Office rents in SEA remain reasonable compared to the world’s most expensive office markets
Premium office occupancy costs in Jakarta rank 55th worldwide. Occupiers are able to find good value in a market where demand from technology and flexible space operators remains strong
JAKARTA, 19 February 2020 – Five Southeast Asian cities rank in the world’s top 86 most expensive premium office rental markets, according to data from global real estate consultant JLL. Singapore holds the 14th spot worldwide, with net effective rents and occupancy costs running US$ 117 per year per square foot. That’s slightly more than half the premium rents in Hong Kong’s Central district, the most expensive submarket according to the fifth edition of JLL’s Premium Office Rent Tracker (PORT), which compares occupancy costs for premium office buildings across the world’s leading real estate markets. The rents in the other five ranked SEA cities were considerably less expensive, and include Ho Chi Minh City (38th, $78/sq ft), Jakarta (55th, $60 sq ft), Manila (66th, $54/sq ft), Bangkok (77th, $46/sq ft) and Kuala Lumpur (85th , $30/sq ft).
While the banking, financial industry sectors continue to be the major occupiers of premium office space globally, technology firms – in particular, online platforms – are playing a greater role in propelling demand for premium office space. In Singapore, according to the Singapore Economic Development Board (EDB), 80 of the top 100 global tech companies, and more than 4,000 home-grown and international start-ups from around the world have established their operations in Singapore. They include internet companies Google, Facebook and LinkedIn, new economy firms engaged in e-commerce or online businesses such as Shopee, Razer and Grab, as well as technology hardware manufacturers like Acer, Apple, Dell and Siemens.
James Taylor, Head of Research, JLL Indonesia says,
“As the world’s fourth most populous country and Southeast Asia’s largest economy, Indonesia is a huge growth market for technology companies and flexible space operators. Demand from these types of firms spiked in the 2017 to 2019 period and further growth is expected as we move into 2020. ”
Other gateway cities in South-east Asia, including Jakarta and Ho Chi Minh City, are now competing with Singapore to become the next Silicon Valley. Specifically, their fast-growing tech start-up ecosystems are diverting some of the attention of venture capital and private equity investors from Singapore. They may eventually challenge Singapore for its position as Asia's investment and innovation hub.
Download the Premium Office Rent Tracker report here.
Notes: In this fifth edition of JLL’s Premium Office Rent Tracker (PORT), we compare like-for-like occupation costs across 86 major office markets in 73 cities. PORT comprises the key elements of occupancy costs – net effective rent, service charges and government tax on rent – all standardised to enable true international comparisons. While only a fraction of a city’s corporate base will pay premium rents, PORT provides a useful barometer of relative costs.
The average total occupancy costs of the five tracked markets in Southeast Asia are as follows:
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