OUTLOOK: SMALLER SUPPLY PIPELINE IN 2016; STRONG DEMAND FOR SPACE

Two prime projects, Central Festival East Ville and Zpell, are scheduled to
complete in 4Q15 and this will bring annual supply to 344,000 sqm. With new
openings in 2016 including the refurbishment of three existing centres that
are expected to complete by 2Q16, another 112,000 sqm of space will be add
to market stock. After 2Q16, no new major completions are expected until at
least 4Q17.
Solid leasing activity in recently completed malls and upcoming projects

should continue to drive rents and capital values higher over the next 12
months.
Note: Bangkok Retail refers to Bangkoks Prime retail market.
A rare new completion provides expansion

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

7.9%
IDR 5,822,743
STAGE IN CYCLE
Growth
Slowing
NET ABSORPTION PICKS UP BUT VACANCY RISES
Financial Indices
Net absorption has been somewhat constrained by a lack of supply in recent

quarters. As such, the completion of St. Moritz Phase II provided tenants with
more options to leverage. This project was approximately 70% pre-committed
upon completion with physical occupancy at around 25%. As such, net
absorption turned positive and vacancy increased to around 8%.
Retail sales grew by just 4.8% y-o-y in July, down from 22.3% in the preceding
month. Slow economic growth and a weakening rupiah negatively affected
purchasing power and sales of food and beverages were down. That said, we
continued to see expansion activity from middle and lower-middle end F&B
tenants while mid-tier fashion also remained active.
140
130
120
Index
110
100
90
4Q11
ST. MORITZ PHASE II, DEVELOPED BY LIPPO, COMPLETES IN WEST JAKARTA

A moratorium on stand-alone retail development has been in place in Jakarta
since 2011. As such, prime retail supply in Jakarta has been limited in recent
years and the only new completions have been retail components of mixeduse projects. There has been no indication as to when the moratorium will be
lifted.
The completion of St. Moritz Phase II in the west of the city boosted total
stock by 80,000 sqm. Developed by Lippo, this mixed-use project is positioned
as mid-market and due to the supply constrained nature of core-Jakarta, precommitment came in at a healthy 70%.
RENTS EDGE UP DESPITE RISING VACANCY

Limited supply has meant that vacancy rates have remained in single-digit
territory since mid-2011. As such, landlords of top-performing malls in good
locations continued to be in the enviable position of having waiting lists for
prime units. This has allowed some landlords to steadily raise rents.
As vacancy rates have remained low for a number of years and small, steady
rental increments continued to be recorded, many retail landlords in Jakarta
are unwilling to offload their assets. As such, no en bloc transactions were
recorded in 3Q15 and with a largely unchanged market situation, yields
remained stable q-o-q.
OUTLOOK: VACANCY LIKELY TO DECREASE; SLOW BUT STEADY RENTAL GROWTH

Physical occupancy in this years only new completion is likely to improve in

4Q15 and into next year, meaning that the average market vacancy rate is
likely to come back down to around pre-3Q15 levels. Just 44,000 sqm of new
supply is likely to enter the market in 2016.
A number of mid-market tenants are currently in the fitting out stage and are
likely to open stores next quarter at St. Moritz. We expect business as usual in
terms of rents with slow, steady growth over the coming quarters.
Note: Jakarta Retail refers to Jakartas Overall Prime retail market.
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Physical Indicators
400
350
300
Thousand sqm
4Q12
4Q13
Rental Value Index
250
200
150
100
50
0
11
12
Completions
13
14
15F
16F
Future Supply
Source: JLL
is for 4Q15.
43 RETAIL
RENTAL
GROWTH Y-O-Y
JAKARTA
Net take-up rises to an 11-quarter high due to

strong commitments in new completions.
DELHI
120
0.4%
INR 248
STAGE IN CYCLE
Rents
Rising
International and well-known domestic retailers continued to focus their

attention on premium malls; however, low vacancy restricted new leasing
activity in such locations. Landlords of prime malls in the Prime South
continued to make tenant adjustments.
Net absorption was at a 15-quarter high in Prime Others and the highest in
eleven quarters in Suburbs. H&M entered the Indian market with a store in
Prime South. Other active comparnies were Mothercare, Jamie Oliver, Pizza
Express and Studio Pepperfry.
115
110
Index
SQ FT PER MONTH,
GROSS ON GFA
STRONG DEMAND FOR QUALITY SPACE
Financial Indices
105
100
44 RETAIL
RENTAL
GROWTH Y-O-Y
95
90
4Q11
ONE COMPLETION EACH IN PRIME OTHERS AND NOIDA

4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Financial Indicators are for the Prime South.
Quarterly supply was recorded at 0.8 million sq ft, the highest level in
seventeen quarters. Worldmark 1 in Prime Others and Gardens Galleria in
Noida became operational with healthy commitment rates.
Vacancy rose slightly by 50 bps q-o-q to 25%, with the highest level being
recorded in Prime Others.
RENTS AND CAPITAL VALUES RISE MARGINALLY IN PRIME OTHERS
Physical Indicators
180
High quality malls were the first preference for retailers and as such,
landlords of some prime malls increased asking rents. Some deals in 3Q15
were transacted at higher rents. Tenant mix repositioning and limited vacancy
resulted in competition for premium space.
A lack of quality assets for sale continued to limit investment activity.
Thousand sqm
150
120
90
OUTLOOK: PROJECTS WITH HEALTHY COMMITMENTS NEAR COMPLETION
60
Upcoming quality projects with healthy pre-commitments are likely to aid

improved absorption volumes going forward. Availability of quality mall space
is expected to continue to restrict absorption and leasing.
Global retailers, hypermarkets, multiplexes and F&B outlets are likely to

be more active in expanding their store networks. However, the strong
performance of online retailing is expected to play an important role for
bricks-and-mortar retailers in determining their future growth plans.
30
0
11
12
Completions
13
14
15F
16F
Future Supply
Source: JLL
is for 4Q15.
Note: Delhi Retail refers to Delhi NCRs Overall Prime retail market.
Some underperforming malls convert retail space

to office use and this contributes to a decline in
overall vacancy.
MUMBAI
1.2%
INR 252
STAGE IN CYCLE
Rents
Rising
F&B AND APPAREL RETAILERS MAIN DEMAND DRIVERS

Leasing activity in 3Q15 was mostly concentrated in malls in the Suburbs and
Prime South, and prime high street locations across the city.
The two categories that dominated leasing activity during the quarter were
F&B and apparel, but home furnishings and hypermarkets also supported
demand.
Financial Indices
120
115
110
NO NEW SUPPLY IN THE QUARTER

It was observed that some landlords of malls with high levels of prolonged
vacancy converted retail space to office use.
As at end-3Q15, total retail stock in Mumbai was 19 million sq ft and vacancy

19.8%. Both stock and vacancy declined q-o-q due to the conversion of retail
space to office use.
RISING DEMAND AND LOW VACANCY IN PREMIUM MALLS PUSH UP RENTS

Prime South and Suburbs recorded a marginal rise in rents, owing to low
vacancy in quality malls.
Overall market yields remained stable at 11.2%, as rents and capital values
continued to move in tandem.
100
95
90
4Q11
Rents and capital values are likely to appreciate in good quality malls and
prominent high street locations, owing to increased interest from retailers for
prime space.
4Q14
4Q15
4Q16
Physical Indicators
350
300
250
Thousand sqm
Peripheral locations of the Mumbai Metropolitan Region are increasingly

Leasing volumes in 4Q15 are likely to rise due in part to a new mall that is
expected to become operational in the Suburbs. This mall is expected to have
a healthy level of commitment upon opening.
4Q12
4Q13
Rental Value Index

Source: JLL
Financial Indicators are for the Prime South.
OUTLOOK: PRIME MALLS LIKELY TO SEE HIGHER RENTS AND CAPITAL VALUES

105
200
150
100
50
0
11
12
Completions
13
14
15F
16F
Future Supply
Source: JLL
is for 4Q15.
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
Retail investment market activity remains

elevated and yields continue to trend down across
a variety of sub-sectors.
SYDNEY
Andrew Quillfeldt, Associate Director Strategic Research,

Australia
120
Index
AUD 1,933
Rents
Stable
The current revitalisation of the Sydney CBD, particularly in Pitt Street Mall,
Martin Place and George Street, is being driven by commercial developments,
international retailers and the construction of a new light rail system.
A number of significant leasing transactions occurred in 3Q15, including Tesla

Motors in 20 Martin Place (1,654 sqm) and H&M subsidiary, COS, at the
redeveloped 5 Martin Place. Leasing activity in major suburban centres
continues to be supply led, via major redevelopments of existing regional and
sub-regional centres.
100
90
SUPPLY ADDITIONS PICK UP IN 2015

4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16

Source: JLL
Supply of retail space in Sydney continues to gradually rise from the low point
in 2013. Three projects completed in 3Q15 totalling 50,600 sqm. Approximately
221,900 sqm is expected to complete in the 2015 calendar year, representing
the first year of above-trend supply since 2010.
During 3Q15, AMP Capital and Scentre Group commenced the AUD 310 million
redevelopment of Warringah Mall (9,000 sqm extension); while Lendlease and
GPT started works on the AUD 240 million redevelopment of Macarthur
Square (16,000 sqm extension).
Physical Indicators
300
SYDNEY IS LIKELY TO LEAD THE NATIONAL RENTAL GROWTH RECOVERY PROFILE
250
Thousand sqm
0.0%
STAGE IN CYCLE
110
46 RETAIL
SQM PER ANNUM,

NET ON GLA
STRONG STATE ECONOMIC ACTIVITY SUPPORTING MARKET FUNDAMENTALS
Financial Indices
80
4Q11
RENTAL
GROWTH Y-O-Y
Further modest rental growth was recorded in the CBD and bulky goods subsectors in 3Q15, as a result of new sources of tenant demand in the CBD and
a strong recovery in household goods spending.
Investment activity remained healthy in 3Q15, and a number of major assets

are currently for sale which are likely to boost the volume of transactions in
4Q15. Further yield compression (25 to 50 basis points) was recorded across
all monitored sub-sectors in 3Q15.
200
150
100
50
0
11
12
Completions
13
14
15F
16F
Future Supply
OUTLOOK: SYDNEY IS EXPECTED TO CONTINUE TO OUTPERFORM

Economic drivers will remain supportive of retail leasing conditions in 2016.

Landlords are continuing to progress with projects to refurbish and expand
existing centres. Supply is projected to moderate in 2016 before increasing
again in 2017 and 2018, based on the current pipeline.
Investment market conditions are likely to remain buoyed by strong demand

for assets, with yields trending slightly lower over the next 12 months,
reaching their low point for the current cycle.
Source: JLL
is for 4Q15.
Note: Sydney Retail refers to Sydneys overall retail market.
An improvement in retail spending growth is

fuelling investor demand and yield compression.
Andrew Quillfeldt, Associate Director Strategic Research,
Australia
SQM PER ANNUM,

NET ON GLA
0.0%
AUD 1,462
STAGE IN CYCLE
Rents
Stable
DRIVERS OF RETAIL SPENDING SUPPORT IMPROVING LEASING CONDITIONS
Financial Indices
Retail turnover grew by 4.9% y-o-y in August 2015. Strong population growth,
improving labour market conditions and positive housing market activity in
Victoria continued to aid retail spending growth.
International retailers continued to underpin new developments. South
African retailer, Mr Price (MRP), began its Australian expansion, committing
to its first store at GPTs Melbourne Central in the CBD. H&M, Uniqlo and MRP
also committed to QICs redevelopment of Eastland Shopping Centre, which
partially completed in October.
120
115
110
Index
105
100
95
SUPPLY IN MELBOURNE REMAINS MODERATE BY HISTORICAL STANDARDS

The average vacancy rate for Melbourne remained stable in the first half of
2015. This was primarily driven by a decrease in the CBD vacancy rate back
closer towards its long-term average level.
Six major projects completed in 3Q15 totalling 53,500 sqm, following 49,900
sqm in 2Q15 and 24,500 sqm in 1Q15. Supply for 2015 is expected to be above
the 2014 level but low in a historical context, with 160,100 sqm completed or
scheduled to complete by year-end, compared with the long-term average of
205,400 sqm.
90
4Q11
Retail investment volumes in Victoria were stable in 3Q15 at AUD 432.8 million.
Momentum in the national investment market has increased notably since
late-3Q. Stud Park Shopping Centre transacted for AUD 154 million, reflecting
an equivalent yield of 5.94%; and Spencer Outlet Centre transacted for
AUD 125 million reflecting a reported initial yield of 5.04%.
OUTLOOK: RETAILERS BUOYED BY ONGOING RETAIL SPENDING RECOVERY

While the outlook for retail spending growth is positive, increased competition
between existing retailers and new retailers expanding into Australia will
likely result in just a mild recovery in average rents across the market. Low
levels of new supply should be supportive of competitive market conditions
for retailers.
Investor demand is likely to remain solid and increasingly we expect to see

more owners take advantage of ideal market conditions and asset pricing
by disposing of stabilised core assets to recycle capital into redevelopment
projects.
Note: Melbourne Retail refers to Melbournes overall retail market.
4Q15
4Q16
Physical Indicators
350
300
250
Thousand sqm
Further rental growth was recorded in the prime CBD and bulky goods subsectors in 3Q15. Average rents (across all sub-sectors) have grown by 0.75%
on an annual basis, the fastest pace since 1Q12, representing the beginning of
a slow recovery.
4Q14

Source: JLL
FURTHER EVIDENCE OF YIELD COMPRESSION EMERGES

4Q12
4Q13
Rental Value Index
200
150
100
50
0
11
12
Completions
13
14
15F
16F
Future Supply
Source: JLL
is for 4Q15.
47 RETAIL
RENTAL
GROWTH Y-O-Y
MELBOURNE
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49 RESIDENTIAL
Residential
Housing prices face downside risks despite record

breaking sales in the top-end of the market.
HONG KONG
120
Index
60
Rents
Rising
Seasonal demand from families boosted leasing activity during the summer.
The end of the peak season saw inquiries shifting towards smaller units
with monthly rentals between HKD 50,00080,000in non-traditional luxury
districts, such as the Western District on Hong Kong Island.
40
20
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
GOVERNMENT ON TRACK TO REACH ITS ANNUAL LAND SUPPLY TARGET

Nine luxury residential projects (177 units) are expected to be issued with
Occupation Permits in 3Q15, providing the largest quarterly supply since 3Q12.
On Hong Kong Island, 24 Po Shan Road in Mid-levels and 8 Mount Nicholson
Road on The Peak will add 38 and 67 luxury units, respectively to the market.
The government announced that the private residential land supply in the first
three quarters of FY2015/16 is expected to amount to 16,700 units, close to
achieving its annual private land supply target of 19,000 units (by March 2016).
Physical Indicators
700
A HOUSE ON THE PEAK BREAKS RECORD IN ASIA
600
500
Units
HKD 45.2
Preliminary data showed 88 residential properties priced above HKD 50 million

changing hands in 3Q15, down 31.8% q-o-q, as the lack of new launches,
interest rate uncertainty and stock market turmoil all negatively affected
buying activity. Notwithstanding, mass residential launched during the quarter
were still generally well-received.
80
50 RESIDENTIAL
4.5%
STAGE IN CYCLE
100
Rents edged up by 1.2% q-o-q, after advancing by 1.6% q-o-q in 2Q15.

Traditional luxury districts displayed more modest rental increases than the
rest of the market, given a shift in preference towards properties requiring
smaller rent payments.
Supported by record-breaking end-user purchases and a strong land sales

market, capital values continued to hold up, enabling market yields to remain
largely stable. In the ultra-luxury segment of the market, a house at 22 Barker
Road on The Peak was sold for HKD 1.50 billion or HKD 151,653 per sq ft, SA,
breaking a record for unit price in Asia.
400
300
200
100
0
SQ FT PER MONTH,
NET ON SA
SALES MOMENTUM DECELERATES AMID UNCERTAINTIES
Financial Indices
0
4Q11
RENTAL
GROWTH Y-O-Y
11
12
Completions
13
14
15F
16F
Future Supply
Source: JLL
is for 4Q15.
OUTLOOK: ANTICIPATED INTEREST RATE RISE REMAINS AS A CONCERN

With the supply pipeline expanding and uncertainty about an interest rate
rise, investors will likely stay on the sidelines. As such, we expect luxury
home prices to hold up in 4Q15, but likely face increasing pressure as demand
wanes, culminating in a correction of 05% in 2016.
Whilst availability remains tight across all budget bands, we may see higher
vacancy in the top-end of the market going forward. We expect rental growth
to remain in the range of 510% for the full year and moderate to 05% in 2016.
Note: Hong Kong Residential refers to Hong Kongs Overall Luxury residential market.
Upgrade demand to support strong sales volumes

through end-2015.
SQM PER MONTH,

GROSS ON GFA
0.3%
RMB 127
STAGE IN CYCLE
Rents
Rising
POSITIVE POLICY ENVIRONMENT SPURS SALES MOMENTUM
Financial Indices
Sales volumes for the high-end residential market continued to expand,

thanks to the further loosening of credit policies. A total of 635 luxury
apartment units were sold in the quarter, up 3.9% q-o-q; meanwhile, 299 highend villas were sold in the same period, up 69.9% q-o-q.
High-end residential leasing demand remained soft. Many serviced
apartments attempted to widen their tenant base by attracting more domestic
tenants or by signing more short-term leases. Net absorption for serviced
apartments registered 38 units.
160
150
140
Index
100
After no new supply for a fifth consecutive quarter, the vacancy rate for
serviced apartments continued to slide, falling 0.4 percentage points q-o-q to
11.5%.
FIERCE COMPETITION WEIGHS ON LUXURY APARTMENT PRICE GROWTH

Supported by the larger transaction volumes, primary capital values for the
high-end villa market increased 4.2% q-o-q. However, under fierce
competition and due to the high prices of new units, capital values for luxury
apartments increased just 1.9% q-o-q.
Serviced apartment and luxury apartment rents were largely flat under the
stable demand environment. High-end villa rents, however, affected by
weakening demand, declined further, dropping 1.3% q-o-q to RMB 110.2 per
sqm per month.
90
4Q11
Sales volumes should remain strong in 4Q15 for both the luxury apartment and
villa markets. Although restrictions on foreign housing purchases in China
were recently lifted, the relaxation in policy is not expected to have a major
impact. However, reverting to the more lenient rules will allow foreign endusers to support the current strength in demand.
A run-up in housing prices is not expected given that developers still face
intense competition and pressure from year-end sales targets. Rents for
serviced apartments are unlikely to rise considering that the year-end is a
slow season for the leasing market.
Note: Beijing Residential refers to Beijings Overall Luxury and High-end residential market.
4Q14
4Q15
4Q16
Capital Value Index
Physical Indicators
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
OUTLOOK: SALES VOLUMES TO REMAIN STRONG UNTIL YEAR-END
4Q12
4Q13
Rental Value Index

Source: JLL
Financial Indicators are for the Overall Luxury
market.
Units
The rebound in transaction volumes gave developers more confidence and

571 luxury apartment units were put up onto the sales market in 3Q15, up 4.8%
q-o-q. The high-end villa market saw 750 new units enter the sales market
over the same period, more than doubling the supply amount which entered
in 2Q15.
120
110
IMPROVED SENTIMENT DRAWS MORE PROJECTS TO SALES MARKET

130
51 RESIDENTIAL
RENTAL
GROWTH Y-O-Y
BEIJING
11
12
Completions
13
14
15F
16F
Future Supply
Source: JLL
is for 4Q15.
Financial Indicators are for the Overall Luxury
market.
Sales on track to reach a six-year high in 2015.
SHANGHAI
Joe Zhou, Head of Research, China
130
Rents
Rising
In the leasing market, demand improved slightly in 3Q15 as some MNCs in

the automotive sector deployed additional expatriates to Shanghai to support
expansion plans. With no new projects opening in the quarter, vacancy in the
serviced apartment market fell by 1.2 percentage points to 12.2% in 3Q15.
115
Index
RMB 135.5
Accommodative policy and robust upgrade demand allowed strong sales

momentum to continue into 3Q15. After surging 104% q-o-q in 2Q15, sales
volumes in the primary market stayed high in 3Q15 with 4.0 million sqm sold,
down 0.1% q-o-q but up 81.2% y-o-y. Likewise, the high-end segment saw 761
units sold in 3Q15, down 2.0% q-o-q but up 122% y-o-y.
120
110
105
100
95
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
NEW LAUNCHES ACCELERATE AMID STRONG MARKET SENTIMENT

In the high-end segment, developers accelerated new launches in light of

buoyant buying sentiment. A total of 1,241 units from 7 projects were launched
for sale in 3Q15, the highest quarterly total since 4Q08.
In the leasing market, no new serviced apartment projects opened in the

quarter. Meanwhile, The Bund Residence in Huangpu District put 106 units
onto the strata-titled market for sale, effectively reducing the markets total
serviced apartment stock.
Physical Indicators
4,000
3,500
HIGH-END PRICES CONTINUE TO RISE
3,000
On the back of better-than-expected sales, developers continued to raise

their prices in 3Q15. On average, primary prices for high-end apartments grew
1.5% q-o-q to RMB 82,207 per sqm in 3Q15.
In the leasing market, average rent for serviced apartments edged up by 0.2%
q-o-q, boosted by improving demand in the presence of limited new supply.
2,500
Units
3.4%
STAGE IN CYCLE
125
52 RESIDENTIAL
SQM PER MONTH,

GROSS ON GFA
SALES MOMENTUM REMAINS STRONG
Financial Indices
90
4Q11
RENTAL
GROWTH Y-O-Y
2,000
1,500
1,000
OUTLOOK: 2015 LIKELY TO END ON A STRONG NOTE
500
0
11
12
Completions
13
14
15F
We expect the strong sales momentum to carry over through the fourth
quarter, given the governments continued accommodative policy stance.
With sales volumes likely to reach a six-year high, Shanghais high-end prices
are likely to be on the rise going forward.
In the leasing market, with very limited supply in the pipeline, serviced
apartment vacancy should continue to fall over the remainder of 2015.
However, we expect rental growth will be minimal in the fourth quarter
as serviced apartments continue to face competition from non-serviced
apartments serving similar residents.
16F
Future Supply
Source: JLL
is for 4Q15.
Note: Shanghai Residential refers to Shanghais high-end residential market.
Continued weakness in the Singapore residential

market as the economy slows.
Ong Teck Hui, National Director Research, Singapore
10.5%
SGD 3.81
STAGE IN CYCLE
Decline
Slowing
DEMAND WEAKENS FURTHER

Preliminary estimates, based on Urban Redevelopment Authority (URA) data,

showed 380 non-landed residential units transacted in Prime districts 9, 10
and 11 in 3Q15. This was a decline of 21% q-o-q but close to the sales volume
of 3Q14. With buyer sentiment already weighed down by the cooling
measures, the seventh lunar month, which is a traditional low period, further
discouraged buyers from making purchases.
Financial Indices
110
100
90
80
No new launches in the Prime districts were recorded in 3Q15. Primary sales
volumes decreased to 107 units in 3Q15 from the 128 units in 2Q15. Similarly,
resale volumes in the quarter were also lower, down 22% q-o-q to 266 units.
70
60
4Q11
NEW SUPPLY DECLINING BUT UNSOLD STOCK INCREASING

It is estimated that 119 prime residential units were completed in 3Q15. Annual
new supply in the prime districts is expected to be reduced significantly over
the next few years ranging between 1,0001,500 units per annum. The
annual average recorded between 2010 and 2014 was 3,100 units. This
situation may help ease supply pressures in the prime residential market.
However, the number of completed and unsold units recorded by the URA
reached more than 1,200 units at end-3Q15, which is about 23% higher than
the 973 units in 2014 and 136% higher than the 509 units in 2013.
Physical Indicators
5,000
Typical Prime capital values fell 1.4% q-o-q to SGD 1,212 per sq ft, while those
for the Luxury Prime segment declined 2.0% q-o-q to SGD 2,017 per sq ft.
Buyer interest remained subdued due to ongoing cooling measures and the
expectation of further price corrections.
OUTLOOK: FURTHER PRESSURE ON RENTS AND CAPITAL VALUES

The number of employment-pass holders has been relatively unchanged since

2011 due to government regulations that limit the intake of foreign labour
into Singapore. As a result, demand for prime residential units has stagnated
while prime stock has grown and competition from newer developments in
the city fringe areas has increased. Therefore rents are expected to continue
trending lower.
Capital values are expected to decline further as investor caution prevails

amid ongoing cooling measures, an economic slowdown and interest rate
uncertainty.
Note: Singapore Residential refers to Singapores Overall Prime and Luxury residential markets.
4,000
3,000
Units
Gross rents in the Typical Prime market fell 1.9% q-o-q to SGD 3.44 per sq ft
per month, while in the Luxury Prime segment rents declined 2.9% q-o-q to
SGD 3.81. A higher number of leasing transactions were recorded in 3Q15
relative to 2Q15, with many existing tenants moving to higher quality premises
with lower rents.
4Q14
4Q15
4Q16
RV Index (Luxury)
CV Index (Luxury)

Source: JLL
RENTS AND CAPITAL VALUES DECLINE BUT LEASING VOLUMES RESILIENT

4Q12
4Q13
RV Index (Prime)
CV Index (Prime)
53 RESIDENTIAL
SQ FT PER MONTH,
GROSS ON GFA
Index
RENTAL
GROWTH Y-O-Y
SINGAPORE
2,000
1,000
11
12
Completions
13
14
15F
16F
Future Supply
Source: JLL
is for 4Q15.
Luxury condominiums in prime locations remain

highly desirable despite the weak
economic outlook.
BANGKOK
120
Index
Growth
Slowing
Six projects completed in 3Q15 and had achieved a combined sales rate of
90% upon completion. Of these projects, those located in desirable
neighbourhoods and those near mass transit achieved the highest sales rates.
105
100
95
90
85
LABOUR SHORTAGES CONTINUE TO PLAGUE CONSTRUCTION SCHEDULES

4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index
Of the eight condominium projects that were scheduled to complete in 3Q15,

two were delayed because of labour shortages, following a pattern seen
frequently in recent quarters. The six new high-end projects that completed in
the quarter added 997 units to the existing stock.
New luxury apartments, The Willows and Monet House were launched in
3Q15 and resulted in the total apartment stock rising to 4,303 units. The
vacancy rate in the apartment sector rose from 6.2% in 2Q15 to 7.3% in 3Q15,
largely as a result of the new supply coming on line.

Source: JLL
Physical Indicators
6,000
SLIGHT RENTAL DECLINE; HEALTHY DEMAND FOR PRIME DEVELOPMENT SITES
5,000
Gross rents for condominiums edged down by 0.2% q-o-q to THB 515 per sqm
per month. Apartment rents declined by 1.1% q-o-q to THB 359 per sqm per
month. Capital values remained at THB 111,225 per sqm in 3Q15, with market
yields were generally stable.
Sansiri PCL bought a 3,344 sqm site on Sukhumvit Soi 38 for THB 1.421 billion
and a 7,022 sqm site on Pradipat Rd. for THB 1.3 billion, while divesting a 3,013
sqm plot near BTS Onnut to BTS Sansiri for THB 828 million. SC Asset PCL
bought a development site in Thong Lor for THB 428,000 per sqm and Richy
Place PCL acquired a project under construction on Sukhumvit Soi 49 from
Woraluck Property valued at THB 945 million.
4,000
Units
THB 515
Four new projects were launched in 3Q15 with a combined pre-sales rate of
68% at the close of the quarter. One of the four projects, The Line Sukhumvit
developed by a joint venture between Sansiri PCL and BTS Group, sold out
completely within days of launch, owing in part to healthy pre-sales
generated from road show events in Hong Kong, Taiwan and Singapore.
110
54 RESIDENTIAL
0.5%
STAGE IN CYCLE
115
3,000
2,000
1,000
0
SQM PER MONTH,

GROSS ON NLA
HEALTHY DEMAND FOR NEW LAUNCHES AND NEW COMPLETIONS
Financial Indices
80
4Q11
RENTAL
GROWTH Y-O-Y
11
12
Completions
13
14
15F
16F
Future Supply
Source: JLL
is for 4Q15.
OUTLOOK: STRONG DEMAND FOR PRIME PROJECTS EXPECTED

Almost 5,300 units are expected to complete by 3Q16 in the Central Business
Areas (CBA), equivalent to 16% of current stock. With more than 88% of these
units already pre-sold, we expect the overall unsold rate in the CBA to remain
in the low single digits throughout the next 12 months.
With a small amount of new apartment supply in the pipeline and healthy
competition between luxury apartments, the condominium rental market and
traditional serviced apartment market, we expect rents in all sectors to grow
very slowly, with yields compressing slightly.
Note: Bangkok Residential refers to Bangkoks Central Business Areas (CBA) high-end and luxury
residential market.
Price growth remains positive, but supply

pressures expected to temper growth
moving forward.
MANILA
Claro dG. Cordero, Jr., Head of Research, Philippines
SQM PER MONTH,

6.1%
PHP 761
STAGE IN CYCLE
Rents
Rising
DEMAND REMAINS STRONG DESPITE SLOWER ECONOMIC GROWTH IN 1H15
Financial Indices
The entry and expansion of multinational companies (MNCs) in the country

drove growth in residential demand, as it encouraged expatriate employees to
locate in residential developments within and on the fringe areas of business
centres such as Makati CBD and Bonifacio Global City (BGC).
The continued positive performance of the economy supported demand for
residential units despite relatively slower growth in 1H15. Sales and leasing
enquiries for mid-to-high-end residential units remained healthy.
160
150
140
Index
The vacancy rate stayed at a manageable level of 6.3%, marginally lower

q-o-q, despite the high volume of supply added in 3Q15.
YIELDS SLIGHTLY CONTRACT AS CAPITAL VALUES GROW MODERATELY

Rents of high-end residential units continued to grow moderately at 1.0%

q-o-q on the back of robust demand from expatriate employees of MNCs in
various sectors such as offshoring and outsourcing (O&O).
Investor interest remained healthy and underpinned a rise in capital values of
1.6% q-o-q to PHP 153,010 per sqm. As a result, investment yields slightly
contracted to 6.0%.
OUTLOOK: SUPPLY PRESSURES LIKELY TO PUSH VACANCY UPWARDS

The expected positive performance of the O&O sector, healthy inflow of

overseas Filipino remittances, increasing demand from foreign retirees, and
positive outlook for the national economy are likely to provide support for the
continued growth of the local residential market.
In the next two quarters, more than 7,000 units are expected to be completed
and the addition of this large stock is expected to heighten supply pressures
and push the vacancy rate upwards.
Note: Manila Residential refers to the Makati CBD and Fringe Residential Condominium Market.
100
90
4Q11
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Physical Indicators
12,000
10,000
8,000
Units
Three developments, namely Park Terraces Tower 1, Trion Towers 2 and The
Linear Tower 2 were completed in 3Q15, adding approximately 2,000 units to
market stock. Meanwhile, Megaworld Corporation launched San Antonio
Residences which will be built on the fringe of Makati CBD.
120
110
VACANCY STABLE AMID LARGE NEW SUPPLY

130
55 RESIDENTIAL
RENTAL
GROWTH Y-O-Y
6,000
4,000
2,000
0
11
12
Completions
13
14
15F
16F
Future Supply
Source: JLL
is for 4Q15.
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57 INDUSTRIAL
Industrial
Rental market posts its weakest quarterly growth

in three years as demand slows.
HONG KONG
180
Index
140
HKD 12.0
Growth
Slowing
Weak demand for Chinese exports and faltering sales in the domestic retail
sector saw the value of total exports and imports falling by 4.1% y-o-y and
6.7% y-o-y, respectively, through 3Q15. This marked the first time since the
GFC that aggregate trade has contracted in two successive quarters.
3PLs and retailers took a cautious view towards expansion amid a worsening
business environment, leading to a relatively quieter leasing market.
Notwithstanding, Chinese e-commerce operator Baozun expanded its
warehousing network in Hong Kong by leasing 13,200 sq ft at the Goodman
Shatin Logistics Centre.
120
100
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
VACANCY IN RAMP ACCESS WAREHOUSES EDGES HIGHER

Returning space from a handful of ramp access warehouses contributed to

vacancy in the overall market edging up to 2.4%. Vacancy in cargo-lift access
warehouses, however, remained tight at below 1.0%. Strong demand for cost
effective space saw some shadow space being backfilled.
The completion date of Mapletrees warehouse development in Tsing Yi has

been brought forward from 2017 to early-2016, given the faster-than-expected
construction progress. No new supply was completed in 3Q15.
Physical Indicators
400
BOTH LEASING AND INVESTMENT ACTIVITY REMAIN SUBDUED
350
300
Thousand sqm
9.2%
STAGE IN CYCLE
160
In spite of rental increases in cargo-lift access warehouses, growth in the

overall market moderated amid subdued leasing activity. Rents in the top-end
of the market faced increased downward pressure as vacant and shadow
space started to pile up.
Capital values rose only modestly against a muted investment market, with
volumes in the broader industrial market slumping by 73.5% q-o-q as investors
adopted a wait-and-see attitude. The absence of en bloc industrial properties
changing hands came amid interest rate uncertainties.
250
200
150
100
58 INDUSTRIAL
SQ FT PER MONTH,
NET ON GFA
LEASING DEMAND REMAINS SLUGGISH AMID A WORSENING LOCAL ECONOMY
Financial Indices
80
4Q11
RENTAL
GROWTH Y-O-Y
50
0
11
12
Completions
13
14
15F
16F
Future Supply
Source: JLL
is for 4Q15.
OUTLOOK: CHINA SLOWDOWN TO CONSTRAIN MARKET GROWTH

A slowdown in Chinese demand and weakness in global trade markets is

likely to continue to weigh on Hong Kongs external trading sector. As a result,
we expect a further slowdown in rental growth over the next 12 months, with
demand moderating due to ongoing headwinds on both the external and
domestic fronts.
Investors are likely to be more selective by focusing on high-quality

warehouse assets, especially those with upgrading potential. High prices
should also continue to divert investors interest towards smaller-sized
industrial properties owing to the more affordable lump sum payments
involved.
Note: Hong Kong Industrial refers to Hong Kongs Industrial Warehouse market.
Stable demand in a tight market continues to

prop up rents.
SQM PER DAY,

2.4%
RMB 1.10
STAGE IN CYCLE
Rents
Rising
MANUFACTURING AND 3PL FIRMS REMAIN THE MAIN DEMAND DRIVERS
Financial Indices
Limited leasable space continued to restrain leasing activity. Due to the

supply-constrained market, net absorption registered just 12,300 sqm in 3Q15,
down 76.3% q-o-q. Manufacturing was one of the most active industries, with
several companies from the sector closing deals in Daxing and emerging
Pinggu submarkets.
Third party logistics (3PL) firms were also busy. SF Express utilised the
opportunity to expand in Beijing Airport Logistics Park (BALP) after Taobao
left earlier in the quarter to consolidate operations at its regional distribution
centre in Wuqing, Tianjin; just 9,000 sqm of available space remains in the
previously fully occupied submarket.
130
125
120
115
Index
110
105
100
95
90
4Q11
VACANCY DECLINES DUE TO STABLE DEMAND AND LACK OF NEW SUPPLY
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index
No new supply entered in 3Q15 and no new projects are expected to come
online until early 2016. Prologis Beijing Capital Airport Logistics Centre II,
previously scheduled to open in 4Q15, was postponed due to construction
delays.

Source: JLL
Under stable demand and absence of new supply, the vacancy rate continued
to slide, falling 0.7 percentage points q-o-q to 3.3%.
Physical Indicators
600
LANDLORDS CONTINUE TO PUSH UP RENTS IN THE LOW VACANCY MARKET
Overall rents continued to increase, rising 1.3% q-o-q after landlords

adjusted their tenant mix to exploit rental growth opportunities in the supplyconstrained market. Capital values followed the rental trend, also growing at
1.3% q-o-q. Yields remained stable as there was no evidence to support any
change in yields.
Investors remained interested in logistics properties, but the lack of tradable
projects on the market continued to restrict deals. More developers were
looking for second-hand land since no new warehouse land supply has come
to the market for more than a year.
OUTLOOK: RENT TO MAINTAIN UPWARD MOMENTUM IN TIGHT MARKET

Manufacturing, 3PL and small e-commerce firms along with brick-and-mortar

retailers should continue to support stable demand and further push down
vacancy. The undersupply condition is expected to drive annual appreciation
to 3.0% by end-2015.
Though vacancy is projected to climb soon after Prologis Beijing Capital

Airport Logistics Centre II opens in early 2016, the spike should only be
temporary as the project is expected to fill up quickly given its prime location.
Note: Beijing Industrial refers to Beijings prime non-bonded logistics market.
500
Thousand sqm
400
300
200
100
0
11
12
Completions
13
14
15F
16F
Future Supply
Source: JLL
is for 4Q15.
59 INDUSTRIAL
RENTAL
GROWTH Y-O-Y
BEIJING
Net absorption is strong, but limited room for

rental growth due to large upcoming supply.
SHANGHAI
Joseph Kim, Associate Director - Research, Shanghai
SQM PER DAY,

0.5%
RMB 1.28
STAGE IN CYCLE
Growth
Slowing
LEASING ACTIVITY IMPROVES DUE TO STRONG DEMAND FROM 3PLS
Financial Indices
140
Non-bonded net absorption rose from 67,000 sqm in 2Q15 to over 90,000 sqm in
3Q15, stronger than had been expected given the quarters lack of new supply.
Bonded absorption reached 10,000 sqm, due in part to the recent rise in crossborder e-commerce as well as increased imports by the automobile industry.
3PLs contributed almost 90% of non-bonded absorption, leasing space in the

highly sought-after west Shanghai submarkets and traditionally less popular
Fengxian and Lingang. In addition, traditional retailers such as Ikea were also
active in the quarter.
130
120
Index
RENTAL
GROWTH Y-O-Y
110
100
90
80
4Q11
NON-BONDED VACANCY CONTINUES TO DROP AMIDST A LACK OF NEW SUPPLY

4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Financial Indicators are for the Non-bonded
market.
Strong absorption along with an absence of new completions contributed to a

fall in non-bonded vacancy, which fell 2.1 percentage points to 11.2% in 3Q15.
Non-bonded vacancy in Shanghai at end-3Q15 was at its lowest level since
2Q14, with much of the vacancy that accumulated over 2H14 now committed.
In the bonded market, a government-backed firm completed a 120,000 sqmproject in the Lingang submarket. The project was fully vacant at the end of
the quarter, contributing to a rise in bonded vacancy to 17.1% despite this
quarters improved take-up.
Physical Indicators
600
LANDLORDS KEEP NON-BONDED RENTS FLAT TO REDUCE VACANCY
Thousand sqm
500
400
Non-bonded rents were flat for a fourth consecutive quarter. Landlord

sentiment showed some improvement in the quarter as strong demand
continued to chip away at lingering vacancies, however, most landlords
continued to prioritise reducing vacancy over raising rents.
There were no en bloc transactions in Shanghai city. LOGOS acquired two

logistics projects in the northern satellite market of Taicang. Investment
activity remained upbeat on the entity level as well, with Apg and E-Shang
jointly committing an additional USD 285 million to their ventures in China.
300
200
100
60 INDUSTRIAL
0
11
12
Completions
13
14
15F
16F
Future Supply
Source: JLL
is for 4Q15.
OUTLOOK: NEW SUPPLY TO LIMIT RENT GROWTH DESPITE STRONGER DEMAND

Three projects totalling 400,000 sqm are scheduled for completion in 4Q15,
including the 250,000 sqm-GLP Baoshan project. In addition, over 600,000 sqm
of new supply is planned for 2016. If completed on schedule, this wave of
supply is likely to push up market vacancy.
Considering the large upcoming supply and potential for rising amounts of
uncommitted space, landlords will be wary about raising rents aggressively,
even considering the recent improvement in demand. As a result, rental
growth in Shanghai is expected to remain at a moderate level for the next 12
months.
Note: Shanghai Industrial refers to high-quality modern warehouses in Shanghai city.
Robust demand for modern distribution centres

in Tokyo persists.
TOKYO
TSUBO PER MONTH,

GROSS ON NLA
5.9%
JPY 4,197
STAGE IN CYCLE
Rents
Rising
DEMAND COMES FROM VARIOUS TENANT TYPES, BUT STRONGEST FROM 3PLS
Financial Indices
Industrial production and exports growth softened in the first two months of
3Q15, impacted by a slowdown in regional trade. In August, industrial
production edged down (-0.5% m-o-m) for the second consecutive month,
while export growth (3.1% y-o-y) also decelerated for a second straight
month.
In spite of mixed economic cues, demand remained robust with food
wholesalers, manufacturers and third party logistics players (3PLs) taking up
space. Net absorption slowed to 68,000 sqm in 3Q15; however, the cumulative
net take-up for the first three quarters of 2015 surpassed the full year total for
2014, reflecting the sectors recent strong performance.
150
140
130
Index
The vacancy rate was 2.8% at end-3Q15, decreasing 110 bps q-o-q and 170
bps y-o-y. Vacancy decreased in the Bay and Inland areas, with the Bay area
vacancy being around 1%.
Prologis Park Higashi Matsuyama (70,000 sqm, GFA) and GLP Kashiwa II
(32,000 sqm, GFA) were added to the development pipeline in the Inland area.
Both projects are due for completion in 2017.
110
100
90
80
4Q11
VACANCY DECLINES TO 2.8%

120
Physical Indicators
1,000
Capital values increased 2.5% q-o-q and 16.9% y-o-y, marking the 12th
consecutive quarter of increase and reflecting further yield compression.
J-REITs remained active in the investment market with GLP Reit acquiring GLP
Shinkiba for JPY 11.54 billion (NOI cap rate of 4.7%).
OUTLOOK: SLOWER GROWTH EXPECTED FOR RENTS AND CAPITAL VALUES

A recovery in regional and global demand should underpin an improvement in

industrial production and exports. According to Oxford Economics, industrial
production is expected to increase 1.7% in 2016, while exports grow by 5.3%.
Vacancy is likely to rise as major new supply enters the market; however,
demand should remain healthy. Rents are expected to rise but at a slower
pace. In the investment market, capital values are expected to grow
moderately as cap rates compress further.
Note: Tokyo Industrial refers to Greater Tokyos Prime logistics market. Compiled in collaboration with
Ichigo Real Estate Services Co., Ltd.
Thousand sqm
1,200
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
RENTS CONTINUE TO RISE, WHILE CAP RATES COMPRESS

Rents averaged JPY 4,197 per tsubo per month in 3Q15, increasing 0.3% q-o-q.
Rents continued to edge up for the 11th consecutive quarter, as the market
tilted in favour of landlords on the back of limited available space.
4Q12
4Q13
Rental Value Index
800
600
400
200
0
11
12
Completions
13
14
15F
16F
Future Supply
Source: JLL
61 INDUSTRIAL
RENTAL
GROWTH Y-O-Y
Owner-occupation drives demand for business

park space.
SINGAPORE
120
Rents
Falling
Total take-up in the first three quarters of 2015 is estimated at 165,000 sqm, a
marked improvement on the annual total of 83,000 sqm in 2014. However, part
of the rise in take-up in 2015 was due to the physical occupation of space by
tenants of buildings completed in 2014.
105
Index
SGD 3.83
Demand for business park space remained sporadic with limited interest
from financial institutions. However, some support came from software and
IT companies. Pre-commitment rates for newly completed developments
continued to be high as most new facilities in recent quarters have been
owner occupied.
110
100
95
90
85
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
ONE OWNER-OCCUPIED FACILITY COMPLETES

Based on data from the Building and Construction Authority of Singapore, a

single business park development by Soo Kee Jewellery (13,000 sqm) was
completed in 3Q15. This makes an estimated 69,000 sqm of space completed
as at YTD September 2015, the majority of which was built-to-suit.
Business park vacancy improved in 3Q15, declining by 40 bps q-o-q as new

supply was limited and take-up stayed relatively healthy.
Physical Indicators
300
30
ECONOMIC UNCERTAINTY DAMPENING INVESTMENT SENTIMENT
250
25
200
20
150
15
Investment volumes for the industrial sector grew 12.8% q-o-q to

SGD 196 million, on the back of a handful of land plots transacted with prices
above SGD 40 million. The business park sector recorded a single sale at
Changi Business Park, with Kingsmen Creative accepting an offer from
Jurong Town Corporation to acquire their site for SGD 7.07 million.
100
10
50
It is still too early to infer that there is an improvement in sentiment, as some

industrial transactions were a result of business consolidation. In addition,
the cloudy economic environment and heightened stock market volatility are
expected to see investor caution prevail.
Percent
Thousand sqm
1.0%
STAGE IN CYCLE
115
62 INDUSTRIAL
SQ FT PER MONTH,
SOFTWARE AND IT INDUSTRIES DRIVE DEMAND FOR BUSINESS PARK SPACE
Financial Indices
80
4Q11
RENTAL
GROWTH Y-O-Y
0
11
12
13
14
15F
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
OUTLOOK: TIGHT SUPPLY TO KEEP VACANCY IN CHECK

With little indication of an improvement to the macroeconomic environment

in sight, a subdued investment market is likely to persist in the short term.
Rents and capital values of business parks are likely to be under continual
downward pressure.
Taking into account that the majority of the near-term business park supply
consists of owner-occupied buildings, vacancy is likely to remain stable with
the potential to tighten further.
Note: Singapore Industrial refers to Singapores island-wide Business Park market.
Strong domestic and offshore interest for

industrial assets should place downward pressure
on yields.
SYDNEY
Nicholas Crothers, Director - Research, Australia
RENTAL
GROWTH Y-O-Y
SQM PER ANNUM,

NET ON GFA
0.4%
AUD 113
STAGE IN CYCLE
Rents
Rising
OUTER WEST PRECINCTS ARE DRIVING LEASING ACTIVITY
Financial Indices
There was 219,100 sqm of gross take-up recorded over 3Q15 37% was
of which was in the Outer South West precinct. Take-up in the quarter
was driven by purpose-built industrial facilities being announced for
manufacturing and transport companies.
Major lease deal announcements in the new build market in the quarter
include a new 55,000 sqm-production facility at Ingleburn for Freedom Foods,
and a new 22,810 sqm-warehouse and distribution facility in Marsden Park for
Linfox.
140
130
120
Index
110
100
90
SUPPLY IN 2015 WILL BE BELOW THE 10-YEAR AVERAGE

Ten developments totalling 147,200 sqm completed in 3Q15, 85% of this space
was pre-committed. A total of 22 projects (283,100 sqm) have now completed
over 2015 nineteen of these completions have been in Sydneys Outer West
precincts.
The purpose-built warehouse and distribution facility leased to Techtronic by
Frasers Property at Kangaroo Avenue in Eastern Creek was the largest
project to complete in the quarter (30,900 sqm). 2015 is expected to be a low
point in the Sydney supply cycle with supply additions in 2015 well below the
10-year average of 557,000 sqm per annum.
80
4Q11
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Financial Indicators are for Outer Central West.
Physical Indicators
800
700
YIELDS CONTINUE TO FALL
Investment transaction volumes strengthened significantly in 3Q15, with 20

assets transacting for a combined AUD 640.9 million. Singaporean based
Ascendas Real Estate Investment Trust purchased a portfolio of 26 assets
located across Sydney, Melbourne, Brisbane and Perth from GIC and Frasers
Property for AUD 1.073 billion.
OUTLOOK: DEVELOPMENT PIPELINE IS EXPECTED TO INCREASE IN 2016

Despite the lack of construction activity in 2015, there will be increased

development in 2016 an estimated 464,000 sqm of developments have
received or are awaiting development approval for next year.
Yields are expected to tighten further underpinned by strong investment

demand for industrial assets across all investor classes. The spread between
prime and secondary grade assets is also expected to compress further as
investors continue bid up the price of secondary assets.
Note: Sydney Industrial refers to Sydneys industrial market (all grades).
600
500
400
300
200
100
0
11
12
13
Take-Up (gross)
14
15F
16F
Completions
Future Supply
Source: JLL
For 2011 to 2014, take-up and completions
are year-end annual. For 2015, take-up and
completions are YTD, while future supply is for
4Q15.
63 INDUSTRIAL
Three industrial precincts had small rental growth over 3Q15. This was
predominantly a result of a lack of development land as well as few
contiguous options for large-space occupiers.
Thousand sqm
Investment activity strengthens over 3Q15, with

total transaction volumes reaching
AUD 378 million.
MELBOURNE
SQM PER ANNUM,

NET ON GFA
0.4%
AUD 82
STAGE IN CYCLE
Rents
Rising
LEASING ACTIVITY IN THE NEW BUILD MARKET REMAINS STRONG
Financial Indices
110
Gross take-up of 112,100 sqm was recorded in 3Q15 and 455,300 sqm as at
year to date September. 2015 take-up is likely to exceed 2014 levels and return
to recent averages. Approximately 60% of gross take-up was in Melbournes
South East industrial market.
Major lease deals announced in 3Q15 include Astral Pools pre-commitment

to a 21,800 sqm-warehouse at Frasers Key Industrial Park in Dandenong, and
Cyclone Tools pre-commitment to 16,000 sqm at Pellicanos Innovation Park in
Dandenong.
105
100
Index
RENTAL
GROWTH Y-O-Y
95
90
85
80
4Q11
SIX PROJECTS TOTALLING 68,500 SQM REACH PRACTICAL COMPLETION

4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16

Source: JLL
Financial Indicators are for South East.
In 3Q15, 100% of new supply was pre-committed upon completion. Design and
Construct projects have completed for DHL Express near the airport in
Tullamarine and for manufacturer Fisher and Paykel in Truganina in the West.
Melbournes supply in 2015 will be far lower than in 2014, but remain the
largest nationally. The proportion of speculative development is continuing to
decline, with only 25,700 sqm of space under construction and yet to secure a
pre lease. This equates to a pre-commitment rate of around 91%.
Physical Indicators
700
RESIDENTIAL DEVELOPERS TARGETING CITY FRINGE SITES CONTINUING TREND
600
Investment transaction volumes accelerated and reached AUD 378 million

across 15 assets in 3Q15. The South East and West precincts recorded prime
yield compression in 3Q15, with the yield range tightening by 50 bps to
6.25%7.00% in both precincts.
The largest single asset transaction in the quarter was the acquisition of the
24 hectare-Bradmill Denim Factory site at 341 Francis Street, Yarraville for
AUD 160 million by Chinese residential developer Fortune Property Group. The
vendor was property investor Colin De Lutis.
Thousand sqm
500
400
300
200
64 INDUSTRIAL
100
0
11
12
13
Take-Up (gross)
14
15F
16F
Completions
Future Supply
Source: JLL
For 2011 to 2014, take-up and completions
are year-end annual. For 2015, take-up and
completions are YTD, while future supply is for
4Q15.
OUTLOOK: YIELDS TO FIRM; MORE CORE DISTRIBUTION ASSETS TO TRADE

Rental growth forecasts for prime net face rents remain unchanged with
growth below the rate of inflation expected in the near term.
As at end-3Q15, 279,000 sqm of supply was under construction and with

192,900 sqm scheduled to complete before the end of 2015. 87% of space in
projects to be completed this year is pre-committed. Supply is expected to
remain above recent trend levels.
Note: Melbourne Industrial refers Melbournes industrial market (all grades).
65 HOTELS
Hotels
Limited growth in inbound visitation results in

weak hotel trading performance.
HONG KONG
4,000
100
3,500
90
60
2,000
50
1,500
40
30
1,000
Occupancy (%)
70
2,500
9.5%
HKD 2,548
RevPar
Falling
Only overnight visitors from South Korea, the Philippines and USA registered
increases as at YTD July 2015, rising 8.4%, 4.2% and 2.7% y-o-y, respectively.
Overnight visitors from short-haul markets (excluding Mainland China),
recorded a decline of 4.3% y-o-y while long-haul markets decreased by 2.6%,
indicating a downward trend in overnight visitation to Hong Kong.
10
0
Feb 10
Aug 10
Feb 11
Aug 11
Feb 12
Aug 12
Feb 13
Aug 13
Feb 14
Aug 14
Feb 15
Aug 15
MAJORITY OF HOTEL OPENINGS IN 2015 COMPRISE OWNER-OPERATED HOTELS
RevPAR
Occupancy (%)
As at YTD September 2015, Hong Kong had approximately 74,000 rooms. An

additional 519 rooms are expected to open in the remainder of 2015, with most
of the future supply located in Kowloon. This will result in an estimated 1,814
new rooms in 2015, an increase of 2.5% in stock if all projects materialise.
Hotel openings were primarily in Kowloon, with only two hotel openings in
Hong Kong Island. With the exception of the Holiday Inn Express Mong Kok
and the Hotel Pravo which is managed by Ascott, most of the new openings
are managed by local independent operators.
Source: STR Global, JLL

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

3,500
No. of rooms
STAGE IN REVPAR CYCLE
As at YTD July 2015, growth in tourist arrivals continued to be driven by sameday visitor arrivals, which showed a 6.4% y-o-y growth to 19.2 million while
overnight visitors declined by 5.1% to 15 million. Hence, overall visitor arrivals
showed minimal growth of 1.0% y-o-y to 34.3 million.
20
500
3,000
HOTEL PERFORMANCE CONTINUES DOWN TREND ACROSS ALL SEGMENTS
2,500
As at YTD August 2015, occupancy for luxury hotels declined 2.6% y-o-y to
75.7%, while Average Daily Rate (ADR) decreased y-o-y by 7.1% to HKD 3,364.
Consequently, Revenue Per Available Room (RevPAR) recorded a 9.5% decline
y-o-y to HKD 2,548. With regard to moving annual average, RevPAR continued
to decline and was recorded at HKD 2,713 in August 2015.
Performance in the upscale as well as the midscale and economy hotel

segments also exhibited RevPAR declines of 14.3% and 14.9% y-o-y
respectively. Declines in trading performance in all segments can be
attributed to weaker demand due to less overnight visitors to Hong Kong.
2,000
1,500
1,000
500
0
11
12
13
Additions to Supply
Source: Industry sources, JLL
66 HOTELS
YTD AUGUST 2015
80
3,000
ADR
REVPAR
GROWTH Y-O-Y
VISITOR ARRIVALS SLIGHTLY INCREASE BY 1.0% Y-O-Y AS AT YTD JULY 2015
Luxury Hotel Trading Performance
ADR / RevPAR (HKD)
Phoebe Teo, Senior Vice President, Strategic Advisory - Hotels &

Hospitality Group, Asia
14
15F
16F
Future Supply
OUTLOOK: LIMITED GROWTH IN VISITOR ARRIVALS

Inbound visitation to Hong Kong remains weak due to currency depreciation

of major source markets and socio-political tension with Mainland China. In
addition, Mainland China has also removed unlimited Hong Kong entry to
Shenzhen residents and amended this to one visit a week effective April 2015,
affecting visitation from Mainland China.
Nevertheless, we are cautiously optimistic that hotel performance is likely to

stabilise in the medium to long run as Hong Kong remains a key business
gateway in Asia and a popular destination for leisure and MICE.
Note: Hong Kong Hotels refers to Hong Kongs Luxury hotel market.
YTD AUGUST 2015
4.1%
RMB 673
RevPar
Rising
INTERNATIONAL VISITOR ARRIVALS SHOW MARGINAL INCREASE

As the Mainland China and USA Tourism Year approaches in 2016, beneficial
travel policies are expected to be implemented to attract visitors to both
countries. Additionally, according to the One Road One Belt Strategy, tighter
relationships with Asian countries is likely to drive tourism.
Upscale Hotel Trading Performance

1,200
As at YTD August 2015, four hotels positioned in the midscale to upscale

segments opened, adding 1,353 rooms to the hotel market. One of the key
hotel openings was the 439-room NUO hotel managed by Kempinski Hotel
Group, which opened in June to become the flagship NUO hotel in China.
By end-2015, an additional 561 rooms are expected to open in Beijing. From
2016 onwards, approximately 4,700 rooms are forecasted to enter the market.
In 2016, significant new supply is expected to enter the market and put some
downward pressure on hotel trading performance.
As Beijing is set to become the host city for the 2022 Winter Olympic Games,
the city is expected to redevelop as a modern tourist destination with various
international MICE events, entertainment options and improved transport
connectivity to attract more visitors.
Note: Beijing Hotels refers to Beijings Upscale hotel market.
50
40
30
20
200
10
0
ADR
RevPAR
Occupancy (%)

3,000
OUTLOOK: MAJOR EVENTS ARE LIKELY TO BENEFIT HOTEL PERFORMANCE
60
400
2,500
No. of rooms
On a moving annual average basis, occupancy reached 71.7% in August while

ADR was recorded at RMB 944; RevPAR remained stable at RMB 680.
70
600
3,500
80
800
ADR CONTINUES TO DECLINE

As at YTD August 2015, occupancy continued on the growth trajectory by
registering an increase of 7.1% to 71.9%. In contrast, Average Daily Rate
(ADR) declined by 2.8% to RMB 935 as compared with the previous year. As a
result, Revenue Per Available Room (RevPAR) increased marginally by 4.1%
y-o-y.
90
1,000
MODERATE SUPPLY OF HOTELS IN 2015

100
Occupancy (%)
According to the latest data released by Beijing Statistics Bureau,

international visitor arrivals to Beijing increased slightly by 0.1% y-o-y to
2.7 million as at YTD August 2015. Visitors from India witnessed the strongest
growth rate at 30.2% y-o-y, followed by Macau which grew 24.6%. However,
visitors from Russia declined by 25.4% y-o-y.
2,000
1,500
1,000
500
0
11
12
13
Additions to Supply
14
15F
16F
Future Supply
67 HOTELS
REVPAR
GROWTH Y-O-Y
BEIJING
Feb 10
Aug 10
Feb 11
Aug 11
Feb 12
Aug 12
Feb 13
Aug 13
Feb 14
Aug 14
Feb 15
Aug 15
Frank Sorgiovanni, Head of Research - Hotels & Hospitality Group,

Asia Pacific
ADR/RevPAR (RMB)
RevPAR stabilises as falling ADR offset by

increase in occupancy.
Robust domestic tourism underpins a steady rise

in ADR and occupancy.
SHANGHAI
100
ADR/RevPAR (RMB)
60
600
40
50
30
Occupancy (%)
70
800
Feb 10
Aug 10
Feb 11
Aug 11
Feb 12
Aug 12
Feb 13
Aug 13
Feb 14
Aug 14
Feb 15
Aug 15
ADR

Five hotels positioned in the midscale to upscale segment have opened as at

YTD September 2015, adding 1,389 rooms to the market. By end-2015, three
additional hotels are expected to enter the market with 651 rooms.
More than 5,000 rooms are in the pipeline in 2016. Disney estimates that
10 million people will visit Shanghai Disneyland theme park annually and this
additional demand will benefit the hotel market.

7,000
INCREASE IN ADR AND OCCUPANCY BOOST REVPAR GROWTH
6,000
No. of rooms
5,000
As at YTD August 2015, Revenue Per Available Room (RevPAR) increased by

10.4% y-o-y to RMB 731, driven by both occupancy and Average Daily Rate
(ADR) growth. ADR increased by 2.2% to RMB 1,078 as compared to the same
period in 2014. Occupancy continued to improve, increasing by 5.0 percentage
points y-o-y to 67.8%.
On a moving annual average basis, ADR has remained relatively stable and
reached RMB 1,073 in August 2015. Occupancy continued to rise, reaching
68.7% in August while RevPAR was recorded at RMB 742.
4,000
3,000
2,000
1,000
11
12
13
Additions to Supply
68 HOTELS
RevPar
Rising
INFLUX OF NEW HOTELS IN 2016 IN TANDEM WITH OPENING OF DISNEYLAND
RevPAR
Occupancy (%)
RMB 731
The main purpose of domestic travel to Shanghai continues to be for

business. However, this segment has witnessed a decrease in demand
stemming from increased volatility in the Chinese stock market. Offsetting this
been a boost in domestic travellers to Shanghai for sightseeing and leisure
purposes.
10
10.4%
20
200
Based on data from the Shanghai Statistics Bureau, as at YTD July 2015,
international visitor arrivals to the city reached approximately 4.5 million,
registering an increase of 0.2% y-o-y. The marginal increase is a result
of weakness in international business travel due to a slowdown in global
economic activity and weaker export demand.
80
1,000
400
YTD AUGUST 2015
90
1,200
REVPAR
GROWTH Y-O-Y
INTERNATIONAL VISITOR ARRIVALS DECLINE; DOMESTIC TOURISM ROBUST

1,400
Frank Sorgiovanni, Head of Research - Hotels & Hospitality Group,

Asia Pacific
14
15F
16F
Future Supply
OUTLOOK: NEW ATTRACTIONS AND INFRASTRUCTURE TO DRAW VISITORS

Shanghai is welcoming several large-scale projects such as the new National

Exhibition and Convention Centre which opened in 2015, the Shanghai
Disneyland which is expected to open in 2016 and the Polar Ocean World
which is anticipated to open in 2017. These new tourist attractions and
exhibition centre are expected to induce inbound visitation and increase
demand for hotels.
Strong demand and balanced supply is expected to strengthen hotel trading

performance across the city in the next 18 months to two years, before a large
supply pipeline may become a concern post-2017.
Note: Shanghai Hotels refer to Shanghais Upscale hotels.
Strong hotel performance attributable to leisure

demand increase.
TOKYO
Tom Sawayanagi, Managing Director Hotels & Hospitality Group,

Japan
16.6%
JPY 41,999
RevPar
Rising
RISING INBOUND VISITATION FORMS SOLID BASE FOR LODGING DEMAND

Domestic leisure travellers including Active Seniors, which refers to retired

people with time and financial resources to travel, have contributed to growth
in accommodation demand. With a large ageing population in Japan, this
segment is an increasingly important contributor of demand.

50,000
100
45,000
90
40,000
80
35,000
70
30,000
60
25,000
50
20,000
40
15,000
30
10,000
20
5,000
10
There are no luxury hotel openings scheduled in 2015. Two new luxury hotels
are in the pipeline for 2016. The 84-room Hoshinoya Tokyo is expected to open
as a ryokan-style lodging facility in the Marunouchi area. The 250-room Prince
Gallery Tokyo Kioicho, the former Grand Prince Hotel Akasaka, is due to open
as part of a redevelopment project.
The 109-room Futako-Tamagawa Excel Hotel Tokyu, a small-sized upscale
hotel in Tokyo, opened in July 2015. This is the only upscale hotel opening in
2015.
ADR


500
While there were no hotel sales transactions in the luxury segment in Tokyo
during 3Q15, Hoshino Resort purchased the ANA Crowne Plaza portfolio for
JPY 40 billion. The portfolio comprises four properties - ANA Crowne Plaza
Hiroshima, Fukuoka, Kanazawa and Toyama.
OUTLOOK: ADR GROWTH LIKELY TO DRIVE REVPAR IN SHORT TERM

Domestic and international demand is expected to maintain upward

momentum. This trend can be attributed to the recent economic
improvements in Japan and increased international arrivals, which have
reached record highs. RevPAR growth in the short term is likely to be driven
by ADR growth as occupancy has already recovered to a high level.
The volume of hotel sales transactions in Japan is relatively small, which can
be attributed to hotel owners preference to hold onto assets so they can
enjoy further gains in cash flow amid improved market conditions. In spite of
this situation, investor interest in hotel assets remains strong.
Note: Tokyo Hotels refers to Tokyos Luxury hotel market.
400
No. of rooms
Hotel trading performance in Tokyo continued to improve, as reflected by

Revenue Per Available Room (RevPAR) increasing 16.6% y-o-y as at YTD
August 2015. This is attributed to the growth in both occupancy and Average
Daily Rate (ADR). On a moving annual average basis, RevPAR has been on a
growth trajectory since 2Q12.
RevPAR
Occupancy (%)
TOKYO HOTELS CONTINUE TO SHOW STRONG PERFORMANCE

NO MAJOR OPENINGS OF FOUR OR FIVE-STAR HOTELS

Occupancy (%)
Inbound visitation to Japan recorded y-o-y growth of 49.1% to 12.9 million as

at YTD August 2015. Growth in visitor arrivals was driven by a significant y-o-y
improvement of 117% in visitors from Mainland China. Visitors from Indonesia,
the Philippines and Vietnam also increased due to the relaxation of multipleentry visas since September 2014.
300
200
100
11
12
13
Additions to Supply
14
15F
16F
Future Supply
69 HOTELS
Feb 10
Aug 10
Feb 11
Aug 11
Feb 12
Aug 12
Feb 13
Aug 13
Feb 14
Aug 14
Feb 15
Aug 15
YTD AUGUST 2015
ADR/RevPAR (JPY)
REVPAR
GROWTH Y-O-Y
Visitor arrivals decline but occupancy improves

in 3Q15.
SINGAPORE
450
100
400
90
350
80
60
250
50
200
40
150
30
100
Occupancy (%)
70
300
0
Feb 10
Aug 10
Feb 11
Aug 11
Feb 12
Aug 12
Feb 13
Aug 13
Feb 14
Aug 14
Feb 15
Aug 15
10
3.2%
SGD 316
RevPar
Falling
As at YTD July 2015, visitor arrivals from Mainland China increased by 13.6%
y-o-y, helping to curb the slowdown in visitor arrivals. Increasing visitor
arrivals were also recorded from South Korea, India and USA. Despite this,
falling arrivals from other key source markets such as Indonesia and Australia
saw total visitor arrivals fall by 1.7% y-o-y.
The Singapore Tourism Board recently launched the SGD 10 million

Experience Step-Up Fund (ESF). The scheme aims to encourage businesses to
develop new tourism experiences to enhance overall visitor experience and
satisfaction in order to attract more visitor arrivals to Singapore.
In 3Q15, three new hotels opened, adding 628 rooms to the market. Hotel
openings comprise the 387-room DResort @ Downtown East, the 41-room
Hotel Vagabond Singapore as well as The South Beach hotel which opened
partially with approximately 200 rooms. The remaining rooms at The South
Beach hotel are expected to open in 2016. New hotel openings as at YTD
September total 2,277 rooms, largely due to major hotel openings in 1H15.
Other notable openings planned for 2015 include the 157-room The Patina,
Capitol Singapore which will boost luxury hotel stock in Singapore. Hotel
openings in 4Q15 also include the 298-room ibis Styles at MacPherson Mall
and the 264-room Hotel Grand Central in the Orchard area.


6,000
5,000
No. of rooms
THREE HOTELS OPEN, ADDING 628 ROOMS
RevPAR
Occupancy (%)
4,000
SLIGHT IMPROVEMENT IN OCCUPANCY BUT ADR AND REVPAR DECLINE
3,000
As at YTD August 2015, occupancy for luxury hotels in Singapore was

recorded at 79.1%, a 0.3 percentage point y-o-y increase.
Average Daily Rate (ADR) declined by 3.5% y-o-y to SGD 399 as visitor arrivals
continued to fall and corporate spending remained restrained. Consequently,
Revenue per Available Room (RevPAR) dipped by 3.2% y-o-y to SGD 316. In
terms of moving annual average, RevPAR levels have shown a gradual decline
from SGD 331 in January 2015 to SGD 325 in August 2015.
2,000
1,000
0
11
12
13
Additions to Supply
70 HOTELS
YTD AUGUST 2015
20
50
ADR
REVPAR
GROWTH Y-O-Y
VISITOR ARRIVALS DECLINE BY 1.7% Y-O-Y AS AT YTD JULY 2015
ADR/RevPAR (SGD)
Frank Sorgiovanni, Head of Research Hotels & Hospitality Group,

Asia Pacific
14
15F
16F
Future Supply
OUTLOOK: MINOR GAINS IN HOTEL TRADING PERFORMANCE EXPECTED

We anticipate limited improvement in hotel trading performance over the

balance of 2015 due to the decline in visitor arrivals and cautious spending by
corporates. However, major events such as the Singapore Grand Prix should
help to boost hotel trading performance, while Singapores position as a key
commercial hub underpins demand in a longer time frame.
The Singapore economy is expected to grow in the range of 2.02.5% in 2015.

Moving forward the governments commitment to increase infrastructure
spending as well as a gradual improvement in the global economy is likely to
support growth and activity in Singapore.
Note: Singapore Hotels refers to Singapores Luxury hotel market.
REVPAR
GROWTH Y-O-Y
YTD AUGUST 2015
49.5%
THB 4,100
RevPar
Rising
VISITOR ARRIVALS TO BANGKOK SHOWING SIGNS OF RECOVERY

Main source markets to Bangkok are regional markets, with Mainland China
strengthening its position as the largest source market with an increase of
148.9% y-o-y as at YTD July 2015, followed by Japan, South Korea and India.
Russian arrivals continued to decline, dropping out of the top ten source
markets.

7,000
As at YTD August 2015, 1,392 new rooms have opened, adding to the 1,442
rooms that opened in 2014. Recently opened hotels include the 297-room
Mvenpick Bangkok Sukhumvit 15, 132-room Citrus Sukhumvit 11 and the 250room Amara Bangkok.
The upcoming supply pipeline comprises 3,585 rooms which are expected to
be operational by end-2015, with 38.1% of total new supply concentrated in
the midscale segment followed by 35.4% in the upscale segment. The majority
of upcoming supply is planned in the Sukhumvit area, accounting for 28.1% of
total supply.
On a moving annual average basis, RevPAR has continued on a growth trend

since 3Q14, reaching THB 4,089 in August 2015, largely supported by growth in
occupancy levels to 70.0%.
70
4,000
60
3,000
40
50
30
2,000
20
10
0
ADR
RevPAR
Occupancy (%)


6,000
5,000
4,000
No. of rooms
As at YTD August 2015, hotel trading performance of the Bangkok market

indicated strong Revenue Per Available Room (RevPAR) growth with a 49.5%
y-o-y increase to THB 4,100. Average Daily Rate (ADR) increased by 0.9%
y-o-y to THB 5,817 in the same period. The increase in RevPAR was driven by
a significant growth in occupancy to 70.5% from 47.6% during the same period
in the previous year.
80
5,000
HOTEL TRADING PERFORMANCE CONTINUES TO SEE STRONG REVPAR GROWTH

90
1,000
NEW SUPPLY IS CONCENTRATED IN THE MIDSCALE AND UPSCALE SEGMENTS

100
6,000
Occupancy (%)
According to the Tourism Authority of Thailand (TAT), international visitors to

Bangkok in 2014 showed a y-o-y decline of 11.3% to 15.5 million. However as
at YTD July 2015, visitor arrivals to Bangkok recorded a 39.5% y-o-y rise to
11.4 million arrivals.
BANGKOK
Feb 10
Aug 10
Feb 11
Aug 11
Feb 12
Aug 12
Feb 13
Aug 13
Feb 14
Aug 14
Feb 15
Aug 15

Asia Pacific
ADR/RevPAR (THB)
Continued rise in visitor arrivals leads to

significant occupancy improvement, supporting
RevPAR growth.
3,000
2,000
1,000
0
11
12
13
Additions to Supply
14
15F
16F
Future Supply
The TAT has announced its 2015 Discover Thainess campaign in order to
promote Thailands natural and cultural assets to international visitors. The
TAT is planning for campaigns targeting high-end and high-spending tourists,
specifically from European and Latin American markets.
The effects of the Erawan bombing are expected to be short term only as
the rapid response by the government through marketing and social media
campaigns has minimised its impact, leading us to anticipate a strong high
season in 4Q15.
Note: Bangkok Hotels refers to Bangkoks Luxury hotel market.
71 HOTELS
OUTLOOK: POSITIVE OUTLOOK; RECORD TOURIST ARRIVALS EXPECTED IN 2015
Slowdown in Indonesias economy is likely to

impact corporate visitation in the short term.
JAKARTA
90
YTD AUGUST 2015
1.8%
USD 107
RevPar
Falling
160
80
140
70
120
60
100
50
80
40
60
30
40
20
20
10
As at YTD July 2015, visitor arrivals to Jakarta reflected a 5.1% y-o-y decline
to 1.2 million.
A slowing Indonesian economy, depreciation in the Indonesian Rupiah and

global economic uncertainty may have affected corporate demand to the
capital city, as reflected by the decline in visitor arrivals as at YTD July 2015.
MAJORITY OF HOTEL OPENINGS IN ECONOMY AND MIDSCALE SEGMENTS

As at YTD September 2015, approximately 1,922 rooms opened. Hotel openings

were primarily economy and midscale hotel brands such as Ibis, Ibis Styles,
Zest, Holiday Inn Express and Aston. Two luxury hotels also debuted in the
market Raffles and Fairmont, comprising 173 and 380 rooms, respectively.
Moving forward, an estimated 2,279 rooms are expected to open during the
remainder of the year. This will result in an increase of rooms stock by 13.0%
in 2015 if all projects materialise.
Feb 10
Aug 10
Feb 11
Aug 11
Feb 12
Aug 12
Feb 13
Aug 13
Feb 14
Aug 14
Feb 15
Aug 15
100
180
Occupancy (%)
200
ADR
REVPAR
GROWTH Y-O-Y
INTERNATIONAL VISITOR ARRIVALS DECLINE 5.1% Y-O-Y AS AT YTD JULY 2015
ADR / RevPAR (USD)

Asia Pacific
RevPAR
Occupancy (%)

CONTINUAL DECLINE IN TRADING PERFORMANCE AS AT YTD AUGUST 2015

As at YTD August 2015, occupancy declined by 2.6 percentage points to 60.2%

while Average Daily Rates (ADR) recorded an improvement of 2.4% y-o-y to
USD 178. On a moving annual average basis, Revenue Per Available Room
(RevPAR) showed a gradual decline to USD 111 as at August 2015.
Hotel trading performance remains weak in Jakarta and one of the reasons is
the slowdown in the Indonesian economy. Moreover, with the addition of two
new luxury hotels during the year, the upscale and luxury hotel sector is likely
to face steeper competition.
4,500
4,000
3,500
No. of rooms
3,000
2,500
2,000
1,500
OUTLOOK: GAINS IN TRADING PERFORMANCE RELY ON ECONOMY IMPROVING
1,000
500
0
11
12
13
Additions to Supply
14
15F
Indonesias economic growth slowed to 4.7% in 2Q15, its lowest level since
2009. Growth was weighed down by weak commodity prices, domestic
consumption and foreign investments, as well as currency volatility. Since
Jakarta is a key business gateway and given the slowdown in the Indonesian
and global economy, this is likely to continue to have an impact on corporate
inbound travel to the capital city.
However, the introduction of the visa exemption policy for more than 45
countries to Indonesia in 2015 will increase the ease of accessibility to the
country. New international luxury hotels will provide greater choice for
corporate travellers but improvements in trading performance will be
dependent on the global economic environment.
16F
Future Supply
72 HOTELS
Note: Jakarta Hotels refers to Jakartas Upscale hotel market.

Asia Pacific
REVPAR
GROWTH Y-O-Y
YTD AUGUST 2015
6.6%
AUD 205
RevPar
Rising
STABLE DEMAND SUPPORTED BY MAJOR EVENTS AND CORPORATE SECTOR
Despite the closure of the Sydney Convention and Exhibition Centre and the
traditionally lower yielding winter months, demand is expected to remain
strong through year-end.
240
As at YTD August 2015, occupancy increased by 0.8% y-o-y and this coupled
with ADR growth of 5.8% resulted in RevPAR rising by 6.6% to AUD 205.
The moving annual average recorded in Sydney for RevPAR as at YTD August
2015 was AUD 204, a new record high.
OUTLOOK: POSITIVE OUTLOOK DESPITE TRADITIONAL SLOW PERIOD IN 4Q

The accommodation market is expected to continue to perform strongly for

the remainder of 2015, despite traditionally softer corporate demand at yearend.
Whilst 367 rooms entered the Sydney market in 3Q15, these additions are
not anticipated to place significant downward pressure on hotel trading
performance. Occupancy is expected to remain at a high level and this in
combination with continued ADR increases should further push RevPAR
upwards.
Note: Sydney Hotels refers to all grades of accommodation and includes both hotels and serviced
apartments.
50
40
30
20
10
Feb 10
Aug 10
Feb 11
Aug 11
Feb 12
Aug 12
Feb 13
Aug 13
Feb 14
Aug 14
Feb 15
Aug 15
ADR
RevPAR
Occupancy (%)


700
600
500
No. of rooms
60
160
120
STRONG MARKET FUNDAMENTALS UNDERLIE POSITIVE HOTEL PERFORMANCE
70
180
Room stock growth is anticipated to average 3.7% per annum between 2015
and 2020.
80
200
140
90
220
MODEST SUPPLY INCREASE IN FIRST THREE QUARTERS OF 2015

In 3Q15, two new hotels and one hotel extension added 367 rooms to the
Sydney market. The largest hotel opening was the Tank Stream Hotel which
added 281 rooms in the budget/economy segment. Other hotels that opened in
the quarter were the Old Clare Hotel (62 rooms) in the luxury segment and an
extension of the Holiday Inn Darling Harbour (24 rooms).
100
Occupancy (%)
Marketwide Hotel Trading Performance
As at YTD August 2015, Sydney maintained a steady occupancy of 88% with

major events including the Netball World Cup and Bledisloe Cup supporting
demand.
ADR/RevPAR (AUD)
SYDNEY
400
300
200
100
0
11
12
13
Additions to Supply
14
15F
16F
Future Supply
Source: Australian Bureau of Statistics, JLL
73 HOTELS
Sydneys hotel market continues to perform in

line with strong market fundamentals.
JLL Research - Asia Pacific
ASIA PACIFIC
Dr Jane Murray
Head of Research Asia Pacific
+852 2846 5274
jane.murray@ap.jll.com
GREATER CHINA
Hong Kong
Denis Ma
Head of Research Hong Kong
+852 2846 5135
denis.ma@ap.jll.com
Shenyang
Cedric Wang
Associate Director,
Research and Consulting
+86 138 0104 9273
cedric.wang@ap.jll.com
Wuhan
Daisy Hu
Assistant Manager
+86 27 5959 2151
daisy.hu@ap.jll.com
China
Joe Zhou
Head of Research China & Shanghai
+86 21 6133 5451
joe.zhou@ap.jll.com
Xian
Lisa Zou
Senior Research Analyst
+86 29 8932 9835
lisa.zou@ap.jll.com
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Steven McCord
Head of Research - Beijing
+86 10 5922 1371
steven.mccord@ap.jll.com
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Jamie Chang
Assistant Manager
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Silvia Zeng
Head of Research Guangzhou
+86 20 3891 1238
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Mark Wong
Senior Analyst
+853 2871 8822
mark.wong@ap.jll.com
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Frank Ma
Head of Research Chengdu
+86 28 6680 5072
frank.ma@ap.jll.com
NORTH ASIA
Japan
Takeshi Akagi
Head of Research Japan
+81 3 5501 9235
takeshi.akagi@ap.jll.com
Qingdao
Celia Chen
Assistant Manager, Research
+86 532 8579 5800 ext 817
celia.chan@ap.jll.com
Tianjin
Chelsea Cai
Head of Research - Tianjin
+86 22 8319 2233
chelsea.cai@ap.jll.com
Chongqing
Sherry Li
Research Analyst
+86 23 6366 9062
sherry.li@ap.jll.com
The Philippines
Claro Cordero
Head of Research Philippines
+63 2 902 0887
claro.cordero@ap.jll.com
Thailand
Andrew Gulbrandson
Head of Research Thailand
+66 2 624 6420
andrew.gulbrandson@ap.jll.com
Vietnam
Stephen Wyatt
Country Head - Vietnam
+84 8 3910 3968
stephen.wyatt@ap.jll.com
Malaysia
Dr Chua Yang Liang
Head of Research - South East Asia
and Singapore
+65 6494 3721
yangliang.chua@ap.jll.com
WEST ASIA
India
Ashutosh Limaye
Head of Research - India
+91 22 6620 7575
ashutosh.limaye@ap.jll.com
AUSTRALASIA
Dr David Rees
Head of Research Australasia
+61 2 9220 8514
david.rees@ap.jll.com
South Korea
Yongmin Lee
Head of Research South Korea
+82 2 3704 8888
yongmin.lee@ap.jll.com
New Zealand
Justin Kean
Head of Research - New Zealand
+64 9 366 1666
justin.kean@ap.jll.com
SOUTH EAST ASIA

Singapore
Dr Chua Yang Liang
Head of Research South East Asia and
Singapore
+65 6494 3721
yangliang.chua@ap.jll.com
HOTELS & HOSPITALITY

Frank Sorgiovanni
Vice President, Research & Strategic
Advisory Asia Pacific
+65 6536 0606
frank.sorgiovanni@ap.jll.com
Indonesia
James Taylor
Head of Research
+62 21 2992 3888
james.taylor@ap.jll.com
JLL offices
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#39-00 Republic Plaza
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tel +1 312 782 5800
fax +1 312 782 4339
www.us.jll.com
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Real estate investment

Asia Pacific Economy and

The impact of online retailing on

Women are critical to Japans

Navigating the patent-cliff:

Net absorption in Shanghais

A rather sluggish economic environment...

Further rate cuts while deflation emerges in some markets

Encouragingly, retail sales in China have been trending higher since

During the quarter, various governments continued to cut interest

Ongoing weakness in regional trade

Stable growth expected for this year and next

Real GDP Growth (%)

Modest pick-up in growth underpinned by infrastructure investment and private consumption.

Pick-up in global growth expected to be driven by improvements in advanced economies including

ASIA PACIFIC PROPERTY MARKET

while leasing and investment maintain

leasing in its Tier 1 markets. Shanghai is on track to achieve its

Healthy office supply additions. Occupancy levels up slightly

Figure 1: Outlook for Major Economies

Net effective rents declined in about one-third of major Asia Pacific

Mid-tier brands are the most active retailers

Generally healthy leasing activity for logistics facilities

exports and airfreight cargo. Strong tenant expansion demand

Strong residential sales momentum in China while some

Buoyant commercial real estate investment market

Capital value growth slows

Figure 3: Direct Commercial Real Estate Investment

Figure 2: Office Rental & Capital Value Changes

Figures relate to the major submarket in each city

Office rental growth slows in most markets

Guangzhou, Kuala Lumpur

Singapore (Business Park)

*For Luxurious Residential Properties

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

Source: JLL (Real Estate Intelligence Service), 3Q15

Continued optimism on leasing and investment activity

ABOUT THE AUTHOR

Figure 4: Rental Property Clocks, 3Q15

The impact of online retailing on Australian

especially given the recent weakening of the Australian dollar,

Gross take-up (sqm): Retail & Wholesale Trade

Online retail turnover growth

Multi-channel online retail trade

Pure-play online retail trade

Source: ABS, JLL Research

ABOUT THE AUTHOR

Women are critical to Japans economic success

The Abenomics structural reform strategy aims to encourage a

ABOUT THE AUTHOR

Female labour force participation rates, top 25 countries 2014

restrictive Japanese labour laws, low numbers of women in

OECD aveage: 62.8

Source: OECD Employment Outlook 2015

Emma Saraff was an intern for JLLs research

Japan female labour force participation rates

Source: OECD Employment Outlook 2015

Takeshi Akagi is the Head of Research in

Navigating the patent-cliff : the role of corporate

Increasing portfolio flexibility (71%)

Challenging the business about presumed space needs (71%)

Reducing portfolio size (71%)

Facilities and Property Management