Asia Pacific Property Digest 4q 2016

Asia Pacific Property Digest
Q4 2016
Growth on track as
Asia Pacific surges ahead
Dear Reader,
2016 finished on a high note, with activity picking up across many of Asia Pacifics property markets.
The highlight of the quarter was Shanghai topping the global ranking of investment destinations for
the first time, driven primarily by domestic investors.
While the uncertain political environment of 2016 is set to continue into 2017, we expect occupier
and investor demand to remain positive with solid optimism around Asia Pacifics long-term
fundamentals.
You can view this report online at http://www.jllapsites.com/research/appd-online/.
I hope you enjoy reading this report and as always, we welcome your feedback on our reports and
service.
Thanks,
Dr Megan Walters
Head of Research Asia Pacific
Hong Kong 14
4 Asia Pacific Economy and

Property Market
Beijing
Shanghai
Guangzhou
15
16
17
Taipei 18
Tokyo 19
8 Asias Silicon Valley rivals Osaka

Seoul
Singapore
20
21
22
Bangkok 23
Feature Articles
Jakarta 24
9 Hangzhou - pioneer of Chinas

new economy
Kuala Lumpur
Manila
Ho Chi Minh City
25
26
27
Delhi 28
Mumbai 29
10 Foreign developers prevail:

Melbourne CBD Bengaluru
Sydney
30
31
Office
Melbourne 32
Perth 33
11 Low office vacancy to boost

rent in India
13 Auckland 34
Hong Kong 36 Hong Kong 58
Beijing 37 Beijing 59
Shanghai 38 Shanghai 60
Guangzhou 39 Tokyo 61
Tokyo 40 Singapore 62
Singapore 41 Sydney 63
Bangkok 42 Melbourne 64
Jakarta 43
Delhi 44
Mumbai 45
Sydney 46
Melbourne 47
Industrial
Retail
35 57
Hong Kong 50 Hong Kong 66
Beijing 51 Beijing 67
Shanghai 52 Shanghai 68
Singapore 53 Tokyo 69
Bangkok 54 Singapore 70
Jakarta 55 Bangkok 71
Kuala Lumpur 72
Sydney 73
Residential
Hotels
49 65
4 FEATURES
ASIA PACIFIC ECONOMY
Resilience despite uncertainty

The US interest rate hike in December marked the culmination of a year of surprises which saw disruptions in political
establishments dominating the headlines, and sending jitters across markets as people digested the possible outcomes.
Fortunately, proactive policy support and healthy domestic demand allowed Asia Pacific economies to sail through these
precarious periods with relative resilience.
Signs of recovery in trade; protectionism casts shadow Most central banks in AP kept rates on hold
January manufacturing PMIs signalled further advancement with In a highly anticipated move, the US Fed tightened its monetary
activity levels expanding in many major markets including a policy at its December meeting, hiking interest rates by 25 bps.
pick-up in new orders. There were also signs that the trade While this move created some anxiety about the path of interest
environment is improving in some of the regions export markets rates, most central banks in the region, including Australia, Korea
including Korea and Singapore. However, the regions largest and India, did not follow the Feds lead and maintained policy
exporter, China, continued to see a patchy performance. Currency rates at or near record lows. However, benchmark rates in Hong
depreciation, in particular following the surprise US election Kong and Singapore rose following the Fed rate hike. In early
result, provided support for a pick-up in shipments in Japan February, Chinas central bank raised its repo rate slightly in
where December exports rose for the first time in more than a what many believe to be an indication of a tightening monetary
year. The recent gains in key markets provides more evidence policy.
that regional trade has likely passed its trough; nevertheless,
Asia Pacific to weather turbulent period
there are still major risks on the horizon with growing rhetoric
about trade barriers. The outlook for the regions economy in 2017 is broadly in line
with the previous year and growth is expected to hover around
Retail sales tread uneven path 5%. While the geopolitical climate and path of US Fed rate hikes
do present risks to the outlook, growth could surprise on the
Consumer spending remains robust in China and is a catalyst for upside as forecasts for many major economies have been revised
solid economic growth. The rapid adoption of shopping at online up on the back of recently strong results. Nevertheless, Asia
marketplaces is helping propel retail sales. The performance of Pacific should remain the primary engine of global growth but
retail sales elsewhere in the region has been less stellar. Japan, with a mixed performance across the region. Chinas economic
the regions second largest economy, saw retail sales return to restructuring will persist and push domestic drivers to the
positive territory towards year-end, rising moderately by 1.7% forefront, while demonetisation presents short-term challenges
y-o-y in November and 0.6% y-o-y in December. In Hong Kong, in India. A weaker Yen has been a boon for Japanese exporters
retail market woes endure as tourists are spending less on big- and could provide a further boost to growth.
ticket purchases. Annual retail sales in the city were down about
8% in 2016.
5 FEATURES
Figure 1: Outlook for Major Economies
Real GDP Growth (%)

Country 2017 Outlook
2016 2017F
Gradual slowdown with growth supported by infrastructure investment and buoyant consumer
China 6.7 6.3
spending.
Weaker JPY to bolster export and tourism sectors, while accommodative policy stance provides
Japan 1.0 1.2
further support.
Demonetisation to have short-term implications but growth likely to pick up as pent-up con-
India 7.1 6.7
sumption demand released.
South Korea 2.7 2.4 Growth to edge lower amid a slowdown in construction investment and private consumption.
Moderate recovery from 3Q16 low point as a low interest rate environment to support growth.
Australia 2.2 1.8
Solid but not remarkable growth in exports.
Indonesia 5.0 5.1 Stable growth supported by government spending on infrastructure and private consumption.
Higher public spending a catalyst for a slight pick-up in growth, while exports see a slow recov-
Singapore 1.8 2.4
ery.
Ongoing weakness in external demand and inbound visitation to weigh on export and retail
Hong Kong 1.5 1.9
sales.
Source: Oxford Economics, February 2017
ASIA PACIFIC PROPERTY MARKET
Leasing and investment markets prove

resilient
The AP commercial real estate market had a strong finish to what was a year of unprecedented uncertainty. On the office
leasing front, financial and tech firms continued to underpin buoyant occupier activity, and with standout performances
from several cities including Delhi and Sydney. Transactional activity was lifted by sustained investor demand in the
region, with China and South Korea seeing record quarterly and annual volumes. Interestingly, Shanghai topped the
ranking of global investment destinations for the first time in 4Q16 and finished among the top five markets overall in
2016 on the back of record investment activity.
Leasing activity finishes the year on a strong note The Hong Kong leasing market was relatively subdued though
mainland China requirements remained the pillar of demand
Asia Pacifics gross leasing volumes increased 23% y-o-y in 4Q16.
growth, while Singapore saw a seasonal slowdown.
In Australia, volumes rose by a healthy 19% y-o-y, driven in large
part by Sydney which saw the second highest volumes in AP Meanwhile, 4Q16 take-up dropped y-o-y in all three China Tier
while Perth also recorded solid gains although from a low base. 1 cities. Shanghais CBD volumes were impacted by high CBD
Indias volumes surged around 80% y-o-y, improving in all four rentals, a ban on registration of new P2P lenders, and more
Tier I markets. The largest rise (and volume) was recorded in companies becoming cost-cautious. Tenants opted to renew
Delhi where big-ticket transactions were made - largely in recent in Beijing in anticipation of new supply in the CBD over the
completions. Volumes also moved up in Tokyo as landlords began next decade, while fewer units available in the core areas of
pre-leasing new supply due in 2018, completions in 2016 created Guangzhou impacted activity.
more options, and tenants relocated from outside the CBD.
6 FEATURES
Sydney continues to lead office rental growth 1 markets was also impacted by less new supply. In Singapore,
sales volumes in prime districts rose from the same period a
Asia Pacific rents grew 0.7% q-o-q and 2.3% y-o-y on average.
year earlier as market sentiment remained positive. Quarterly
The strongest performers over the last year were Sydney (22%)
leasing conditions remained generally in line with recent quarters
due to a lack of large blocks of space, and Melbourne (13%),
as reduced housing allowances and fewer expat employees
supported by positive leasing activity and competition for space.
continued to impact demand in many markets.
Hong Kong recorded the strongest growth in Asia and was closely
followed by Osaka. Weakest annual results were seen in Perth, Continued appetite for real estate
despite benefitting from higher commodity prices in 4Q16, and
Singapore, although the decline slowed partly due to seasonal Investment volumes finished the year on a high note, with
factors and a brief stabilisation as current low rents attracted volumes for the whole year rising 5% from the 2015 level to
some relocations. USD 130 billion. The full-year performance was lifted by strong
performances in core markets such as China, Singapore and
F&B remains key demand driver South Korea. Chinas strong finish saw it supplant Japan as the
largest market by volume, with total sales of USD 34.4 billion.
Landlords in Chinas major markets are looking to gain a
competitive edge and improve footfall by utilising trendy retailers In 4Q16, commercial investment volumes rose 21% y-o-y to
or pop-up stores. F&B operators remained active in seeking retail USD 43.4 billion, bolstered by record quarters in China (USD
space, while sports brands also expanded. Demand in Hong 15.5 billion) and South Korea (USD 7.4 billion), as well as strong
Kong was underpinned by cosmetics and active-wear retailers activity in Japan, as buyers aimed to close deals before the
taking advantage of declining rents to lock in leases. Retailers in year-end. Australia saw a weaker performance y-o-y with owners
Singapore continued to consolidate and also focussed on their holding on to stock given the limited reinvestment opportunities.
online presence, targeting consumers who prefer to buy online
while using their physical stores as pick-up points. Conditions in Cross-border investors remained active through 2016, accounting
the Australian leasing market softened slightly in 4Q16 given that for more than a third of total investment volumes. Intra-regional
a number of retailers entered into administration. purchaser transactions still dominated and accounted for about
54% of cross-border transactions, while the remainder were
3PLs and e-commerce firms driving demand inter-regional purchaser transactions.
Third-party logistics (3PLs) firms continued to drive demand
in the Asia Pacific logistics market in 4Q16. Retailers and Office capital values maintain growth trajectory
manufacturers expanded into some of the vacant space There was a mixed performance for capital values across sectors
previously occupied by 3PLs in Hong Kong which have relocated and markets in the region. In the office sector, Asia Pacific
to cut costs. In Singapore, leasing demand remained subdued quarterly capital value growth moved higher by 1.2% in aggregate
because of the challenging trade environment. Occupier take-up in 4Q16. Melbourne was the regional outperformer with capital
was robust in Australia in 4Q16; in contrast to the prevailing values rising nearly 10% q-o-q. Strong growth was also recorded
trend, take-up was in existing stock. in Hong Kong (+3.1% q-o-q), Osaka (+2.8%) and Sydney (+2.8%).
Jakarta capital values slid the furthest followed by Singapore.
Recent policy measures impact residential sales activity
Stricter policy restrictions were imposed in China and Hong Kong 2017 office leasing volumes expected to hold up
in 4Q16, denting residential sales. Hong Kong raised stamp duties A strong result for leasing volumes in 4Q16 helped lift the full-year
on purchases in November while many Chinese cities introduced results for 2016, which were down only 2% from the previous
a range of cooling measures including higher down payments for years level. Even though we expect a larger volume of supply
non-commodity homes. Slower sales momentum in Chinas Tier
Figure 2: Office Rental & Capital Value Changes Yearly % Changes, 4Q16 Figure 3: Direct Commercial Real Estate Investment 20072016
2016
25 140 $130 bill
5% y-o-y
20
120
15
100
10
USD Billion
80
y-o-y %
5
60
0
5 40
10 20
15
0
ey
e
ne
ng
ila
ai
ng
rta
ba
ou
or
ko
ky
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
gh
dn
an
ur
Ko
iji
ka
um
Se
ap
To
ng
Be
an
bo
Sy
Ja
ng
ng
Ba
M
Sh
el
Japan China Australia Singapore

Ho
Si
M
Rental Values Capital Values Hong Kong South Korea Other
Figures relate to the major submarket in each city Figures refer to transactions over USD 5 million in office, retail, hotels and
Source: JLL (Real Estate Intelligence Service), 4Q16 industrial
Source: JLL (Real Estate Intelligence Service), 4Q16
7 FEATURES
Figure 4: Rental Property Clocks, 4Q16
Grade A Office Prime Retail
Beijing Guangzhou
Beijing
Hong Kong Shanghai, Seoul
Tokyo^
Tokyo, Auckland Jakarta
Shanghai, Auckland
Kuala Lumpur
Manila
Growth Rents Wellington
Growth Rents
Slowing Falling Singapore Slowing Falling
Wellington Bangkok,Jakarta,
Hong Kong^
Manila,
Sydney, Guangzhou Kuala Lumpur
Melbourne
Osaka Rents Decline Rents Decline
Singapore
Rising Slowing Rising Slowing
Bangkok
Canberra Mumbai
Bengaluru
Ho Chi Minh City Hanoi Delhi
Perth Bengaluru
Delhi, Chennai Brisbane Melbourne*, Chennai Sydney*, SE Queensland*
Mumbai Adelaide
Taipei
*Regional
Note: Clock positions for the office sector relate to the main submarket in each city. ^High Street Shops/Multi-level High Street
Prime Residential Industrial
Shanghai Jakarta Hong Kong

Guangzhou
Tokyo, Beijing, Auckland
Bangkok
Wellington
Growth Rents Kuala Lumpur Growth Rents
Slowing Falling Slowing Falling
Manila
Manila
Rents Decline Rents Decline
Rising Slowing Rising Slowing Singapore
(Logistics),
Hong Kong, Singapore
Beijing Singapore (Business Park)
Sydney
Melbourne, Shanghai
Brisbane
*Logistics (Hong Kong, Shanghai, Beijing, Greater Tokyo)
Source: JLL (Real Estate Intelligence Service), 4Q16

Note: Clock positions for the office sector relate to the main submarket in each city.
in 2017, lingering uncertainty surrounding the economic and

political backdrop is expected to keep gross leasing volumes
relatively in line with 2016 (-5% to 0% growth). Although ABOUT THE AUTHOR
aggregate conditions are likely to be generally stable, office Dr Megan Walters joined JLL in 2010 and
leasing performance will continue to be varied as local market in October 2016 was appointed as Head of
drivers may diverge. We have moved up our short-term forecast Research Asia Pacific. In this role, Megan
for rent growth in the core areas of Hong Kong and Osaka on leads a team of 160 professional researchers
sustained demand and tight vacancy. We have observed that in the region, which forms part of a network
some landlords in Hong Kong are willing to renew leases at below of over 400 researchers in 65 countries
market rents in order to maintain a low vacancy environment and around the globe.
as such, are being aggressive on their rental stance for vacant
space.
8 FEATURES
Asias Silicon Valley rivals

The recent rise of the tech sector in Asia Pacific has been According to our survey, at the local level, i.e. within a city, access
meteoric, with tech firms needing more office space to to talent pools was cited as the most important driver of location
accommodate their rapid expansion. Take for example how choice. Firms understand that attracting and retaining the right
Singles Day, the biggest day in online shopping in China, saw talent is critical to the success of their business.
Alibaba Group recording USD 17.8 billion in gross merchandise
volume in China. Thats USD 15.1 billion more than all sources Our analysis indicates that tech firms are an important source of
combined on Cyber Monday in the United States. occupier demand for investment grade office and business park
space. Furthermore, given the accelerating pace of technology
Tech firms, such as Alibaba, form an increasingly important advancements, tech firms are set to play a key role in shaping not
source of office and business park leasing demand, accounting only our work and personal lives but also occupier demand.
for 17 percent of five million square metres of gross leasing
activity from 4Q15 to 3Q16.
Our data reveals that tech companies that design hardware, such
as Cisco and Juniper, were the most active category, followed by
e-commerce companies including Amazon and Flipkart.
To get to the heart of what drives office location choice for

companies, we surveyed JLL leasing experts and analysts in 17
Asia Pacific markets. Our recent report, Tech firm office location
choicehow does it work in Asia Pacific?, describes location
choice drivers in detail. We summarise some of our key findings
below.
Size matters, so does cost
Market size is key for tech firms in selecting a new office location.
Across nearly all tech segments we analysed, the potential for
business growth as a result of tapping into big markets has a
substantial impact on location choice within the region. Some
companies have identified India as a key market in part because
of its large consumer base of more than one billion people. For
example, Xiaomi revenues topped USD 1 billion, less than two
years after first entering India. Other advantages such as cost,
skill level and rule of law also play an important role in the
location choices tech firms make across the region.
Attracting the right talent is critical

ABOUT THE AUTHOR
Agglomerative forces such as talent pooling and knowledge Christopher Clausen is a Senior Research
spillovers have long been theorised to drive firms location Manager based in Hong Kong. He regularly
decisions. We need not look far to find evidence. For example, writes on the Asia Pacific office markets. In
financial services companies cluster near stock exchanges. his current role, Christopher leverages his
Perhaps the most celebrated industry cluster in recent history local market research background and
has been the rise of tech firms in Silicon Valley. Some of the most works closely with local market Research
well-known companies specialising in computer technology, teams to control and improve the quality of
consumer electronics, social media and even automobiles are their methodologies, analysis and reporting.
headquartered there.
9 FEATURES
Hangzhou - pioneer of Chinas new economy
Hangzhou, the birth place of the e-commerce titan Alibaba, has achieve the highest Grade A office rents among Chinas Tier 1.5
been fostering entrepreneurship and encouraging private sector cities, reaching RMB 136 (US$19.60) per sqm per month. A few
growth. These initiatives have paid off handsomely, particularly top quality projects in the citys traditional CBD can achieve rents
in the office market as growth of its tertiary sector or services as high as RMB 8-10 sqm per day, comparable to some Grade A
sector outshines Tier 1 cities such as Beijing and Shanghai. projects in the Shanghai CBD.
The capital city of Chinas eastern province of Zhejiang has Policies to support the service sector particularly tech and
been in the global spotlight since August, when it was chosen, financial services will continue to stimulate Hangzhous
in preference to Beijing and Shanghai, to host the G20 summit. economy and drive demand for its office space.
Hosting the G20 has brought a variety of collateral benefits to the Technology: Hangzhous tech scene is symbolised by Alibaba.
city, including increased media exposure, heightened popularity This local start-up has grown to occupy around 500,000
with tourists, as well as a wave of infrastructure improvements
sqm of office space in the city today. Beyond Alibaba,
that connect the citys neighbourhoods and business districts.
local government initiatives have made Hangzhou a top
All these advantages have helped to further build the citys destination for talent seeking career opportunities in Chinas
reputation as an innovation capital and a pioneer of Chinas new
tech industry. Examples include subsidies for start-ups and a
economy.
development on the citys outskirts called Dream Town that
In 2015, Hangzhou achieved real GDP growth of 10.2% while houses over 700 start-ups. Successful start-ups are likely to
growth in the rest of China slipped to 6.9%. Within GDP, tertiary upgrade their office space, fuelling demand for the citys Grade
sector growth is the most meaningful indicator of office market
A offices.
demand, and a key contributor to GDP. JLL compared tertiary
sector growth across Chinas thirteen Tier 1 and 1.5 cities and Financial services: Hangzhou aims to leverage its strength in
found that Hangzhous tertiary GDP growth rate exceeded that of e-commerce and renowned support for private sector firms to
all the others, and notably was an average of 5 percentage points grow its role as a financial hub for the Yangtze River Delta. The
higher than Tier 1 cities like Beijing and Shanghai. citys government currently is focusing its efforts on the hedge
Hangzhous robust and growing service sector has helped it fund and third-party payment sectors, and is setting up fund
towns while giving support to companies planning IPOs.
Going forward, these policies will continue to stimulate real
estate demand and will further strengthen Hangzhous reputation
Figure 1: Tertiary GDP of Tier 1 and Tier 1.5 cities
as one of Chinas most progressive and innovative cities.
2,000 20
Tertiary GDP y-o-y Growth %
Tertiary GDP (RMB Billion)
1,500 14.6% 15
1,000 10
500 5
0 0 ABOUT THE AUTHOR

Cathy Huang is a research manager
g
n
i
en
Ch njin
Ha ou
Ch ou
Na u
g
Sh an
ng
Gu gha
jin
in
in
'a
ho
gd
zh
ya
uh
zh
zh
gq
nj
Xi
i
en
gz
Be
an
en
en
Su
ng
Ti
specialising on the Shanghai office market.

on
an
Sh
Sh
She authors market commentary and analysis

Source: Local Bureau of Statistics for quarterly publications, media releases and
market presentations, as well as JLLs Real
Estate Intelligence Service (REIS). Cathy also
regularly contributes to consulting projects
on behalf of clients and investors.
10 FEATURES
Foreign developers prevail: Melbourne CBD

Foreign investment in Australian property is a widely discussed CBD residential sites tracked by JLL were purchased by domestic
topic in the media. Most commentary has surrounded private developers, totalling AUD 102 million. In contrast, foreign
foreign investors and their impact on apartment demand. purchases comprised the remaining 75 per cent and totalled
However, foreign investment is also prevalent in the form of approximately AUD 372 million.
developing residential property in Australias major cities,
especially in the CBDs. The Foreign Investment Review Board Developers preference for Melbournes CBD stems from similar
noted AUD 12.85 billion of proposed investment in Victorian reasons to those driving private foreign investors. Melbourne has
residential developments by foreign investors in FY2015. a strongly growing population and was ranked the most liveable
city by the Economist Intelligence Unit in 2016 for the sixth
With Melbournes CBD population in 2036 forecast to be 83 per successive year scoring highly in stability, infrastructure,
cent higher than in 2016, construction of residential education, health care, and environment. The Melbourne CBD is
developments has been on the rise. Foreign developers comprise also a popular choice for international students. The Times
just over one-third of all apartment developments in Melbournes Higher Education ranks the University of Melbourne as the 33rd
CBD supply-pipeline (see Figure 1). This includes all development best university in the world, while RMIT scores highly on a
stages from plans submitted to under construction. However, number of ranking indices too. Melbourne is also a familiar
when the supply-pipeline is measured as a percentage of units, location for overseas visitors reflected in the 14.3 per cent rise in
foreign developers equate to almost half of the CBDs total unit international visitors in 2015.
supply.
Foreign developers account for 51 per cent of the 7,733 units
currently under construction in the citys CBD. The majority of
Figure 1: Supply pipeline in Melbourne CBD by origin of developer domestic developments will complete in 2017 including Cbus
Propertys 35 Spring Street and Sinclair Brooks La Trobe Tower.
Number of Units in Number of Developments in Hence from 2018 onwards, 74 per cent (2,133 units) of stock
Supply-Pipeline Supply-Pipeline currently under construction will be produced by foreign
developers. The future supply pipeline and high percentage of
site purchases by foreign buyers suggest that the presence of
Australia Foreign Australia Foreign foreign developers will continue.
47% 48% 54% 36%
As foreign developers become more familiar with the geography
of Melbourne, it is likely we will see them expand their
geographical focus outside the CBD. The AUD 174 million
acquisition of the Bradmill site in Yarraville by Beijing-based
Chang Sheng provides one example of this. This trend is expected
to strengthen in 2017 providing further competition to domestic
JV JV developers.
5% 10%
Foreign JV Australia
Source : JLL Research
ABOUT THE AUTHOR

This divergence is caused by the differing average size of projects
that foreign developers prefer to deliver. The average size of a Louise Burke is a Strategic Research Analyst
foreign developers project within the Melbourne CBD is 619 units for JLL, based in Melbourne, Australia.
compared to 396 units for a domestic developer. This is reflective She is responsible for coverage of the
of foreign developers preference for large-scale developments Melbourne residential market, providing
which are more likely to be feasible in the CBD rather than in the market analysis and the quarterly market
fringe. The prevalence of foreign developers in Melbournes CBD commentary for this sector.
is also reflected in recent site sales. In 2016 just 25 per cent of
11 FEATURES
Low office vacancy to boost rent in India
At end-4Q16, Indias total Grade A office stock stood at 479 million Figure 1: Pan-India vacancy rate and rent growth
sq ft and with an average vacancy rate of 15.1%. The average
vacancy rate has been declining since 2013 amid strong demand 20 7
from domestic as well as international office occupiers, and this 18 6
trend is forecast to continue in the medium to long term.
Rental growth (y-o-y %)

16
5
Vacancy rate (%)
14
12 4
If we look at the vacancy rate across cities, most are well placed
10 3
except certain submarkets of the National Capital Region (NCR) 8 2
and Mumbai, which are skewing up the pan-India average (Table 6
1
1). The NCR alone contributes 41% to total pan-India vacant stock 4
2 0
of 72 million sq ft, followed by Mumbai contributing 27% while
0 1
Bengaluru, the second biggest office market in size after Mumbai, 2010 2011 2012 2013 2014 2015 2016 2017F 2018F
contributes just about 5% to pan-India vacant stock. Vacancy rate Rental growth rate
The strength of markets such as Bengaluru, Pune and Hyderabad Source: JLL, 4Q16
lies in their competitive rents, quality assets and large floor
plates, as well as the availability of skilled human resources and
an established IT base. Hyderabad has excellent road Overall, low vacancy levels in many Indian cities and rising
infrastructure that adds to the citys attractiveness. All these demand for high-quality Grade A space is likely drive up average
factors have resulted in strong demand for office space in these rents, but at varying degrees for different submarkets. For
markets, which is projected to put upward pressure on office instance, submarkets such as the Secondary Business Districts
rents in those cities thus raising overall rental rates across the (SBDs) of Bengaluru and Pune, and Hi-Tech City in Hyderabad
country (Figure 1). are expected to outperform the average, with rents growing
Table 1: City-level total and vacant office stock
Mumbai Bengaluru NCR-Delhi Chennai Pune Hyderabad Kolkata

Total Office Stock (mn sq ft) 108.1 101.1 96.3 57.0 49.7 44.8 22.0
Vacant Office Stock (mn sq ft) 19.7 3.8 29.8 6.2 2.8 4.1 6.1
Apart from each citys own strength, the healthy demand forecast 4-6% y-o-y in the medium term (201718). Meanwhile, the CBDs
is backed by continued occupier interest in the Indian market of all cities, suburbs such as MG Road, Greater Noida in the NCR,
with positive steps from the government towards improving Saltlake in Kolkata among others, will see stability or a small rise
transparency and sustainability in the sector via various real in rents of 0-1% in the same forecast period.
estate and economic policies. In this context, the scarcity of office
space has prompted new projects by developers, particularly
in cities such as Bengaluru, Pune, Hyderabad and Chennai. In
Mumbai, six out of eight submarkets will likely see a decline in ABOUT THE AUTHOR
vacancy rates by the end of 2017, although currently they are Subash Bhola is an Associate Director of
close to the city average of 18%. Research based in Mumbai. He is
responsible for managing the operations of
Its worth noting that the vacancy rate is often very different JLLs Real Estate Intelligence Service
between Grade A assets and superior Grade A assets i.e. those (REIS) in India. Other key responsibilities
that are of higher quality and in prime locations in a city. Our include commercial real estate analysis and
estimates show that the vacancy rate for superior Grade A assets forecasting.
is around 6% at the pan-India level as compared to 15.1% for the
overall Grade A basket.
Office
13 OFFICE
Central rentals continue to recover despite
HONG KONG weak demand.
Denis Ma, Head of Research, Hong Kong
RENTAL SQ FT PER MONTH, STAGE IN CYCLE

GROWTH Y-O-Y NET EFFECTIVE ON NLA
Growth
9.6% HKD 112.3
14 OFFICE
Slowing
Financial Indices Limited availability curbs leasing activity

130 A tight vacancy environment contributed to limit leasing activity with the
125 total number of new lettings dropping to about 18% below the five-year
120 quarterly average. In Central, mainland Chinese firms remained a key
115 source of demand, accounting for 54% of new lettings (floor area leased).
110
The development of new high quality offices continued to attract global
Index
105
financial institutions to Kowloon East with JPMorgan pre-leasing 225,000
100
sq ft (gross) at 77 Hoi Bun Road (Link REIT/Nan Fung) in Kwun Tong. The
95 bank intends to consolidate some of its operations outside of Central into
90 the building; scheduled for completion in 2019.
85
80 Kowloon East now the citys second largest office market
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
Rental Value Index Capital Value Index
Kowloon East overtook Wanchai/Causeway Bay to become the citys
Arrows indicate 12-month outlook
second largest office submarket after Central, in terms of stock, following
Index base: 4Q12 =100 the completion of Goldin Financial Global Centre (602,400 sq ft) in
Source: JLL Kowloon Bay.
Financial Indicators are for Central.
A business development site in Cheung Sha Wan (NKIL 6505) with a
maximum buildable GFA of 998,200 sq ft was released for sale by the
Physical Indicators government, with a tender closing date in February 2017. Three
300 6
commercial development sites, including Murray Road Multi-Storey Car
Park, were included in the 1Q17 land sale programme.
250 5
The emergence of a two-speed rental market
200 4
A tight vacancy environment contributed to rental markets in Hong Kong
Thousand sqm
150 3
Island outperforming those in Kowloon, with Central rentals closing in on
Percent
100 2 their pre-GFC record highs set in 2008. However, rentals in Kowloon
continued to be weighed down by mounting supply side pressure.
50 1
0 0
Record high prices achieved in the strata-titled office and land sales
markets saw capital values growing at a faster pace in 4Q16. However,
50 1
12 13 14 15 16 17F
most of the growth was recorded before the mainland Chinese
government announced its latest round of capital controls including
Take-Up (net) Completions
tightening measures on outbound real estate investment in late
Future Supply Vacancy Rate
November.
Source: JLL
For 2012 to 2016, take-up, completions and vacancy Outlook: Rental markets to soften outside of Central
rates are year-end annual. Future supply is for 2017.
Physical Indicators are for the Overall market. Rental markets outside of Central are expected to come under further
pressure against weak demand and increasing vacancy in 2017. In
contrast, Central rentals are likely to climb higher, up 05%, on the back
of sustained demand from mainland Chinese firms and limited tenant
options.
Despite a potential faster pace of interest rate hikes in 2017, capital values
should grow in the range of 05% given that investor appetite for office
assets remains high. Growth is likely to be further supported by strong
pricing in upcoming government land sales.
Note: Hong Kong Office refers to Hong Kongs overall Grade A office market.
Landlords accept uncertainty in the market and
the realities of a slower economy.
Steven McCord, Head of Research, North China
BEIJING
RENTAL SQM PER MONTH, STAGE IN CYCLE

GROWTH Y-O-Y NET EFFECTIVE ON GFA
Rents
0.8% RMB 388
15 OFFICE
Stable
CBD benefits from strong domestic finance demand Financial Indices
Under softer demand, particularly from foreign companies, the domestic 120
finance sector continued to dominate the leasing market, accounting for
115
46% of Grade A transactions in the quarter. While many of these deals were
in Finance Street, almost half were in the CBD, where landlords signed 110
finance tenants to fill modest vacancies. 105
Index
100
The IT sector also continued to be a strong source of demand. However,
many tech firms were increasingly interested in Grade B space due to 95
heightened cost sensitivity. After surging in Wangjing over the last two 90
years, IT demand was markedly cooler and shifted to more outlying, low-
85
cost locations.
80
Olympic Area emerges as the next significant submarket 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
North of the city in Olympic Area, Sinotrans Building A (74,000 sqm) was Arrows indicate 12-month outlook
completed for self-use by the state-owned logistics company. Index base: 4Q12 =100
Source: JLL
The A1 Expansion (38,700 sqm) also completed in Finance Street and will Financial Indicators are for the CBD.
be occupied by government-related finance companies. The two new
completions boosted net take-up significantly to 193,500 sqm in 4Q16, up
80.3% q-o-q. Physical Indicators
Overall rents were flat q-o-q due to slow leasing activity 700 7
Accepting market conditions, landlords were more realistic and deployed 600 6
flexible rental strategies at the end of the year. Some maintained lower 500 5
rents to attract foreign tenants; others accepted more domestic tenants
Thousand sqm
400 4
and made modest rental gains. Slower growth in Finance Street suggested
Percent
that sky-high rents in the area may finally be peaking. 300 3
The Grade A market continued to be quiet and investment deals were 200 2
limited to Grade B and strata-titled assets in non-core areas. Huaxia 100 1
Insurance followed earlier deals in the year with the purchase of World
0 0
Chamber Center Building 3 in Tongzhou, currently under construction. 12 13 14 15 16 17F
Outlook: Early completions to edge ahead of future competition Take-Up (net) Completions
Managed by experienced landlords, the first high-quality completions
coming from the new supply wave are expected to outperform older Source: JLL
buildings due to their higher quality specifications. The fast leasing Note: Beijing Retail refers to Beijings Urban retail
market.
progress of quality new buildings observed in 2016 reveals that pent-up Physical Indicators are for the Overall market.
demand for high-quality office space remains.
Domestic firms should continue to drive demand as foreign tenants run
under greater cost-sensitivity. Beijing will remain an important base for
North China operations, but slower growth in the country has reduced
urgency in companies China expansion plans.
Note: Beijing Office refers to Beijings overall Grade A office market.

The Decentralised market accounts for more
SHANGHAI than 80% of Grade A net absorption in 2016.
Daniel Yao, Director - Research, Shanghai
RENTAL SQM PER DAY, STAGE IN CYCLE

Rents
0.8% RMB 10.4
16 OFFICE
Falling
Financial Indices Fringe CBD markets flourish in 2016

130 The Decentralised market recorded net absorption of 563,000 sqm in 2016,
125 surpassing the previous five years annual average of 396,000 sqm. Fringe
120 CBD areas became particularly attractive to cost-conscious CBD tenants
115 looking to consolidate or expand, as well as to companies seeking upgrade
110 options from older properties.
Index
105
The CBD market saw slower leasing activity towards the year-end, partially
100
due to competition from decentralised areas. City-level commercial banks,
95 insurance, and securities companies drove demand in Pudong, while
90 technology and communications firms rose as an emerging demand
85 source in Puxi, alongside non-finance professional services and retail
80 firms.
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
Substantial supply additions with seven new completions
Index base: 4Q12 =100 In the CBD, Century Link Tower 2 (64,850 sqm) and SOHO Tianshan Plaza
Source: JLL
Financial Indicators are for the CBD. (72,000 sqm) reached completion in Pudong and Puxi respectively. In the
Decentralised market, five projects with a total area of 284,144 sqm (GFA)
reached completion.
Physical Indicators Vacancy increased 1.5 percentage points q-o-q to 9.1% in the Puxi CBD and
1,200 12
1.4 percentage points to 7.9% in the Pudong CBD. Decentralised vacancy
increased 2.2 percentage points to 18.1% due to new supply.
1,000 10
Strong rental growth in decentralised market despite large supply
800 8
Rents in the Decentralised market increased 4.4% y-o-y in 4Q16, driven by
Thousand sqm
new projects and fringe CBD areas which are benefitting from maturing
Percent
600 6
business environments. The CBD had a strong rental performance in
400 4 1H16, but increasing competition from decentralised areas and supply
pressures caused rents to trend downwards in the second half of the year.
200 2
The investment market was active in 4Q16, driven by domestic capital.
0 0
12 13 14 15 16 17F
Domestic insurers continued to seek investment opportunities and
demonstrated strong interest in office projects in the CBD. The sale of
Century Link was among the largest transactions in Shanghai on record.
Outlook: Considerable new supply scheduled for 2017
Source: JLL
For 2012 to 2016, take-up, completions and Both the CBD and the Decentralised market are expecting a large influx of
vacancy rates are year-end annual. Future supply
is for 2017. new supply in 2017. After several years of supply shortage, the Lujiazui CBD
Physical Indicators are for the CBD. is expecting several new completions. In the Decentralised market, a
significant portion of new projects will be concentrated in Hongkou,
Minhang, and decentralised Pudong submarkets.
While strong consolidation and expansion demand is likely to carry over to
2017, the market will need time to absorb the added stock. Vacancy is
expected to increase, causing landlords to adjust their rental expectations.
In the short term, the CBD market is likely to face a rental correction.
Note: Shanghai Office refers to Shanghais overall Grade A office market, consisting of Pudong, Puxi and
decentralised areas.
Investment market active with upcoming projects
being transacted in the absence of core assets.
Silvia Zeng, Head of Research, South China
GUANGZHOU

Decline
0.7% RMB 166
17 OFFICE
Slowing
Space in new high-quality Grade A office buildings in high demand Financial Indices
Overall leasing demand was generally stable. Certain industries were more 130
inclined to purchase under-construction projects to meet self-occupancy 125
demand. MNC tenants continued to be conservative and preferred lease 120
renewals. 115
110
Leasing demand was largely concentrated in Zhujiang New Town (ZJNT).
Index
105
Three office buildings completed in the previous quarter attracted
100
significant demand for relocation and upgrades, with domestic SMEs in
finance driving most demand. Total net absorption reached more than 95
90,000 sqm in 4Q16. 90

85
Vacancy declines as previous quarters new space taken up 80
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
Bueland Plaza in emerging Pazhou was completed in the quarter, with an Rental Value Index Capital Value Index
area close to 70,000 sqm (GFA). Total stock increased to more than Arrows indicate 12-month outlook
5 million sqm as at end-2016. Index base: 4Q12 =100
Source: JLL
With stable demand and increasing occupancy rates in projects completed
both in 3Q16 and 4Q16, overall vacancy edged down by 0.7 percentage
points from 3Q16.
Physical Indicators
Grade A office rents decline and capital values remain stable
600 18
The increasing occupancy rate in relatively new projects intensified
competition between new and old buildings in ZJNT, forcing several 500 15
landlords to reduce rents in order remain attractive. As a result, Grade A
400 12
office rents experienced their first negative q-o-q growth in 2016, and were
Thousand sqm
down by 0.8%.
Percent
300 9
Large office sales transactions driven by self-use demand were observed in

200 6
the investment market in the quarter. Although the absence of existing
saleable core assets caused under-construction projects to be sought-after 100 3
and transacted, capital values remained broadly stable with q-o-q growth
0 0
of 0.7% mainly due to the unimpressive rental performance. 12 13 14 15 16 17F
Outlook: Supply-demand rebalance to restore moderate rental growth Take-Up (net) Completions
Economic growth is expected to be stable, with the nations industrial
policies promoting finance-related professional services and the Source: JLL
technology sectors creating significant leasing demand. With new supply For 2012 to 2016, take-up, completions and
expected to be low in 2017, supply and demand should rebalance, leading is for 2017.
to a decline in the vacancy rate and an increase in rents. Physical Indicators are for the Overall market.
Self-use demand is expected to further improve investment market

sentiment and create a sellers market that will grant landlords greater
bargaining power. Due to the lack of existing saleable Grade A office
properties, transactions involving projects under construction are
expected to become more frequent in 2017.
Note: Guangzhou Office refers to Guangzhous overall Grade A office market.

TAIPEI
Occupiers and investors remain cautious.
Jamie Chang, Head of Research, Taiwan
RENTAL PING PER MONTH, STAGE IN CYCLE

GROWTH Y-O-Y NET ON GFA
Rents
2.2% NTD 3,109
18 OFFICE
Stable
Financial Indices Relocations support demand

140 Annual net absorption for 2016 totalled 15,800 ping, the second lowest
level since 2012. Overall demand was generally stable but several
130 corporates had reduced headcounts or shuttered operations and
subsequently surrendered space.
120
Most new leases during the year were small in size and concentrated in
Index
110
new buildings in Xinyi and the Non-Core CBD. However, several large lease
100
transactions were recorded as corporate tenants relocated to high-quality
buildings.
90
No supply in 2016
80 No new supply entered the market in 4Q16 as the owner of a project
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
expected to complete further postponed its opening. This delay meant
that there were no new completions in 2016.
Index base: 4Q12 =100
Source: JLL With no new supply and positive take-up, the overall vacancy rate declined
Financial Indicators are for Xinyi. 1 percentage point q-o-q to 9.1% in 4Q16. On an annual basis, the vacancy
rate declined 1.6 percentage points.
Rental growth stalls as landlords soften their stance
Physical Indicators
The average rent for the overall market was NTD 2,643 per ping per
300 12
month, a slight decrease of 0.2% q-o-q. However, rents increased 2.2%
250 10 on a y-o-y basis and this was attributable to higher rental levels at new
buildings.
200 8
Thousand sqm
Given uncertainty surrounding the economic climate and relatively

Percent
150 6 stable market conditions, most landlords were weary of raising rents.
100 4 Outlook: Occupiers and investors to remain on the side-lines
50 2 The economy is expected to see some signs of improvement in 2017 with
upside potential for further gains in trade and industrial production. In the
0 0 office sector, demand is likely to remain centred on high-tech, IT and
12 13 14 15 16 17F
finance industries; and with most new leases for small-to-mid sized units.
Future Supply Vacancy Rate On the investment front, insurers funds available for real estate
investment reached NTD 4,400 billion at end-2016, increasing 13% from
Source: JLL
For 2012 to 2016, take-up, completions and 2015. With such a large amount of capital, investors are likely to continue
vacancy rates are year-end annual. Future supply to look for investment opportunities both domestically and abroad.
is for 2017.
Physical Indicators are for the Overall market.
However, economic and political uncertainties are likely to continue to
weigh on investor sentiment in 2017.
Note: Taipei Office refers to Taipeis overall Grade A office market.

Vacancy rises as new supply enters the market
while prime areas drive rental growth.
Takeshi Akagi, Head of Research, Japan
TOKYO
RENTAL TSUBO PER MONTH, STAGE IN CYCLE

GROWTH Y-O-Y GROSS ON NLA
Growth
2.3% JPY 36,209
19 OFFICE
Slowing
Net absorption in 2016 surpasses the previous year by 30% Financial Indices
A tight labour market persisted with the unemployment rate hovering 170
around 3% in November, while the jobs-to-applicant ratio rose to a 25- 160
year of 1.41. According to the Tankan survey, the business sentiment index
150
for large manufacturers was rated 10, improving for the first time in four
140
quarters.
130
Index
With new leasing and expansion demand from various business sectors, 120
including wholesale and retail, information and communications and 110
professional services, net absorption in 4Q16 registered 127,000 sqm. Net
100
absorption totalled 460,000 sqm in 2016, equivalent to about 130% of the
90
previous year, as major new supply stimulated demand.
80
Vacancy rises slightly but remains below 2% 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
New supply in 4Q16 was 170,000 sqm, increasing total stock by 2.2% q-o-q. Arrows indicate 12-month outlook
Sumitomo Realty & Developments Roppongi Grand Tower (NLA 104,000 Index base: 4Q12 =100
sqm) and Kyobashi Edogrand (NLA 67,000 sqm) completed in 4Q16. Source: JLL
The vacancy rate at end-4Q16 was 1.9%, increasing 50 bps q-o-q but
remaining stable y-o-y. Vacancy rose for the first time in three quarters as
new supply entered the market. Vacant space in existing buildings Physical Indicators
remained limited. 600 6
Rents continue up trend while capital value growth picks up

500 5
Rents in the Grade A office market in Tokyo averaged JPY 36,209 per
400 4
tsubo per month at end-4Q16, rising 1.0% q-o-q and 2.3% y-o-y. This was
Thousand sqm
the nineteenth consecutive quarter of growth, accelerating for the first

Percent
300 3
time in four quarters, with the strongest growth registered in Otemachi/
Marunouchi and Akasaka/Roppongi. 200 2
Capital values at end-4Q16 increased 0.6% q-o-q and 3.4% y-o-y, with 100 1
growth picking up for the first time in three quarters. A notable transaction
0 0
in the quarter was Invesco J-Reits sale of Harumi Island Triton Square 12 13 14 15 16 17F
(partial ownership) for JPY 10.1 billion.
Outlook: Rents and capital values to grow, albeit at a slower pace in 2017 Future Supply Vacancy Rate
Oxford Economics projects that real GDP should grow 1.0% in 2017, largely Source: JLL
in line with the previous year, while the unemployment rate should decline For 2012 to 2016, take-up, completions and vacancy
further to below 3%. Bond yields have started to rise gradually, but with
the Bank of Japan essentially fixing the 10-year government bond rate at
0%, further upward movement is unlikely in the short term.
With new supply in 2017 forecasted to be equivalent to about 60% of the
past 10-year average, the vacancy rate is expected to remain below 3%.
Nevertheless, rents should continue to rise but at a slower pace. In the
investment market, strong interest from investors and limited availability
of assets is likely to spur competition and place downward pressure on
yields. Capital values should grow relatively in line with 2016.
Note: Tokyo Office refers to Tokyos 5 Kus Grade A office market.
Major relocations are challenging amid low
OSAKA vacancy and limited supply.

Rents
6.8% JPY 17,477
20 OFFICE
Rising
Financial Indices A shortage of supply weighs on net absorption

170 Employment conditions continued to improve in Greater Osaka, with the
160
unemployment rate decreasing 50 bps m-o-m to 3.3% in October and the
jobs-to-applicant ratio rising slightly m-o-m to 1.31. According to the
150
Greater Osaka Tankan survey in December, the business situation of large
140
manufacturers improved with the sentiment index rising from 7 to 9.
130
Index
120 Despite sustained demand from sectors including information and

110
communications, finance, and professional services, major leasing
transactions were constrained given the tight vacancy situation and
100
limited supply. A small negative result was recorded for net absorption
90
in 4Q16. For the full-year, net take-up totalled 29,000 sqm, equivalent to
80 about 30% of the previous year.
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
Vacancy edges up
Index base: 4Q12 =100 No new supply entered the Grade A office market in Osaka in 4Q16 and
Source: JLL there has been no new supply since 1Q15.
The vacancy rate at end-4Q16 was 3.9%, increasing 10 bps q-o-q but
decreasing 170 bps y-o-y. Vacancy rose for the first time in three quarters
Physical Indicators as absorption in Nakanoshima was offset by an increase in vacant space in
180 12
Umeda.
Rental growth accelerates for the third consecutive quarter
150 10
Rents in the Grade A office market in Osaka averaged JPY 17,477 per
120 8
tsubo per month at end-4Q16, rising 2.7% q-o-q and 6.8% y-o-y. This was
Thousand sqm
the tenth consecutive quarter of growth and third straight quarter of

Percent
90 6
acceleration. Growth was registered across the CBD.
60 4
Capital values at end-4Q16 increased 2.8% q-o-q and 15.2% y-o-y, with
30 2 growth slowing for the first time in two quarters. Investment yields were
stable and below 4% for the fifth straight quarter. In spite of heightened
0 0
12 13 14 15 16 17F
investor interest, no Grade A sales transactions were witnessed in the
quarter due to a lack of assets for sale.
Future Supply Vacancy Rate Outlook: Rental growth to slow in 2017
Source: JLL Oxford Economics is forecasting real GDP in Greater Osaka to grow by 0.7%
For 2012 to 2016, take-up, completions and vacancy in 2017, a pace mostly in line with the previous year, while the
unemployment rate is likely to remain near its current low level. However,
the Greater Osaka Tankan survey indicated that more manufacturers are
cautious about the short-term outlook.
The vacancy rate is expected to rise slightly to above 4% as new supply
comes online. As such, rental growth is expected to slow. In the investment
market, strong interest from domestic and international investors against
limited product on the market should place downward pressure on yields.
Note: Osaka Office refers to Osakas 2 Kus Grade A office market.

Record sales volumes bolstered by the
KRW 2.6 trillion disposition of IFC Seoul.
Yongmin Lee, Head of Research, Korea
SEOUL
RENTAL PYUNG PER MONTH, STAGE IN CYCLE

Rents
0.5% KRW 95,164
21 OFFICE
Falling
Reshuffling by major domestic tenants boosts demand Financial Indices
Overall net absorption increased to 45,300 pyung, aided by the relocation 130
of several major domestic tenants including affiliates of Samsung, Mirae 125
Asset Daewoo and Daisha Securities, all of which took up space in the CBD. 120
115
An uptick in expansion activity was also witnessed, led by WeWork which
110
opened its largest office in Asia in the CBD (11,000 pyung) and Amazon
Index
105
leasing an additional 2,000 pyung in Gangnam.
100
Daishin Securities HQ completes in the CBD 95
The only Grade A completion during the quarter was Daishin Securities HQ 90
(GFA 16,011 pyung) which is located in the CBD. Daishin Securities 85
relocated from a Grade B office building in Yeouido to occupy 80

4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
approximately half of the new buildings GFA with WeWork contracting the Rental Value Index Capital Value Index
remaining space. Arrows indicate 12-month outlook
Overall vacancy declined 200 bps q-o-q to 11.8%. Gangnam recorded the Source: JLL
greatest quarterly reduction in vacancy, declining by 460 bps q-o-q to Financial Indicators are for the CBD.
6.7%, aided by take-up at the recently completed Parnas Tower and
further relocations of Samsung affiliates into Samsung Seocho Town.
Physical Indicators
Record transaction volumes led by the sale of IFC Seoul
500 15
Sales volumes for 4Q16 and 2016 amounted to KRW 3.2 trillion and
KRW 8.0 trillion respectively, both record levels. Activity was dominated 400 12
by the KRW 2.6 trillion sale of IFC Seoul from AIG to Brookfield. Other deals
of note included Blackstones acquisition of Capital Tower and Capstone
Thousand sqm
300 9
Asset Managements purchase of DSME Building.
Overall net effective rents declined 0.8% q-o-q. The largest reduction was 200 6 Percent
seen in the CBD where rents declined 2.3% q-o-q as landlords offered
higher incentives to counteract current and pending vacancy. 100 3
Outlook: Net absorption to slow in 2017 0 0

12 13 14 15 16 17F
Net absorption is projected to be negative for 2017 due to several
domestic tenants relocating to their own newly completed buildings; Hana
Bank may consolidate to KEB Hana Bank New HQ in the CBD, LG Innotek
and LG Electronics are planning to move into the LG Seoul Station Building Source: JLL
and Amore Pacific are scheduled to depart Signature Towers. For 2012 to 2016, take-up, completions and vacancy
Changes in borrowing costs will be watched closely by investors and will
be a key determinate of investor sentiment over 2017, particularly for core-
focused domestic investors. Nevertheless, quality offerings coming to the
market are still likely to be warmly received by investors given the strong
investor liquidity present in the market.
Note: Seoul Office refers to Seouls overall Grade A office market.

Investors confidence in the long-term office
SINGAPORE market strengthens amidst current leasing woes.
Dr Chua Yang Liang, Head of Research, Southeast Asia

GROWTH Y-O-Y GROSS EFFECTIVE ON NLA
Rents
9.9% SGD 8.54
22 OFFICE
Falling
Financial Indices CBD take-up remains positive on the back of attractive rents
130 Similar to the previous quarter, the overall CBD net take-up remained
125 positive as tenants took advantage of the attractive rents and leasing
120 incentives in the form of longer fitting-out periods. The vacancy rate in
115 existing buildings increased when a number of tenants relocated to Guoco
110 Tower.
Index
105
Overall demand was mixed and came from the business services, finance
100
and insurance, and technology sectors. The slower economic growth and
95 cautious corporate real estate outlook resulted in fewer relocations and/or
90 expansions in 4Q16 compared to 3Q16.
85
80 The vacancy rate could increase as more supply comes on stream
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
Guoco Tower (0.9 million sq ft) was completed in 3Q16 and the building
had a high commitment rate as of end-4Q16. No major en bloc
Index base: 4Q12 =100 developments were completed in the CBD in 4Q16.
Source: JLL
Financial Indicators are for the CBD. Marina One is expected to be completed in 1Q17, providing 1.9 million sq
ft of prime office space in the Marina Bay submarket. The pre-commitment
rate of this project inched up slightly as tenants finalised their leasing
Physical Indicators terms.
250 10 Decline in rents slows as the leasing market briefly stabilised
200 8
The decline in rents slowed during the quarter, partly due to seasonal
factors and a brief stabilisation of the leasing market, as current low rents
were able to attract some tenants to relocate. Buildings with better
Thousand sqm
150 6
technical specifications and higher occupancy rates still commanded a
Percent
100 4
slight rent premium.
Institutional investors continued to be active in the office market and were
50 2
looking beyond the current lacklustre leasing market. The 25 bps increase
in interest rates by the Federal Reserve did not have an apparent effect as
0 0
12 13 14 15 16 17F
yields achieved in recent investment deals have remained fairly tight.
Take-Up (net) Completions Outlook: 2017 leasing market to be similar to that of 2016
The competitive leasing packages and the upcoming supply could attract
Source: JLL more tenants particularly those with capital expenditure budget - to
For 2012 to 2016, take-up, completions and vacancy relocate in the next few quarters. However, any expansion plans may be
Physical Indicators are for the CBD. modest given the short-term uncertainties faced by companies in a
broader global context.
Office rents are expected to decline further in the next few quarters as
landlords compete with the completion of new supply and the pre-leasing
activity occurring for buildings that are likely to be completed in 2018.
Barring any external shocks, the leasing market in 2017 should be similar
to that in 2016.
Note: Singapore Office refers to Singapores CBD Grade A office market in Marina Bay, Raffles Place, Shenton
Way, and Marina Centre.
Strong investor interest in newly launched REITs
BANGKOK
and weak occupier sentiment duel for supremacy
as 2016 comes to a close.
Andrew Gulbrandson, Head of Research, Thailand

Rents
0.0% THB 819 Rising
23 OFFICE
Demand contracts amidst weak market sentiment Financial Indices
Net absorption turned slightly negative in 4Q16 as a number of occupiers 150
relocated to buildings outside of the CBA to reduce rental costs. With much
140
of the net take-up in 2016 being driven by occupiers relocating to newly
completed projects that were nearly fully leased by year-end, occupiers 130
looking to relocate must decide whether to renew and wait for new supply
120
in 2017 18 or relocate outside of the CBA.
Index
110
Market sentiment was subdued in the wake of the passing of Thailands
King Bhumibol in October; however, we expect leasing activity to pick up 100
in 2017. 90
No new supply; Magnolia Ratchadamri Boulevard delayed 80

4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
Magnolia Ratchadamri Boulevard, a mixed-use development that includes Rental Value Index Capital Value Index
a 6,000 sqm office component, leasehold ultra-luxury condominiums and Arrows indicate 12-month outlook
Southeast Asias first Waldorf Astoria hotel, saw its completion slip to Index base: 4Q12 =100
1Q17. On completion, the office component will be largely occupied by the Source: JLL
landowner.
With no new supply in the quarter and limited occupier movement, Grade
A vacancy in Bangkoks CBA remains unchanged at 8.3% in 4Q16, hovering Physical Indicators
at a two-year low. 120 18
Newly launched TRPIME REIT acquires two office buildings

100 15
A newly formed REIT, the Thailand Prime Property Freehold and Leasehold
80 12
Real Estate Investment Trust (TPRIME) launched its IPO in 4Q16. TPRIME
Thousand sqm
acquired two prime office buildings, Mercury Tower (NLA 24,765 sqm,
Percent
60 9
leasehold basis) and Exchange Tower (NLA 42,888, freehold basis) for a
total price of THB 7.22 billion. 40 6
Both gross and net effective rents in the CBA increased by 0.3% q-o-q in 20 3
4Q16. Stronger rent growth was recorded in the Central East submarket
0 0
driven by several newly completed projects that had leased up quickly 12 13 14 15 16 17F
over the past few quarters.
Outlook: Stable demand and vacancy rates expected in 2017 Future Supply Vacancy Rate
Source: JLL
With 46,000 sqm of new supply anticipated to complete in 2017, we expect For 2012 to 2016, take-up, completions and
the vacancy rate to rise slightly in 2017 but remain at a healthy level from a vacancy rates are year-end annual. Future supply
is for 2017.
historical perspective.
Despite sluggish year-end leasing activity, limited supply in prime areas
and continuing strong demand for prime office space in the CBA will likely
drive modest rental growth in 2017.
Note: Bangkok Office refers to Bangkoks Central Business Area (CBA) Grade A office market.
JAKARTA
Rents fall for the sixth successive quarter.
James Taylor, Head of Research, Indonesia
RENTAL SQM PER ANNUM, STAGE IN CYCLE

Rents
9.1% IDR 3,854,790
24 OFFICE
Falling
Financial Indices Strongest demand from e-commerce firms

200 Tenants seized the opportunity to upgrade offices due to lower rents and
high vacancy rates. A local bank relocated from a Grade B building into
180 8,500 sqm of relatively new Grade A space, while a local e-commerce
company signed a deal to upgrade and expand into around 12,000 sqm in
160
an upcoming Grade A project.
Index
140
E-commerce remained the stand-out sector in driving demand - several
120
smaller deals were signed in recent quarters in addition to the large deal
mentioned above. This relatively new sector is beginning to expand
100 rapidly. Local and international banks, law firms and professional service
providers also remained active drivers of demand.
80
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17 No Grade A completions in 4Q16
Strong demand and rapidly increasing rents in the years following the
Index base: 4Q12 =100 Global Financial Crisis in 2008 resulted in a construction boom and a
Source: JLL packed supply schedule. While no Grade A supply was delivered in 4Q16,
there were lower grade completions in the CBD and non-CBD locations.
As the current wave of Grade A supply began to be delivered in early 2015,
Physical Indicators vacancy rates started to rise to the extent that around 27.5% of existing
stock is vacant. However, several recent completed projects skew the
600 30
average and many well-established, well-located buildings continue to
500 25 report healthy vacancy levels.
400 20
High vacancy rates continue to put pressure on rents
Thousand sqm
While 2H16 saw no new Grade A completions, vacancy remained high and
Percent
300 15
rents continued falling. Grade A rents have now declined on a q-o-q basis
200 10 for six consecutive quarters. In 4Q16, Grade A rents fell by 2.3% q-o-q and
about 9% y-o-y; broadly in line with JLLs forecasts for the whole year.
100 5
The Jakarta office market is tightly held and few sales transactions have
0 0 been witnessed in recent years. However, despite high vacancy rates and
12 13 14 15 16 17F
falling rents, interest remains strong and in 4Q16 a Japanese group
Take-Up (net) Completions announced their participation in a project to develop a 46-story office
tower on the Rasuna Said thoroughfare in Jakartas CBD.
Source: JLL
For 2012 to 2016, take-up, completions and vacancy Outlook: High volume of supply, high vacancy and falling rents expected
2016 was a record year in terms of supply and even more is expected in
2017. As such, even with improving demand, vacancy rates are likely to
remain high and landlords are expected to continue to bring down rents.
Landlords which are willing to be flexible are likely to be best placed to
capture demand.
Investor interest is likely to remain strong but few en bloc transactions are
expected to close. The most likely point of entry for foreign investors is in
the form of forward purchases of under construction assets or land
purchases for development.
Note: Jakarta Office refers to Jakartas CBD Grade A office market.
Average rents in the DC submarket surpass those
of the KLC submarket.
Veena Loh, Head of Research, Malaysia
KUALA LUMPUR

Rents
0.8% MYR 6.19
25 OFFICE
Falling
Decentralised take-up makes up for weakness in Kuala Lumpur City Financial Indices
Demand continued to be lacklustre in Kuala Lumpur City (KLC) amid 120
downsizing of oil and gas companies, and this resulted in the submarket
115
recording its largest negative net absorption result on record. As a result,
the vacancy rate for this submarket rose above 14% in 4Q16. In contrast, 110
demand in the Decentralised (DC) submarket remained strong and it 105

recorded positive net absorption.
Index
100
Overall, demand continued to be driven by the technology and business 95

services sectors. For instance, Google continued to expand and recently 90
committed to an additional three floors in its existing building.
85
Projects due for completion in 4Q16 delayed 80
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
There was no new supply in 4Q16 as the three projects due for completion Rental Value Index Capital Value Index
were delayed to 2017. JKG Tower and Public Mutual Tower were pending Arrows indicate 12-month outlook
issuance of Certificates of Completion and Compliance, while The Pillars in Index base: 4Q12 =100
KL Eco City was delayed due to a bridge collapse at the project site. Source: JLL
Financial Indicators are for the Kuala Lumpur City
Centre.
The overall vacancy rate tightened 40 bps to 12.8% due to healthy take-up
in the DC submarket, which was supported by a decentralisation trend.
Strong interest from occupiers was particularly true for office buildings Physical Indicators
that are accessible via the rail transit link.
300 24
Rents continue to correct in the City Centre
250 20
Rents in the city centre continued to decline amid weak demand and rising
200 16
vacancy, while rents in the fringe area increased marginally aided by the
Thousand sqm
completion of Phase I of MRT Line 1. Capital values fell slightly in the KLC 150 12
Percent
submarket as rents declined further, while capital values in the DC 100 8
submarket grew marginally.
50 4
There was one office sales transaction in 4Q16. Menara AIA Cap Square,
0 0
located in the KLC submarket, was sold by Germanys Union Investment
Real Estate GmBh (UIRE) to Malaysian pension fund Kumpulan Wang 50 4
12 13 14 15 16 17F
Persaraan (KWAP) for MYR 474.3 million.
Outlook: Further rental compression likely in the City Centre Future Supply Vacancy Rate
Demand is expected to remain subdued, especially in the KLC submarket, Source: JLL
as the economy continues to be impacted by both domestic and foreign For 2012 to 2016, take-up, completions and vacancy
headwinds. Rents are likely to decline further in the KLC submarket while Physical Indicators are for Kuala Lumpur City
the DC submarket is expected to see marginal rental growth due to Centre.
improved transportation infrastructure and completions of new integrated
developments.
Seven projects are earmarked for completion in 2017, adding about
4.49 million sq ft to total stock, with the majority located in the DC
submarket. Consequently, overall vacancy is expected to rise as the new
supply comes on stream.
Note: Kuala Lumpur office refers to Kuala Lumpurs Grade A office market consisting of Kuala Lumpur City
Centre (KLC) and Decentralised (DC) submarkets.
Strong demand amid large volume of new supply
MANILA maintains upward rent trend.
Claro dG. Cordero, Jr., Head of Research, Philippines

Growth
8.3% PHP 979
26 OFFICE
Slowing
Financial Indices Net absorption rises on the back of strong demand

160 Net absorption in Makati CBD and Bonifacio Global City (BGC) posted a
significant increase in 4Q16, reaching 119,900 sqm from the 43,000 sqm
150
recorded in 3Q16, as take-up in new developments was high. The
140 offshoring & outsourcing (O&O) sector remained the primary driver of
demand for office space.
130
Index
Notable leasing transactions in 4Q16 involved an O&O company and

120
advertising firms leasing more than 8,000 sqm in BGC. Furthermore, a tech
100 firm and a consulting firm leased space totalling more than 5,000 sqm in
90
Makati CBD.
80 Supply rebounds with new completions

4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
Completions during the quarter included Vista Hub, W City Center and
Uptown Bonifacio Tower 3, all in BGC, adding 117,300 sqm to total stock.
Index base: 4Q12 =100 Key developments set to complete in 1Q17 are Metrobank Center, The
Source: JLL Curve, Inoza Tower, Ore Central, World Plaza, One Bonifacio High Street
Office and High Street South Corporate Plaza Tower 1, all in BGC.
Vacancy further declined to reach 2.0% in 4Q16 despite the large
Physical Indicators volume of stock completed during the quarter, as occupancy in existing
developments improved while newly completed buildings achieved high
500 5
occupancy levels.
400 4 Capital value growth marginally outpaces rental growth
Rents increased 1.4% q-o-q to PHP 979 per sqm per month in 4Q16 amid
Thousand sqm
300 3
a tight vacancy environment. Growth in capital values slightly exceeded
Percent
that of rents, posting an increase of 1.5% q-o-q to PHP 128,000 per sqm in
200 2
4Q16.
100 1 The strong local economy continues to attract occupiers and investment
into the country. The upward adjustment of the countrys economic
0 0 growth forecasts by the Asian Development Bank further highlights the
12 13 14 15 16 17F
potential attractiveness of the country to investors.
Future Supply Vacancy Rate Outlook: Large incoming supply may temper rent growth
Source: JLL The next two quarters are expected to see the completion of 286,000 sqm
For 2012 to 2016, take-up, completions and of office space from nine developments, which may result in the slowing of
is for 2017. rent growth.
Nonetheless, the office rental market is expected to remain landlord-
favourable due to sustained demand primarily sourced from the expansion
of the O&O sector. Pre-commitment rates for many future developments in
Makati CBD and BGC are at a high level.
Note: Manila Office refers to the Makati CBD and BGC Grade A office market.
Positive market performance with an uptick in
occupancy and average rent.
Trang Le, Head of Research, Vietnam
HO CHI MINH CITY

Rents
1.8% USD 38.7
27 OFFICE
Rising
Gradual take up of space Financial Indices
There was positive net absorption in the office sector of 1,300 sqm in 4Q16. 110
However, this figure was lower q-o-q due to limited available stock. The
largest amount of available office space was recorded in Kumho Asiana 105
Plaza and Bitexco Financial Tower. Vietcombank Tower and Times Square
100
were officially fully occupied as at end-4Q16.
Index
95
New office set-ups and relocation transactions continued to be the main
drivers of office demand in 4Q16. Some notable leasing deals in the 90
quarter included Robert Walters Vietnam, Shin & Kim Law Firm and Credit
Suisse taking up a total of more than 1,300 sqm. 85
Stock remains unchanged 80

4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
There were no new completions in 4Q16. Grade A office stock is expected Rental Value Index
to remain unchanged until the second half of 2017, when Saigon Centre
Phase II and Deutsches Haus are scheduled to complete in 3Q17. Arrows indicate 12-month outlook
As at end-4Q16, total available space for lease in all Grade A buildings Source: JLL
stood at about 9,000 sqm. The average vacancy rate of Grade A office
buildings in 4Q16 reached 4.7%, a slight decline from the 5.2% in the
previous quarter. Physical Indicators
Rents rise slightly 60 24
In 4Q16, the average net effective rent of the Grade A office market stood 50 20
at USD 38.7 per sqm per month, a slight rise of 0.2% q-o-q. The uptrend in
rent was maintained for the fifth consecutive quarter. 40 16
Thousand sqm
Percent
No investment transactions were recorded in 4Q16. Owners of office 30 12
buildings in the city have shown a preference to hold on to high-quality
20 8
assets. The average capital value of the Grade A office market edge higher
by 0.2% q-o-q to USD 5,099 per sqm, on the back of an improving market 10 4
performance.
0 0
Outlook: Market conditions likely to improve throughout 2017 12 13 14 15 16 17F
Deutsches Haus developer targets to complete the development in August Take-Up (net) Completions
2017. Construction of Saigon Centre Phase II is expected to finish in early
3Q17 at the latest. These two projects, when complete, will add more than Source: JLL
58,000 sqm to total stock in 2017. For 2012 to 2016, take-up, completions and
is for 2017.
Strong leasing pre-commitments have been observed in the two upcoming
projects. The average rent of the overall market is forecast to move higher
in 2017, mainly driven by higher rentals at the new supply.
Note: Note: Ho Chi Minh City Office refers to Ho Chi Minh Citys Grade A office market.
Indias capital records its strongest quarter of
DELHI leasing activity in two years.
Ashutosh Limaye, Head of Research, India

GROWTH Y-O-Y GROSS ON GFA
Rents
4.7% INR 140
28 OFFICE
Rising
Financial Indices Net take-up climbs to a three-quarter high on the back of strong demand
120 Leasing activity during the quarter was characterised by a high number of
transactions. Smaller, domestic firms were very active during the quarter
115
as evidenced by the number of transactions with an average size of 1,000
110 2,000 sq ft. Take-up was driven by technology occupiers but e-commerce,
105 manufacturing and financial service firms were also observed to be signing
up for additional office space.
Index
100
95 Both the CBD and SBD continued to see sluggish leasing activity with the
90 suburbs, particularly Gurgaon gaining ground at their expense. Net
absorption was significantly up q-o-q in both Gurgaon and Noida. Major
85
lettings involved companies such as MakeMyTrip, Birlasoft, Mankind
80 Pharma, Dell, GlobalLogic and Markit.
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
New supply significantly higher on a q-o-q basis
Index base: 4Q12 =100 Seven completions in Gurgaon and Noida added 1.7 million sq ft of new
Source: JLL supply during the quarter.
Financial Indicators are for the SBD.
The vacancy rate dropped by 30 bps q-o-q to 30.9% in 4Q16. Vacancy in
prime office corridors and superior office buildings continued to decline
Physical Indicators while the peripheral office corridors struggled with high vacancy and low
1,400 35 occupier penetration.
1,200 30 Rents and capital values decline in the CBD but grow in Gurgaon and Noida
1,000 25 Rental declines in old and strata-titled properties were responsible for
the continuing correction in the CBD. In Gurgaon, rental gains in DLF
Thousand sqm
800 20
Percent
Cybercity and in other office corridors were countered by corrections in

600 15 strata-titled office buildings, particularly in the MG Road corridor. Newer
400 10
completions which had slightly higher entry rents contributed to the
marginal increase in Noida.
200 5
Capital value growth continued to be driven by premium, leased assets
0 0
12 13 14 15 16 17F
which are highly sought after by institutional investors. However, yields
remained steady as capital value growth remained aligned with rents.
Future Supply Vacancy Rate Outlook: Demand to remain robust
Source: JLL Large IT occupiers are likely to remain committed towards future IT SEZs
For 2012 to 2016, take-up, completions and vacancy
rates are year-end annual. Future supply is for 2017. as part of their business strategies. Demand is also expected to remain
Physical Indicators are for the Overall market. strong from financial services, consulting and manufacturing/industrial
firms for quality IT and non-IT projects.
Upcoming quality supply in select emerging corridors is likely to find more
traction due to the cost advantages. Private equity and institutional
money are expected to continue to chase prime, leased assets in core
office markets.
Note: Delhi Office refers to Delhi NCRs overall Grade A office market.
As Indias corporate office hub, Mumbai
MUMBAI
continues to see steady demand for
commercial space.

Rents
0.3% INR 211
29 OFFICE
Rising
Leasing activity improves but net take-up declines Financial Indices
In 4Q16, net absorption decreased 23% q-o-q. The decline in net take-up 120
was largely attributed to the limited contribution of pre-commitments,
115
as there were less new completions. Upcoming office projects in the BKC,
SBD North and Navi Mumbai attracted pre-commitments in 4Q16. 110
105
IT/ITeS, BFSI and manufacturing companies drove demand for office space
Index
100
in the quarter and transaction volumes picked up q-o-q.
95
Only two new buildings complete during the quarter
90
In 4Q16, two projects became operational providing a total area of
85
1.04 million sq ft and with a combined pre-commitment rate of 23.0%.
Mumbais total stock grew 1.0% q-o-q and surpassed the 108 million sq ft 80
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
level. Rental Value Index Capital Value Index
We have observed a new trend of upcoming office developments including Arrows indicate 12-month outlook
mixed-use components. Source: JLL
Financial Indicators are for the SBD BKC.
Generally limited movement in rents and capital values
Select submarkets in the Mumbai office market recorded small q-o-q
rental increases, with new leases and renewals closed in the range of Physical Indicators
0.51.0% higher than the previous quarters market average. 1,200 30
In the CBD, rental declines continued to outpace falls in capital values and
1,000 25
this caused yields to compress slightly. However, the core BKC witnessed
quality office space leased at premium rents. In the rental cycle, the core 800 20
Thousand sqm
BKC is entering the rent rising phase following a period of prolonged
Percent
600 15
stagnancy.
Outlook: Strong leasing activity expected in upcoming quarters 400 10
Net absorption in 2017 is expected to slightly surpass 2016s level with 200 5
pre-commitments to upcoming quality projects likely to be high. Vacancy
0 0
levels are expected to come down as quality office space is quickly taken 12 13 14 15 16 17F
up.
Occupiers requiring back office space, e-commerce and new start-up Future Supply Vacancy Rate
companies should generate demand along with occupiers from other Source: JLL
sectors. The SBD will witness the launch of non-IT buildings, while Thane- For 2012 to 2016, take-up, completions and vacancy
Belapur Road in Navi Mumbai is set to see a plethora of IT developments in Physical Indicators are for the Overall market.
upcoming quarters.
Note: Mumbai Office refers to Mumbais overall Grade A office market.

Bengaluru records the highest net take-up among
Indian cities in 2016, albeit falling short of 2015s
BENGALURU strong performance.

Rents
8.5% INR 74
30 OFFICE
Rising
Financial Indices Net absorption in 4Q16 almost double the previous quarters level
140 Net take-up in 4Q16 rose to 1.9 million sq ft. However, overall net
135 absorption in Bengaluru for the full-year 2016 dropped by about 20% to
130 8.6 million sq ft due in large part to a tight vacancy environment -
125
particularly in prime locations - as demand remained healthy throughout
120
115
the year.
Index
110
Key occupiers who leased space in 4Q16 included Microsoft, Amazon,
105
100
UBER, State Street and Lowes.
95
Vacancy edges up
90
85 Six office buildings commenced operations in 4Q16, adding 2.7 million sq
80 ft to the Grade A office stock which reached 101.1 million sq ft. Most
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
buildings started operations with good occupancy rates.
Arrows indicate 12-month outlook Bengaluru office vacancy increased marginally to 3.8% amid new supply.
Source: JLL Limited available space and stable demand underpin rent growth
Financial Indicators are for the SBD.
In 4Q16, average rents increased across the city in the range of 13% q-o-q.
Low vacancy rates in key locations supported rising rents.
Physical Indicators
Capital values increased at a similar pace as rents and this resulted in
1,200 12 stable market yields.
1,000 10 Outlook: Yields likely to compress in select areas
800 8 Sustained demand should keep vacancy rates below 5% in 2017. The
Thousand sqm
northern and southern parts of the city are likely to witness increased
Percent
600 6 levels of leasing activity.

400 4 Rents and capital values are expected to increase but at a slower pace as
the market witnessed significant growth during 2016. Yields are likely to
200 2
compress along some stretches of the SBD Outer Ring Road.
0 0
12 13 14 15 16 17F

Source: JLL
Note: Bengaluru Office refers to Bengalurus overall Grade A office market.

Limited secondary grade space options results in
the strongest annual rental growth in 20 years.
Andrew Ballantyne, Head of Research, Australia
SYDNEY

Rents
17.6% AUD 799
31 OFFICE
Rising
Leasing activity concentrated in the prime sector of the market Financial Indices
Sydney CBD net absorption totalled 81,600 sqm over 2016. Multiple sectors 170
were in expansionary mode and net absorption in the Sydney CBD was 160
almost 40% higher than the 40-year average.
150
A large portion of major tenant moves over 4Q16 were in the prime sector 140
of the market. The largest tenant move of the quarter was IAG relocating 130
Index
to Darling Park Tower 2 (35,612 sqm). IAG took up the majority of the 120
backfill space which was vacated by PwC, who relocated to International 110
Towers Sydney Tower 1 (26,500 sqm).
100
Completions in 2016 the highest since 1992 90
A total of 238,000 sqm of office space completed in 2016, which is the 80

4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
highest completion figure since 1992. International Towers Sydney Rental Value Index Capital Value Index
Tower 1 (101,050 sqm) and 333 George Street (12,453 sqm) completed in Arrows indicate 12-month outlook
4Q16. Index base: 4Q12 =100
Source: JLL
Vacancy in newly completed developments pushed the Sydney CBD
vacancy rate up 0.5 percentage points to 7.7%. A more accurate reflection
of the strength of the CBD market are the strong conditions in the Grade A
market, where the vacancy rate of 5.5% is well below the 10-year average Physical Indicators
of 8.1%. 300 12
Sydney CBD rental growth is the strongest of all the Australian CBDs 250 10
Limited quality contiguous space options across Grade A and secondary 200 8
assets resulted in strong face rental growth, and a sharp drop in
Thousand sqm
150 6
incentives. Prime gross effective rents increased by 17.6% y-o-y, the
Percent
strongest growth figure since 2007, and secondary gross effective rents 100 4
increased by 30.0%, the strongest figure since 1997.
50 2
Sydney CBD investment volumes totalled AUD 3.87 billion in 2016. The 0 0
largest sale in 4Q16 was two AMP funds (AMP Capital Diversified Property
50 2
Fund and AMP Capital Wholesale Office Fund) acquiring 33 Alfred Street 12 13 14 15 16 17F
from AMP Life for AUD 430.0 million.
Outlook: The Sydney CBD will contract in size in 2017 Future Supply Vacancy Rate
Office withdrawals are expected to be higher than completions in 2017 Source: JLL
which will result in the Sydney CBD contracting in size. Of the 129,800 sqm For 2012 to 2016, take-up, completions and vacancy
of assets earmarked for withdrawal in 2017, approximately 63,000 sqm
(49%) will be demolished to make way for the Sydney metro infrastructure
project.
The Sydney CBD vacancy rate is expected to trend down over 2017. A
total of 44,800 sqm of office space is expected to complete in 2017, of
which 56% has already received a pre-commitment. This, combined with
displaced tenants from office withdrawals, should result in tightening
market conditions over the next 12 months.
Note: Sydney Office refers to Sydneys CBD office market (all grades).
Strong demand throughout 2016 results in the
MELBOURNE
strongest CBD annual net absorption
(188,700 sqm) since 1978.
Annabel McFarlane, Associate Director - Research, Australia

Rents
10.5% AUD 448
32 OFFICE
Rising
Financial Indices Expansionary moves drive the strong leasing market in 4Q16
150 CBD net absorption totalled 33,800 sqm in 4Q16. Serviced office and
co-working businesses were active throughout 2016. Legal co-working
140
operator Barristers Chambers, for example, expanded into an additional
130 5,802 sqm at 420 Lonsdale in 4Q16. A number of tenants centralised from
fringe locations to the CBD in the quarter.
120
Index
110
Net absorption was positive in Melbournes CBD, Fringe and Suburban
office markets as expansions outweighed contractions in the final quarter
100 of 2016.
90 Vacancy declines further to 8.1%
80 Prime and secondary vacancy in the CBD office market declined to 7.9%
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
and 8.4% as a result of no new supply and strong demand. PwCs move
into its newly completed Southbank development early in 2017 is one of
Index base: 4Q12 =100 two projects expected to complete in 2017.
Source: JLL
Pre-commitments secured over the second half of 2016 will kick off the
next wave of office supply. Four or five major office projects are likely to
complete in 2018 and 2020. Withdrawals for conversion to residential use
Physical Indicators continue to be a feature of the fringe office markets which is particularly
200 12
concentrated on the St Kilda Road precinct.
Prime CBD yield range narrows to 5.00%6.25%
150 9
The sales of ANZ HQ, 100 Queen Street for AUD 275 million and One
Melbourne Quarter, Collins St Docklands for AUD 250 million reset pricing
Thousand sqm
100 6
benchmarks in the quarter. The spread between prime and secondary
Percent
50 3
asset yields (upper end) narrowed rapidly over the year as investors
moved up the risk curve to acquire assets.
0 0 Strong occupier demand and limited supply fuelled strong prime (10.5%
y-o-y) and secondary (6.4%) gross effective rental growth in the CBD.
50 3
12 13 14 15 16 17F
Fringe office markets have performed strongly with gross effective rents
increasing on average 10.3% y-o-y in prime and 13.2% in secondary grade
assets.
Outlook: Yields expected to stabilise at or close to current record lows
Source: JLL
For 2012 to 2016, take-up, completions and vacancy Vacancy is forecast to decline to a cyclical low in 2017 and rise as supply
increases through 2020. Demand is expected to normalise over 2017 and
2018 following very high levels recorded over the previous 24 months.
Solid rental growth is anticipated in 2017, with landlords expected to
continue to ease incentives to match improving business sentiment.
Note: Melbourne Office refers to Melbournes CBD office market (all grades).
Signs of recovery in Perth as iron ore
prices rebound.
PERTH

Decline
12.1% AUD 431
33 OFFICE
Slowing
Strongest quarterly net absorption result in four years Financial Indices
Several positive contributions to net absorption were made in 4Q16 as a 110
number of occupiers centralised from the suburbs and leased space in the
CBD. Some sub-lease space was withdrawn from the market. 100
Attractive rents, incentives and the availability of high quality office space 90
remain the drivers of leasing enquiry and activity in the Perth CBD. Net
Index
80
absorption for 2016 totalled 12,700 sqm. While there were a number of
occupier moves within the CBD during the year, a downsizing trend was 70
evident throughout 2016.
60
Vacancy remains elevated at 24.1%
The Perth CBD recorded a 0.6 percentage points fall in vacancy over 4Q16, 50
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
reaching 24.1%. This was the first decline in vacancy in 19 quarters. Over Rental Value Index Capital Value Index
the last four years, vacancy has increased by an average of 0.9 percentage Arrows indicate 12-month outlook
points per quarter. Index base: 4Q12 =100
Source: JLL
The supply pipeline has cooled following a record year of completions in
the Perth CBD in 2015. Two projects are currently under construction in the
Perth CBD. The largest is Woodsides new office building at Capital Square
(48,484 sqm), anticipated for completion in 2018. New supply is unlikely to Physical Indicators
begin construction without pre-commitment. 200 40
Limited stock available for investment

150 30
There were no major CBD sales transactions ( AUD 5.0 million) in 4Q16,
100 20
with sales over 2016 totalling AUD 588.8 million across six deals. Five out of
Thousand sqm
the six transactions occurred in the first quarter of 2016, and the full-year
Percent
50 10
volumes were a significant increase over 2015.
0 0
The most recent sale was in July 2016 when The Insurance Commission of
Western Australia sold Westralia Plaza at 167 St Georges Terrace to Zone Q 50 10
Investments of China, for AUD 87.0 million. While opportunities are limited,
100 20
investment interest remains robust from local, national and offshore 12 13 14 15 16 17F
buyers, looking to invest in the Perth CBD.
Outlook: Perth CBD starting to stabilise Future Supply Vacancy Rate
Vacancy is expected to remain elevated throughout 2017, as occupiers Source: JLL

continue to review their office space requirements. Tenant enquiry and For 2012 to 2016, take-up, completions and vacancy
demand is expected to remain driven by lease expiry and the opportunity
to upgrade facilities. Attractive rents in the CBD may continue to stimulate
enquiry from suburban occupiers looking to centralise.
Rents are expected to stabilise during 2017. Competition for tenants
remains evident, and incentives should remain important in stimulating
activity. Investment activity is expected to remain limited, with few assets
on the market for sale in the Perth market.
Note: Perth Office refers to Perths CBD office market (all grades).
Market conditions remain tight at the top end of
AUCKLAND
the market with premium grade space in
short supply.
Tom Barclay, Head of Research, New Zealand

GROWTH Y-O-Y NET ON NLA
Growth
3.6% NZD 478
34 OFFICE
Slowing
Financial Indices Demand holds up but is dependent on quality

160 Business confidence and the sustained growth of the New Zealand
economy underpinned the momentum in demand throughout 2016.
150
Tenants continued to seek quality office accommodation. Top locations
140
were a priority, particularly for waterfront and Wynyard Quarter addresses.
130
Demand for secondary space was less pronounced and correspondingly
Index
120
rental growth has been weaker than that observed for the premium and
110 Grade A buildings. A number of refurbished Grade B buildings have space
100 available and struggled to gain traction in the market.
90 Vacancy sits near record low but new supply is imminent
80 Vacancy at end-2016 was virtually non-existent across Aucklands four
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
premium towers, whilst Grade A vacancy held flat at 2.8%. Additional
Grade B space following refurbishment added some capacity with vacancy
Index base: 4Q12 =100 increasing to 7.8%, with a number of floors yet to be leased by end-4Q16.
Source: JLL Overall CBD vacancy firmed to 7.1% in December largely as a result of
strong take-up within new developments in the Wynyard precinct.
The delivery of 125 Queen Street (15,000 sqm) following refurbishment will
Physical Indicators add further capacity in the secondary CBD market in 2017.
50 15 Yields approaching cyclical low
Investors remained interested in acquiring premium and Grade A office
40 12
assets but were hindered by the small pool of assets being tightly held at
this point in the cycle. Yields compressed to new lows in 4Q16, with
Thousand sqm
30 9
average prime yields firming to 6.25%, the lowest point on record.
Percent
20 6 Landlords remained in a position of power with rental growth across the

grade spectrum in 2016, albeit at a slower rate than was observed in 2015.
10 3 The majority of growth was skewed towards the prime sector of the
market where vacancy is tightest, with average face rents rising by 3.6%
0 0 over 2016 to reach NZD 478 per sqm per annum in 4Q16.
12 13 14 15 16 17F
Take-Up (net) Completions Outlook: Relief for pent-up demand on the horizon
Whilst vacancy is tight at the top for premium and Grade A space, relief is
Source: JLL around the corner with a substantial amount of high quality floors being
rates are year-end annual. Future supply is for 2017. advertised for occupation in 2018 and 2019. This is occurring
Physical Indicators are for the Overall market. predominantly in buildings where larger occupiers have committed to the
new Commercial Bay development (due for completion in 2019).
Whilst the upcoming Commercial Bay will provide relief in the premium
portion of the market in the core CBD, there remains a number of Grade A
buildings in the Wynyard precinct to be delivered in the interim including
Precinct 5A, the Datacom building and 44 Sale Street which together will
contribute over 30,000 sqm of space. The delivery of these projects over
2017 and early 2018 will likely see the vacancy rate increase in the core
CBD as more tenants are drawn to Wynyard.
Note: Auckland Office refers to Aucklands CBD and Viaduct Harbour office market.
Retail
35 RETAIL
Rental decline slows as slump in retail
HONG KONG sales narrows.
Terence Chan, Head of Retail, Hong Kong

Decline
18.4% HKD 462.0
Slowing
Financial Indices Inbound tourism and retails sales show signs of stabilisation
120 Total visitor arrivals slid by just 2.3% y-o-y in October-November after a
3.6% y-o-y fall in 3Q16. The improvements were buttressed by a more
110 modest 6.5% y-o-y drop in Individual Visit Scheme (IVS) arrivals. The
ongoing slump in retail sales also showed signs of stabilisation, down just
100
4.2% y-o-y in October-November from 7.5% y-o-y in 3Q16.
Index
90
Leasing activity slowed down ahead of the holiday season, with landlords
80
turning more accommodative towards short-term leases to minimise void
36 RETAIL
periods. Mass retailers, notably cosmetics and active wear retailers, as well
70 as F&B operators, continued to underpin leasing demand, whilst luxury
retailers resorted to downsizing strategies.
60
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17 Retailing in the New Territories gets a big lift
RV Index (High Street Shop)
CV Index (High Street Shop) YOHO Mall extension below Grand YOHO was issued with its Occupation
RV Index (Premium Prime Shopping Centres)
RV Index (Overall Prime Shopping Centres) Permit in December, adding 471,000 sq ft to the market. The new phase is
Arrows indicate 12-month outlook part of the 1.1 million sq ft YOHO Mall project, the largest retail podium
Source: JLL
since 2010.
A commercial development site (NKIL 6557) in the Kai Tak Development
Physical Indicators Area was acquired by Lifestyle International Holdings, the operator of
200
SOGO department store via the governments land sale programme. The
buyer intends to open a 546,000 sq ft SOGO department on the site,
expecting to complete in 2021.
160
Rental downslide of High Street shops moderates
Thousand sqm
120 Amid stabilising sector indicators, High Street shop rents continued to
drop in 4Q16, albeit at a slower pace. Base rentals in Prime and Premium
80 shopping centres continued to trend downwards, given ongoing tenant
reshuffling activity and the growing profile of F&B and mass retailer
30 tenants against a slight increase in vacancy.
A wide expectation gap between buyers and sellers continued to limit sales
0
12 13 14 15 16 17F
transactions on high streets. Nevertheless, sales evidence on secondary
Completions Future Supply
streets suggests that capital values continued to soften over the quarter.
Outlook: Market to bottom out in 2017
Source: JLL
For 2012 to 2016, completions are year-end annual. The retail sectors two year slump is likely to end in 2017. Still, this recovery
Future supply is for 2017.
is unlikely to materialise until 2H17. Hence, we forecast that rents will
likely end the year at a lower level, albeit the decline will be less than in
recent years; down 05% for High Street shops and down 0-5% in Prime
shopping centres amid a changing tenant mix.
Riding on the gradual recovery of the retail sector, we expect local
seasoned investors to actively seek out bargains and value-added
opportunities, driving up investment volumes over the near term. Capital
values are thus forecasted to decline by a more moderate 510% in 2017.
Note: Hong Kong Retail refers to Hong Kongs Overall Prime shopping centres and High Street retail markets.
Trendy brands further boost destination malls as
shoppers continue to flock to these projects.
BEIJING

Growth
2.0% RMB 892
Slowing
Hot brands attract shoppers at destination malls Financial Indices
Trendy retailers or brands of the moment popped up at top projects, as 130
landlords used these tenants to boost profile and increase footfall. For
example, Greybox, a specialty coffee brand under Roseonly, opened its first 120
store at Kerry Center.
110
Topwin Center bucked the trend of other completed small, centrally
Index
located projects which tended to be slow to fill up. Near Taikoo Li, the
100
project managed to raise its commitment rate to 92% by year-end, only
37 RETAIL
two quarters after opening.
90
Two new Wanda malls open near each other in south Beijing
Two new Wanda malls opened, adding to the 2016 supply boom in south 80
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
Beijing. Wanda Fengtai (approx. 170,000 sqm) and Wanda Huaifang Rental Value Index Capital Value Index
(approx. 230,000 sqm) opened just over 5 km from each other. Traditionally Arrows indicate 12-month outlook
underserved for retail, south Beijing saw nearly 1 million sqm of new Index base: 4Q12 =100
supply enter the area in 2016. Source: JLL
Outlier Fun Capital Outlet opened at a theme park with just 60%
commitment, in contrast to the near full-commitment typically achieved at
other newly opened suburban projects. Physical Indicators
Quarterly rental growth flat, while annual growth is lowest in 10 years 700
Rental growth remained slow, with the Urban market growing just 0.2% 600
q-o-q. Full-year rental growth reached only 2.0% in 2016, the lowest in ten
years. This was due to less spending by visitors from nearby provinces and 500
weaker demand for merchandise from local residents given headwinds

Thousand sqm
400
from the three Os: online, overseas, and outlet shopping.
300
Key properties with a strong reach across the city continued to thrive,
while others were squeezed between these thriving malls and the booming 200
suburban market, which has come into its own as a mature alternative for
100
most shopping needs. Suburban rents grew 0.7% q-o-q, while y-o-y growth
also outperformed the Urban market at 3.8%. 0
12 13 14 15 16 17F
Outlook: 2017 to be peak supply year, partially due to 2016 delays Completions Future Supply
We may see more non-traditional tenants appear as landlords seek to Source: JLL
differentiate their malls from competitors. However, chasing fads is For 2012 to 2016, completions are year-end annual.
difficult to sustain, and more long-term solutions such as locating co-
working space in malls serves to create a captive audience that will help
boost spending.
The year 2017 will be a peak supply year as delayed projects from 2016
comprising approximately 20% of the total GFA for new supply in the
coming 12 months are expected to enter the market by year-end.
However, projects set to open in 2017 may also be subject to delays.
Note: Beijing Retail refers to Beijings Urban retail market.

Several new decentralised malls see
SHANGHAI strong openings.
Joe Zhou, Head of Research, China

Growth
1.3% RMB 51.6
Slowing
Financial Indices Continued strong demand from F&B and experience-oriented brands
130 Sentiment improved among fashion retailers as several brands
experienced y-o-y sales increases after a weak first half of 2016. However,
120 this did not translate into increased leasing activity as brands remained
cautious about overcommitting themselves. Overall leasing patterns
110 remained similar to earlier in the year.
Index
F&B demand remained strong, particularly from mid-range restaurants

100
serving regional Chinese cuisine, as well as small casual shops like juice
38 RETAIL
bars, which benefited from collaboration with mobile take-out dining

90
apps. Childrens retailers continued to expand, as did fitness centres,
sportswear brands and other tenants selling healthy lifestyles.
80
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17 One prime and five decentralised projects open in 4Q16

Vankes Infinitus and Qibao Vanke Plaza opened to strong foot traffic. In
4Q10 =100
Index base: 4Q12 Hongqiao Transportation Hub, Longfor Paradise Walk and Macrolink
Source: JLL Shopping Mall opened as large one-stop shopping malls, while the smaller
Financial Indicators are for the Prime market.
community mall RHTD Luna Plaza Phase 2 in Hongkou targets local
residents. 118 Plaza completed phase two of its refurbishment.
Physical Indicators Vacancy decreased slightly to 9.7% in prime areas as projects in mature
700
submarkets improved occupancy. In the decentralised market, vacancy
declined to 9.4% as most new projects opened with high occupancy and
600 strong foot traffic.
500 Prime rental growth slows while investment activity picks up
Thousand sqm
400 Prime open-market ground floor base rental growth decelerated from 2.8%
y-o-y in 3Q16 to 1.3% in 4Q16, reaching RMB 51.6 per sqm per day. Prime rents
300
have been impacted by weak or falling rents in struggling submarkets like
200 West Nanjing Road. Decentralised rents held up better, with growth slowing
from 3.0% y-o-y in the previous quarter to 2.9% to reach RMB 20.4 per sqm per
100 day.
0
12 13 14 15 16 17F
Retail investment activity was strong in the quarter. China Life acquired
Century Link for RMB 20 billion. Joy City acquired Parkside Plaza for
RMB 2.2 billion. Xuebao Mansion was acquired by Blackstone, while Carlyle
Source: JLL sold the commercial part of Richgate to CSI Properties.
For 2012 to 2016, completions are year-end annual.
Future supply is for 2017. Outlook: Rental growth expected to moderate further
Physical Indicators are for the Prime market.
Supply pressures and rising competition in both prime and decentralised
markets indicate that rental growth is likely to further decelerate in 2017.
Established downtown malls and maturing decentralised malls in good
locations will drive rental increases.
F&B and experience-oriented brands will remain major drivers of demand
for retail space. Fashion retailers are expected to remain cautious in their
expansion plans, though sports and casual wear brands will remain active.
Note: Shanghai Retail refers to Shanghais overall Prime and Decentralised retail markets.
Stiff competition among malls with similar
GUANGZHOU
positioning prompts landlords to improve
differentiation.
Silvia Zeng, Head of Research, South China

Rents
0.4% RMB 368.4
Stable
Fashion retailers cautious in entering new malls Financial Indices
Muted growth in Guangzhou retail sales resulted in weak leasing demand. 140
Fashion retailers became even more cautious in expansion plans and some
even shut down shops during the quarter. Retailers in the mid-to-high-end 130
fashion segment were especially hesitant to enter new projects.
120
F&B remained the main driver of leasing demand and space for F&B use in
Index
110
newly completed malls was observed to have higher occupancy relative to
space dedicated to other trades. Sportswear retailers, being an exception 100
39 RETAIL
among fashion retailers, also performed relatively well during the quarter.
90
Substantial new supply leads to rising vacancy rates
Parc Central on Tianhe Road, Seasons Mall IV and IGC in Zhujiang New 80
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
Town entered the market in the quarter, adding a total of 259,103 sqm of Rental Value Index Capital Value Index
new space. Arrows indicate 12-month outlook
The three new malls were all positioned as mid-to-high range malls, Source: JLL
targeting with similar tenants and customers. The intense competition
resulted in large amounts of vacant space upon opening and pushed up
the overall vacancy rate from 2.0% in 3Q16 to 4.4% at end-4Q16.
Physical Indicators
Rentals remain flat, suppressed by weak demand
400
Weak overall leasing demand along with substantial new supply
contributed to rising vacant space and created downward pressure on 350
rents. However, most landlords did not soften their stance and requested 300
the same asking rents. In general, overall rents continued to be stable.
Thousand sqm
250
No en bloc investment transactions were recorded in 4Q16, although there 200
was a constant influx of enquiries from domestic investors. Capital values
150
trended upwards while market yields were mildly compressed.
100
Outlook: Slow rental growth is predicted
50
Overall leasing demand is expected to remain stable in 2017. We anticipate
that experience related retailers (including F&B) are most likely to be 0
12 13 14 15 16 17F
tenants continuing their expansion, while demand from general retailers is
likely to remain flat or even decline slightly in part due to a conservative
sales outlook for 2017. Source: JLL
Four projects in the pipeline are expected to complete over the next 12 Future supply is for 2017.
months. In contrast with 2016, when most new projects opened in core
precincts, supply in 2017 will be much more dispersed. In general, the
vacancy rate should slowly decline and overall rents will remain flat.
Note: Guangzhou Retail refers to Guangzhou overall Prime retail market.

Rental growth slows further as rents are
TOKYO approaching record high levels.

Growth
2.1% JPY 78,783
Slowing
Financial Indices Demand holds up but retailers increasingly cautious

200 There were signs of improvement in consumption as the decline in large
scale retail store sales in Tokyo eased from October (3.0% y-o-y) to
180 November (1.2% y-o-y). Visitor arrivals continued to rise during the same
period, supporting a recovery in tourist consumption which grew 1.3%
160
y-o-y in 4Q16 compared with a 2.9% q-o-q dip in the previous quarter.
Index
140
Although healthy demand persisted for prime retail space in 4Q16, an
120
increasing number of retailers were cautious about new store openings
40 RETAIL
given the changing spending patterns of tourists. Key openings in the

100 quarter included Cartier Ginza Boutique, Ginza Kitcho and Bills at the
newly opened Okura House.
80
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17 Okura House opens at the Ginza 2-chome crossing
In 4Q16, Okura House opened on a corner fronting the Ginza 2-chome
Index base: 4Q12 =100 crossing. This was the fourth redevelopment of the Okura Main Building
Source: JLL and this commercial facility has 12 floors above ground with a total GFA of
6,800 sqm. Retail space is offered on floors B1 to 7 and 12. Cartiers flagship
store occupies floors B1 to 3, while F&B tenants Ginza Kitcho and Bills are
on floors 4 and 12, respectively.
Retail Sales
10
A tight vacancy environment persisted in the prime retail market in 4Q16.
8 Rents grow for the seventeenth consecutive quarter but at a slower pace
6 Rents in the prime retail area averaged JPY 78,783 per tsubo per month at
end-4Q16, rising 0.6% q-o-q and 2.1% y-o-y. This was the seventeenth
4
consecutive quarter of rental growth but the increase slowed for the first
y-o-y (%)
2 time in two quarters. Growth was strongest for upper floor space in Ginza.
0
Capital values at end-4Q16 increased 0.3% q-o-q and 4.7% y-o-y. Growth
2 was largely in line with the previous quarter, reflecting moderate rental
4
growth and stable investment yields. Investment transactions in the
quarter included Japan Prime Realtys acquisition of Ginza Gates, a retail
6 building fronting Namiki-dori, for JPY 10.1 billion (NOI cap rate of 3.2%).
3Q11 3Q12 3Q13 3Q14 3Q15 3Q16
Sales Growth of Large-Scale Outlook: Rental growth to slow further in 2017
Retail Stores in Tokyo
Source: Ministry of Economy, Trade and Industry According to Oxford Economics, nominal private consumption is expected to
rise 0.8% in 2017, supported by rising disposable income which is forecasted
to grow 1.8%. The number of visitor arrivals is anticipated to increase further,
but the slowdown in tourist consumption could persist given the shift in
spending away from luxury goods.
Despite the tight-demand supply environment, rental growth is expected to
be moderate as rents near the previous peak level. In the investment market,
strong interest from investors including institutional and high net worth
individuals should continue against limited availability of assets on the
market, and this could place further downward pressure on yields.
Note: Tokyo Office refers to Ginza and Omotesando Prime retail markets.
Retail market continues to soften as retailers and
consumers brace for stronger headwinds.
Angelia Phua, Associate Director -
SINGAPORE
Research & Consultancy, Singapore

Decline
7.5% SGD 34.10
Slowing
Tourism sector boosts retail sales Financial Indices
Total retail sales, excluding motor vehicles, recorded a decline in November 110
2016 compared to a year ago, indicating the persistence of weak consumer
sentiment. While the F&B sales index recorded a similar decline, take-ups 105
were dominated by the entry of new-to-market F&B operators in the Orchard
100
submarket.
Index
Despite the slight drop in tourist arrivals in 2Q16, there was encouraging 95
growth in tourism expenditure driven by shopping and F&B. This was likely 90
41 RETAIL
fuelled by the growing number of first-time mainland Chinese visitors, as
well as Indonesian visitors, who frequent Singapore as a destination for 85
holidays or as short-haul trips to attend to personal needs.
80
Concentration of new retail supply in the Marina submarket 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
The Marina submarket welcomed two newly constructed retail podiums Arrows indicate 12-month outlook
during the quarter. The first, South Beach, opened with full occupancy, while Index base: 4Q12 =100
the newly constructed retail component of Guoco Tower, Tanjong Pagar Source: JLL
Financial Indicators are for Orchard Road.
Centre, opened with 85% occupancy. Both retail podiums have an F&B-
centric tenant mix.
In the Suburban submarket, the scheduled opening of Hillion Mall has been Physical Indicators
delayed from 4Q16 to 1Q17. Owing to its direct connection to the Bukit 200
Panjang MRT and LRT, it reported a healthy occupancy rate of 90%,
entrenching the lure of retailers to malls in the Suburban submarket.
150
Correction of rental and capital values to continue
Thousand sqm
Besides the expected influx of new retail supply due in 2017, which
contributed to further rent correction across all submarkets in 4Q16, a 100
steeper decline in rents within the Marina submarket was underpinned by
retailers seeking pre-termination of their leases because of weak
50
performance.
Investment sales volumes for the quarter rose sharply from 3Q16. Notable
transactions were mostly in the Suburban submarket, as these properties 0
12 13 14 15 16 17F
generate more resilient rental income. Besides marginal compression of Completions Future Supply
yield in the Suburban submarket, yields stayed stable as the capital value
correction was in line with the rental decline. Source: JLL
Outlook: An equally challenging year ahead for retail Future supply is for 2017.
Compared to 2016, a greater volume of supply in retail space is due to
complete in 2017. Despite the possible spike in retail sales due to the
festivities in 4Q16, the sentiment of consumers and retailers alike is
expected to remain weak following the Fed hike and this is likely to weigh
on spending in 2017.
Vacancy rates are therefore likely to inflate, in light of weak occupier
demand and tenant consolidation by retailers. Rents and capital values
will continue to correct.
Note: Singapore Rtail refers to Singapores Orchard, Marina and Suburban retail markets.
Re-investing in the health and competitiveness
BANGKOK
of existing assets trumps searching for new
greenfield opportunities.

Growth
1.0% THB 2,467
Slowing
Financial Indices International retailers continue expanding across the market

120 Prime grade retail space was still in demand in 4Q16 with significant positive
net absorption numbers driven mainly by the completion of new retail
115
space, including Show DC (78,000 sqm NLA) and the expansion of Seacon
110 Square Srinakarin (12,000 sqm NLA).
105
International retailers continued to show strong interest in entering the
Index
100
market as well as expanding existing footprints. In 4Q16, at least five
95 international retailers opened their first stores in Thailand, most of which
42 RETAIL
90 operate in the F&B segment.

85 Two new retail centres complete in 4Q16
80 Show DC, which opened in December, is a specialty centre that is designed
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
Rental Value Index Capital Value Index specifically to cater to Thailands rapidly growing tourism industry,
particularly tourists from North Asia. The current tenant mix features a
Index base: 4Q12 =100 variety of F&B and fashion tenants organised by the Mall of Korea, Lotte
Source: JLL Duty Frees first location in Thailand, a H&M, and a wide variety of
entertainment and attractions. The aforementioned expansion at Seacon
Square Srinakarin consisted entirely of new F&B tenants.
Physical Indicators With the two new completions and corresponding take-up, vacancy rose to
500
5.0% in 4Q16, up from 4.3% in 3Q16. The uptick is due in large part to Show
DC only being 50% occupied on opening. We expect new tenants to
continue opening throughout 2017.
400
Rents hold firm as developers pour capital into existing assets
Thousand sqm
300 Gross rents in 4Q16 remain unchanged from the previous quarter. Retail
landlords have struggled to raise rents in recent months owing to a
200 slowdown in consumer spending caused by the passing and subsequent
mourning period of Thailands King Bhumibol.
100
Bangkoks retail market has become relatively saturated in recent years from
a supply perspective. Major developers have pushed back new greenfield
0
12 13 14 15 16 17F
projects in the metro area by three to four years (or more in some cases) and
are focusing on renovating existing assets to enhance competitiveness.
Outlook: Thin supply pipeline as developers move up-country
Source: JLL
For 2012 to 2016, completions are year-end annual. Two new retail projects are expected to complete in 2017. The largest is
Siam Piwats ICONSIAM, which consists of a large super regional centre and
a separate smaller specialty centre focusing on luxury brands. Both should
complete in late 2017. The second is the retail component at Gaysorn Tower.
As developers like Central Pattana PCL (CPN) focus investment efforts in
Bangkok on renovating existing assets, they also continue to introduce
greenfield projects in provincial markets. CPN has three new centres
expected to complete in 2017 outside of Bangkok, while other developers
such as The Mall Group and Siam Retail have projects underway in the resort
markets of Phuket and Pattaya.
Note: Bangkok Retail refers to Bangkoks Prime retail market.
JAKARTA
No completions and vacancy edges down.
James Taylor, Head of Research, Jakarta

Growth
2.7% IDR 5,982,692
Slowing
Limited take-up due lack of available space Financial Indices
No new projects were delivered in 4Q16 and just one new completion was 140
recorded in the whole year. Given the lack of available space in the market,
net absorption tends to be supply-driven and as such, relatively low take-up 130
levels (3,300 sqm) were recorded in 4Q16.
120
Jakartas shopping malls are often weekend destinations for shoppers,
Index
110
families and leisure seekers. As such, F&B has been the most active retail
segment for some time with entertainment playing a supporting role and 100
43 RETAIL
driving demand for retail space. Several local and international brands
expanded in 4Q16. 90
No new completions; vacancy remains low 80

4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
A long-standing moratorium on stand-alone retail development in core Rental Value Index Capital Value Index
areas of the city has created a thin supply pipeline. No new projects were Arrows indicate 12-month outlook
completed in 4Q16 and just one was delivered in the whole year (Neo Soho Index base: 4Q12 =100
in 3Q16). Source: JLL
Given the lack of options for developers, the most likely point of entry in
core areas of the city is retail portions of mixed-use developments, with
sites close to the upcoming MRT an attractive proposition for some Physical Indicators
developers. Decentralised projects in Greater Jakartas townships also 400
present opportunities in areas unaffected by the moratorium.
350
Rents unchanged q-o-q; no investment deals close
300
Given the lack of available space in Jakartas prime retail market and
Thousand sqm
250
limited supply pipeline, occupancy levels have been healthy for some time.
In such a situation, landlords of top performing malls have been well- 200
placed to raise rents steadily. Rents were flat in 4Q16 but rose by 2.7% 150
y-o-y.
100
Steady rental growth, low vacancy rates and limited supply are such that
50
retail is consistently on the radar for investors. However, for the same
reasons, existing owners are often unwilling to offload and few en bloc 0
12 13 14 15 16 17F
transactions have historically closed in Jakarta no deals were announced Completions Future Supply
in 4Q16.
Source: JLL
Outlook: One new completion expected; vacancy to remain low For 2012 to 2016, completions are year-end annual.
Aeon Mall is earmarked for delivery in late 2017. This project is part of an
aggressive Greater Jakarta expansion plan by Aeon and will be the groups
second delivery in the Jakarta area following their 2015 project in the BSD
Township in the Tangerang area.
Space in 2017s only new completion is expected to be absorbed quickly
and the average market vacancy rate is likely to remain low. As such,
landlords are expected to continue increasing rental quotations and
investor interest will remain strong.
Note: Jakarta Retail refers to Jakartas overall Prime retail market.

A lack of vacancy in superior quality malls
DELHI
causes net absorption to slip to a
six-quarter low.

Rents
0.0% INR 248
Rising
Financial Indices Retailer activity being hindered by limited availability in quality malls
120 With vacancy in established premium malls low and recent quality
completions having achieved healthy occupancy, leasing activity remained
115
limited. This coupled with retailer exits from lower quality malls resulted in
110 negative net absorption during the quarter.
105
Despite healthy leasing activity in the recently refurbished Ansal Plaza, an
Index
100
active churn among retailers resulted in negative net take-up in the Prime
95 South during the quarter. Older, strata-titled retail properties in the Prime
44 RETAIL
90 Others are facing retailer exits while the Suburban submarket saw space
take-up restricted by a lack of vacancy in recent, quality completions.
85
80 Overall vacancy declines; highest vacancy in Prime Others

4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
Rental Value Index Capital Value Index There were no retail projects completed during the quarter.
Arrows indicate 12-month outlook Vacancy declined by 70 bps q-o-q to 20.4% in 4Q16, with supply
Source: JLL rationalisation of underperforming malls persisting. The Prime Others
Financial Indicators are for the Prime South. continued to have the highest vacancy amongst all retail submarkets.
Generally stable rents and capital values
Physical Indicators Rents remained largely unchanged across the city except for a small rise in
the Suburban submarket.
300
Capital values were largely stable across all submarkets barring the
250 Suburban submarket, where they rose in line with rents.
200 Outlook: Big-box retailers, F&B and entertainment to drive demand
Thousand sqm
Fast fashion, entertainment and F&B retail categories should drive demand
150
for quality retail space in 2017. Relaxed foreign direct investment rules are
100 likely to result in the entry of new global retailers.
The high occupancy rates in quality malls are likely to continue to limit
50
take-up and leasing activity in the absence of new completions. Selected
0
upcoming, quality retail projects have garnered some pre-commitments
12 13 14 15 16 17F but retailer interest is likely to grow as they move closer to completion.
Completions Future Supply Average-quality projects may struggle to attract retailer interest and this
Source: JLL could result in project delays.
Note: Delhi Retail refers to Delhi NCRs overall Prime retail market.
With a shortage of prime space and limited
supply, landlords are adjusting tenant mixes to
boost the presence of tenants with high
rental affordability.
MUMBAI

Rents
1.6% INR 257
Rising
Strong demand for quality space; net take-up concentrated in Suburbs Financial Indices
Net absorption for the quarter stood at 34,000 sq ft, significantly less than 120
the 427,000 sq ft in the previous quarter. However, take-up in 3Q16 was
115
boosted by the completion of a new mall in the Suburbs which had good
occupancy. We continue to see a wide disparity in the performance of 110
malls with some struggling to attract tenants. 105
Index
100
Retailers in the fashion, F&B and entertainment categories were the most
active in the quarter. 95
45 RETAIL
90
No new mall openings
85
Total stock of prime malls in Mumbai was 17.6 million sq ft at end-4Q16,
4.5% lower than a year earlier. 80
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
No new supply and positive net absorption contributed to a slight decline
in vacancy to 12.5% in 4Q16. Arrows indicate 12-month outlook
Rents rise in Suburbs and Prime South Source: JLL
Financial Indicators are for the Prime South.
Overall, prime mall rents grew 0.9% q-o-q to INR 121 with the Suburbs
witnessing the fastest pace of growth, followed by the Prime South. There
was no change in rents in the Prime North. Physical Indicators
Yields held steady in 4Q16 as rents and capital values moved in tandem. 80
Outlook: Upward pressure on rents and capital values expected 70
60
More quality space is expected to become available in the Suburbs and
the Prime South in 2017 as several new malls are scheduled to reach
Thousand sqm
50
completion.
40
International retailers in the lifestyle and premium categories are likely 30
to continue to look for opportunities to open stores in Mumbai given its
20
strong long-term fundamentals.
10
0
12 13 14 15 16 17F
Source: JLL
Note: Mumbai Retail refers to Mumbais overall Prime retail market.

Sydney CBD retail seeing strong market
conditions, fuelled by a greater presence of
SYDNEY international retailers, growth in inbound tourism

and positive trends in white collar employment.
Andrew Quillfeldt, Associate Director
Strategic Research, Australia

GROWTH Y-O-Y NET ON GLA
Rents
0.0% AUD 1,933
Stable
Financial Indices Retail spending continues to moderate in New South Wales

120 Retail spending growth in New South Wales (NSW) slowed in the year to
November 2016 from a peak in 2014, and is now only marginally below the
historical average of 4.6% y-o-y. However, growth remains comparable to
110 Victoria and well above the national average.
Leasing demand in prime regional and CBD shopping centres remains firm.
Index
100
Competition in the supermarket (and specialty food) sector is weighing on
leasing demand in neighbourhood centres. Spending on cafes, restaurants
46 RETAIL
90 and takeaway food is growing strongly, at 6.6% y-o-y in November 2016.

Vacancy edges down across Sydney in 2H16, yet above historical rates
80 Retail completions totalled 107,000 sqm in 2016, well below the long-term
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
Rental Value Index average (150,300 sqm). The neighbourhood sector represented 34,700 sqm
or 34% of completions in 2016. Stage One of Warringah Mall completed in
Index base: 4Q12 =100 November 2016 with many international brands such as H&M, Sephora and
Source: JLL Mecca Maxima leasing space. The Barangaroo South retail precinct (18,000
Financial Indicators are for regional shopping
centres. sqm) also opened over 4Q16 with 84 retailers and a new smaller format
David Jones (1,400sqm).
Physical Indicators The average vacancy rate in regional centres edged down to 1.0% in 2H16,
250
the lowest nationally. Neighbourhood centres (3.3%) were the only sub-
sector to record an increase in vacancy over 2H16.
200 Investment activity strong in 2016, although it declines in 4Q16
Retail investments totalled AUD 1.98 billion in 2016, 22% below 2015.
Thousand sqm
150 Significant sales in 4Q16 included: Ballina Central Shopping Centre (7.24%)
and Goulburn Central Shopping Centre (8.80%) which provided yield
100 benchmarks for non-metropolitan Sydney assets. With only three sub-
regional and regional shopping centres trading in 2016 across NSW,
50 investors are considering a broader range of retail assets, resulting in
almost a third of all retail transactions over the year being classified as
0
other typically comprising standalone retail premises.
12 13 14 15 16 17F
Yields continued to compress as competition for assets remained firm. We
recorded 13 bps of compression across the shopping centre formats
Source: JLL (unweighted) in 4Q16. Yields are close to the trough in this cycle and we
For 2012 to 2016, completions are year-end annual. expect to record limited yield compression over 2017 and 2018.
Outlook: Strong NSW economy supportive of retail spending
Supply is likely to be marginally above the long-term average in 2017 and
2018, but solid population growth suggests the market is likely to remain
relatively undersupplied on a per capita basis. Landlords are likely to
remain focussed on the refurbishment of existing space.
As yields approach their low for the current cycle, rental growth is likely to
become the primary driver of the movement in capital values over the next
12 months.
Note: Sydney Retail refers to Sydneys overall retail market.
Retail conditions in Melbourne remain positive
MELBOURNE
and were starting to see evidence of positive
rental growth.
Annabel McFarlene, Associate Director - Research, Australia

GROWTH Y-O-Y NET ON GLA
Rents
1.6% AUD 1,486
Rising
Retail spending growth remains above average, supporting retailer demand Financial Indices
Victorian retail turnover increased 4.4% y-o-y in November 2016, well 120
above the 3.6% national rate. Growth in clothing retailing accelerated, with
many international brands now expanding in this market. Department
stores in Victoria performed well and recorded the highest growth of any 110
state.
Index
100
Melbournes CBD super-prime retail market remained at full occupancy,
resulting in a spillover of retailer demand to the broader CBD. International
47 RETAIL
retailers continue to be attracted to the strong fundamentals. Local 90
retailers are seeking ways to differentiate their retail offering to compete
with new entrants and online retailers.
80
Supply is relatively low by historical standards 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
Rental Value Index
Pacific Werribee, a major regional shopping centre in Melbournes western
growth corridor, is expected to complete its AUD 370 million Index base: 4Q12 =100
redevelopment in early 2017. Australias largest shopping centre, Source: JLL
Financial Indicators are for regional shopping
Chadstone, is also undergoing an AUD 666 million staged redevelopment, centres.
with the major component, the West Mall, opening in October 2016. The
development will see the first Legoland Discovery Centre open in the
Physical Indicators
Southern Hemisphere and is expected to reach final completion in 2Q17,
adding a further 19,800 sqm of retail floor space. 350
Only one project completed in 4Q16, a bulky goods multi-unit centre, 300
Waurn Ponds Homemaker Centre (13,405 sqm). Supply for 2016 (79,500
250
sqm) was the second lowest figure in 15 years, reflecting the focus on the
Thousand sqm
redevelopment of existing centres, rather than new shopping centres. 200
Victorian retail transactions the highest nationally in 4Q16 150
Yield spreads remained wide in 4Q16, reflecting variance in the quality of 100
stock in the market. Investors are pricing secondary grade assets more
conservatively, but are chasing low-risk assets more aggressively. Yield 50
compression was evident across all retail sub-categories in 4Q16. 0

Neighbourhood assets mid-point yield compressed by 75 bps to 5.63%. 12 13 14 15 16 17F
Investment volumes in 4Q16 were AUD 553.1 million. Key transactions
included the acquisition by J.P. Morgan of the recently completed Source: JLL
St. Collins Lane for AUD 247 million. Scentre Group divested Casey Central For 2012 to 2016, completions are year-end annual.
shopping centre to M&G Real Estate Asia for AUD 221 million.
Outlook: The rental growth outlook for Melbourne remains positive
The drivers of retail turnover suggest market conditions should remain
healthy in Melbourne in the short term. Above-average population growth
and large tourism numbers are continuing to support retail turnover
growth and interest from international retailers for space.
While investor demand for assets remains robust, yields are likely to reach
their low point over the next 12 months.
Note: Melbourne Retail refers to Melbournes overall retail market.
Residential
49 RESIDENTIAL
The governments latest efforts to cool the
HONG KONG
housing market seem to be having little effect
on prices.

GROWTH Y-O-Y NET ON SA
Decline
7.2% HKD 41.6 Slowing
Financial Indices Latest stamp duty hike halts sales activity

110 Sales activity came to a halt after the government increased the stamp
duty for all residential transactions to a flat rate of 15%; save for first-time
105 buyers and upgraders. Some developers postponed project launches
to digest these new measures. Still, Hang Lung Properties sold all 302
100
assigned units at The Long Beach in Tai Kok Tsui.
Index
95
The opening of new MTR linesKwun Tong Line Extension and the South
90
Island Line (East)helped boost rental demand in Homantin and the
Southside. Elsewhere in the market, leasing activity remained subdued
85 leading up to a seasonal year-end slowdown.
80 Land supply on track to exceed governments target

4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
Rental Value Index Capital Value Index According to the governments quarterly land sale programme for 1Q17,
two residential sites will be released for sale via public tender. Together
Index base: 4Q12 =100 with MTRC, URA and private redevelopment sources, the government will
Source: JLL have accounted for the land supply of 19,460 flats, 8% higher than their
financial year target.
50 RESIDENTIAL
A total of 203 luxury units was expected to be issued with Occupation

Physical Indicators Permits in 4Q16, including 18 units at 44 Stubbs Road, 24 units from
800
Sun Hung Kai Properties St. Moritz, and 76 units from New World
Developments Mount Pavilia in Sai Kung.
700
Investors continue to eye redevelopment opportunities
600
Amid the slowdown in transaction volumes in the mass market, 48
500
properties priced over HKD 100 million changed hands in 4Q16, up
Units
400 50.0% y-o-y. Among notable transactions, Henderson Land successfully

300 amalgamated a 23,031 sq ft site in Hunghom for HKD 1.74 billion.
200 Rents continued to decline across the board, down 1.0% q-o-q in 4Q16 as
landlords more willingly offered incentives, including longer rent-free
100
periods, against rising vacancy in the high-end segment of the market.
0
12 13 14 15 16 17F
Meanwhile, capital values held up on the back of strong land sales and
record high transaction prices being achieved.
Outlook: Interest rate outlook to weigh on the market
Source: JLL
For 2012 to 2016, completions are year-end annual. In anticipation of further interest rate hikes, the build-up of luxury supply
and uncertainties surrounding the new Chief Executive elections in March
2017, the near-term outlook remains cautious for the residential market.
Still we expect capital values to end 2017 marginally higher, up 05%.
Leasing activity should gradually pick up over the next six months, though
the changing profile of expatriate tenants could lead to shrinking demand
in the high-end segment. Against an increase in supply, rents should
remain under pressure over the next 12 months, down 05%.
Note: Hong Kong Residential refers to Hong Kongs Overall Luxury residential market.
The market shows signs of cooling, and
BEIJING
government policy is set to control prices
in 2017.

Rents
4.9% RMB 133 Rising
Cooling policy issued at end-3Q16 restrains sales demand Financial Indices

The new tightening policy issued at end-3Q16, which increased the 140
minimum down payment for home-buyers, had an immediate impact
on the market. Luxury apartment and high-end villa sales transaction 130
volumes decreased 48% and 33% q-o-q, respectively.
120
Leasing demand for luxury apartments and high-end villas remained
Index
110
stable, following the trend from the previous quarter. Serviced apartments
saw an increase in the number of short-term tenants driven by business 100
travellers towards the end of the year.
90
Fewer pre-sales certifications given; new supply drops
With the cooling measures in place, developers held back in launching new 80
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
projects. At the same time, there was speculation that the Beijing Rental Value Index Capital Value Index
government tightened pre-sales certification for high-priced projects. This Arrows indicate 12-month outlook
had a subsequent impact and only 579 luxury apartment units and 181 Index base: 4Q12 =100
Source: JLL
high-end villas entered the market in 4Q16, down by 67% and 62% q-o-q, Financial Indicators are for the Overall Luxury
respectively. market.
51 RESIDENTIAL
One new serviced apartment project, Damei Oakwood outside the East 4th
Ring Road, entered the market with 171 units. Somerset Shunyi planned to Physical Indicators
open by end-4Q16, but postponed its completion to 2018. The serviced
9,000
apartment vacancy rate increased to 11.2% due to low occupancy at the
new project. 8,000
7,000
Primary capital value growth stable
6,000
Although demand was restrained, primary capital values for luxury
5,000
apartments recorded q-o-q growth at 1.7%. Meanwhile, the primary capital
Units
values growth rate for high-end villas accelerated q-o-q to 7.9% in the 4,000
quarter, as landlords of mature villa projects still managed to raise prices. 3,000
2,000
Rents rose by 1.8% q-o-q for luxury apartments and decreased slightly by
0.3% for high-end villas. Serviced apartment rents were flat q-o-q. 1,000
0
Outlook: Both demand and supply likely to be restrained 12 13 14 15 16 17F
After the Beijing mayor vowed in late 2016 that housing prices would not Completions Future Supply
rise in 2017, we anticipate strict implementation of the cooling policy and Source: JLL
possibly even follow-up measures. As such, we do not expect demand and For 2012 to 2016, completions are year-end annual.
supply to recover rapidly in the high-end market. Financial Indicators are for the Overall Luxury
market.
Three serviced apartment projects are expected to open in 2017, which
is likely to drive up market vacancy. However, two of them are far from
the core urban area. Therefore, new supply will not put much pressure on
the market and overall rents are still expected to rise moderately due to
increasing costs.
Note: Beijing Residential refers to Beijings Overall Luxury and High-end residential market.
Tightening policies tame price growth and
SHANGHAI impact sales volumes.

Rents
1.8% RMB 140.7 Stable
Financial Indices Declining sales due to limited new supply and restrictive measures
140 Following a buying spree in 3Q16, Shanghai announced a series of
tightening measures to cool the market. Coupled with limited new supply,
130 these new policies led to a plunge in sales volumes. Mass market and high-
end sales fell 50% and 29% q-o-q, respectively, in 4Q16.
120
Buoyant demand from upgraders prevented a steeper decline in sales
Index
110
momentum, with strong sales in the quarters newly launched projects. For
100
example, One Majesty launched 138 units, of which 84 units were sold in
4Q16. In the leasing market, rents declined by 0.9% q-o-q as demand
90 softened slightly towards the year-end.
80 New supply falls sharply; developers appetite for land fades

4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
Rental Value Index Capital Value Index New supply in the mass market contracted 34% q-o-q as the government
tightened policy measures. In the high-end segment, there were only two
Index base: 4Q12 =100 projects launched with 275 new units for sale, representing a sharp decline
Source: JLL of 76% from the previous quarter.
Developers appetite for land purchases were impacted when the
52 RESIDENTIAL
government stepped up efforts to scrutinise funding sources for land

Physical Indicators acquisitions. As a result, almost all of the 26 residential-use land plots sold
7,000
in 4Q16 were traded at the reserve price.
6,000
Price growth decelerates
Despite the new tightening policy, most developers remained upbeat given
5,000
low inventory levels and solid demand from upgraders. Growth in high-end
4,000 apartment prices in the primary market rose a further 1.0% q-o-q in 4Q16,
Units
down only moderately from the 1.6% growth recorded in 3Q16. High-end
3,000
prices surged 14.3% from 2015 to 2016.
2,000
In the secondary market, prices rose a further 2.7% q-o-q after recording
1,000 3.0% growth in 3Q16. For the full-year of 2016, the average secondary price
surged 21.3% y-o-y, driven by strong buying demand. The rise in capital
0
12 13 14 15 16 17F
values, coupled with the slight dip in rents, led to further compression in
yields in 4Q16.
Outlook: Sales expected to remain low; prices to stabilise
Source: JLL
For 2012 to 2016, completions are year-end annual. The Shanghai governments housing policy stance is likely to remain
tight throughout 2017, as stabilising the housing market is a top political
priority. As such, sales in the mass market will likely stay low over the next
12 months.
In the high-end segment, sales are also expected to remain low in 2017,
mainly due to limited new supply in the pipeline. However, given solid
demand from upgraders, we expect prices to remain stable in the months
to come.
Note: Shanghai Residential refers to Shanghais High-end residential market.

SINGAPORE
Pick-up in en bloc sales at year-end.
Ong Teck Hui, National Director Research, Singapore

Decline
8.0% SGD 4.69 Slowing
Sustained investment demand Financial Indices

Sales volumes in the prime districts declined in 4Q16 due to the year-end 110
holiday period and the lack of new launches. However, the figures showed
an increase of approximately 70% compared to the volumes in 4Q15. 100
Discounts and other incentive schemes offered by developers continued to

attract buyers. Market sentiment remained positive as investors and 90
Index
developers perceive that the market may be closer to the bottom.
80
Supply in prime residential districts tapers during the quarter
Cairnhill Nine, a 268 unit condominium in the Orchard area, was the largest 70
project completed in 4Q16. The project was launched for sales in March
2016 and achieved 82% take-up as at December 2016. 60
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
RV Index (Prime) RV Index (Luxury)
Annual new completions in 2016 were 20% lower than that in 2015 and
CV Index (Prime) CV Index (Luxury)
37% lower than the annual average from 2011 to 2015. Future supply in
the prime districts over the next five years are likely to remain moderate Index base: 4Q12 =100
and continuity in supply would depend mainly on the availability of private Source: JLL
land as prime district sites tend to be limited under the Government Land
53 RESIDENTIAL
Sales programme.
Physical Indicators
En bloc deals generate interest among developers
5,000
Rents continued to decline in 4Q16. Leasing activity slowed down during
the quarter due to a lacklustre economic performance and uncertainties in
4,000
the job market.
Capital values improved slightly during the quarter. In 4Q16, a portfolio of 3,000
three apartment buildings near Orchard Road was sold for
Units
SGD 190.5 million to multiple developers in Singapore. Under the 2,000

Residential Property Acts Qualifying Certificate (QC) rules, all developers
with non-Singaporean shareholders or directors are required to sell all
1,000
dwelling units within two years from the date of TOP. Developers were
under pressure due to the approaching Qualifying Certificate deadlines
0
and disposed of their unsold units to avoid paying hefty extension charges. 12 13 14 15 16 17F
Outlook: Prime residential market closer to its trough
The perception that prices could be bottoming out and more competitive Source: JLL
pricing is likely to spur demand in 2017. However, rising interest rates and For 2012 to 2016, completions are year-end annual.
expected slow economic growth in 2017 are likely to impede a quick
turnaround in the market.
The leasing market should remain weak, as the economy is unlikely to see
any significant improvement in 2017.
Note: Singapore Residential refers to Singapores overall Prime and Luxury residential markets.
More new condo units complete in 2016 than in
BANGKOK
all of 2013-15 combined, but demand
remains strong.

Growth
0.1% THB 516 Slowing
Financial Indices Strong pre-sales in newly completed projects

120 In 4Q16, more than 5,400 new units were sold by developers amid a large
number of new projects that completed with high pre-sales rates.
115
110 Eight new projects were launched during the quarter with a combined
pre-sales rate of 28%. Four of the eight projects were in the ultra luxury
105
segment and achieved a combined pre-sales rate of 30%. Only Khun by
Index
100
Yoo from Sansiri PCL, a 148 unit ultra luxury project in the Thong Lor
95 neighbourhood performed well with a pre-sales rate of 60%.
90
Significant volume of new completions
85
Nearly 5,900 new condo units across 14 projects completed in 4Q16, leading to
80 a 16% q-o-q increase in stock, which now stands just shy of 42,000 units. With
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
Rental Value Index Capital Value Index the strong number of pre-commitments in these newly completed projects,
the unsold rate in the prime condo segment remains below 3%, meaning
Index base: 4Q12 =100 there exists very little primary market inventory available for sale.
Source: JLL
In the luxury apartment sector, Tonson Court, was withdrawn from the market
as the owner sold the land to a residential developer who will demolish it and
54 RESIDENTIAL
build a new condominium project on site. The vacancy rate in the luxury
Physical Indicators apartment sector stands at 8.2%, with many larger 2 bedroom and 3 bedroom
units available in the market.
9,000
Well-known listed developers continue acquisition spree
8,000
In 4Q16, condominium net effective rents increased by by 0.7% q-o-q while
7,000
luxury apartment rents increased by 4.0% q-o-q. Rental growth in the
6,000
prime condo segment remains muted as there exists stiff, growing
5,000 competition as supply continues to increase and many owners are seeking
Units
4,000 a rental yield.

3,000
Three listed developers, Singha Estate PCL, Asset Bright PCL and Ananda
2,000 Development PCL (in conjunction with Mitsui Fudosan from Japan),
1,000 acquired prime development sites in 4Q16. The total outlay of the
0
unrelated transactions is estimated at THB 8.5 billion (USD 240 million).
12 13 14 15 16 17F
Outlook: Stable condo demand; new rules could inflate development costs
Source: JLL We expect nearly 5,000 new condo units to complete in 2017. While most
For 2012 to 2016, completions are year-end annual. projects have healthy pre-sales rates we anticipate that the unsold rate
across the CBA may increase to 45% by end-2017. Should developers
continue to launch new top-end projects in 2017, they may begin to test
the limits of both foreign and domestic demand.
New energy conservation regulations are expected to come into force in
mid-2017. The new guidelines will require developers to invest more in the
design and construction of condo projects to meet energy and water
savings targets. These additional costs are likely to be passed on directly to
the consumer and result in rising capital values and selling prices.
Note: Bangkok Residential refers to Bangkoks CBA High-end and Luxury residential market.
Luxury sales remain weak but sentiment begins
to improve.
James Taylor, Head of Research, Indonesia
JAKARTA

Rents
1.0% IDR 3,425,463 Stable
Luxury buyers yet to return to the sales market Financial Indices

Many of the factors contributing to weak sentiment in the condominium 200
sales market are now much improved. Headline GDP growth picked up
slightly in 2016 and the rupiah improved against the US dollar, while the 180
government took active steps to stimulate the market. However, sales
160
remained weak and it may take several quarters of stability for the market
to improve.
Index
140
Many oil & gas and mining firms contracted significantly in 2015 and 2016. 120
This led to a shrinking expatriate population and consequently weaker
demand for serviced apartments. Serviced apartment net absorption was 100
negative for the fourth successive quarter in 4Q16.
80
No physical completions in 4Q16 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
No new serviced apartments or luxury condominiums were completed in Arrows indicate 12-month outlook
4Q16. Given negative net absorption throughout 2016, serviced apartment Index base: 4Q12 =100
vacancy rates hit 24% by year-end, despite no new supply during the year. Source: JLL
High-end condominium launches are in line with demand, and as such, no
55 RESIDENTIAL
luxury products were launched in 4Q16. Two lower-end projects entered
the sales market, including the first phase of a large development in West Physical Indicators
Jakarta developed by a mainland Chinese group.
600
Luxury condominium prices remain largely flat
500
Despite improving sentiment due to better macroeconomic fundamentals
and government support, buyers have not yet returned to the market 400
en-masse. As such, luxury condominium prices remained flat. Serviced
apartment rents edge up marginally q-o-q (0.7%).
Units
300
Jakartas socioeconomic fundamentals are an attractive proposition for 200

developers and investors. As such, interest remained strong from regional
groups notably those from Japan, Hong Kong, Singapore and 100
increasingly mainland China.
0
Outlook: Condominium demand to improve in 612 months 12 13 14 15 16 17F
An improving macroeconomic environment and government support are
likely to result in improvements in the condominium sales market, Source: JLL
although it may take several quarters of stability for sentiment to improve For 2012 to 2016, completions are year-end annual.
sufficiently for a pick-up in sales. Serviced apartment rents are likely to fall
due to high vacancy rates.
Investor demand is likely to remain strong and development groups are
likely to continue to eye the relatively limited number of available sites in
core areas of the city where there is an active leasing market. Decentralised
developments both within city limits and further out in townships are also
likely to remain popular.
Note: Jakarta Residential refers to Jakartas luxury condominium and serviced apartment markets.
Industrial
57 INDUSTRIAL
Leasing demand remains focused on cost-saving
HONG KONG
relocation amid lagged effects in
improving trades.

Growth
1.7% HKD 12.9 Slowing
Financial Indices Key demand drivers show improvement
180 Improved demand from major Asian trading partners saw the total value of
exports and imports grow by 3.1% and 4.1% y-o-y, respectively, in
160 OctoberNovember. Airfreight cargo and container throughput increased
7.1% and 11.2% y-o-y, respectively over the same two-month period.
140
Warehousing demand was largely underpinned by cost-saving relocation
Index
requirements among 3PLs. Among the few tenants willing to commit to

120
warehouses toward the upper end of the market were commercial
kitchens. In one of the largest such examples, Angliss HKa food service
100
companyexpanded into 147,000 sq ft at Mapletree Logistics Hub Tsing Yi.
80
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
Vacancy drops as availability in lift access warehouses tightens
Sizeable new lettings at Mapletree Logistics Hub Tsing Yi, coupled with the
Arrows indicate 12-month outlook tightening availability in lift-access facilities contributed to the overall
Source: JLL vacancy rate edging down to 2.3%.
No new supply completed in 4Q16. The completion of China Merchants

Logistics Centre (1.49 million sq ft) in Tsing Yi has now been postponed to
Physical Indicators 2Q17.
Reduction in industrial stock provide warehouse rents a lift

500
450 Overall, rents edged up 0.3% q-o-q in 4Q16 to end the year 1.7% higher.
400 Rents in Kowloon grew 1.4% q-o-q, driven by rental increases in Kwun
350 Tong, where revitalisation policies have reduced industrial stock and
Thousand sqm
300 warehousing options. In the New Territories, steady demand from 3PLs
250 targeting lift access warehouses saw rents increase by 0.3% q-o-q.
200
150 Few notable transactions were recorded in the investment market with
100 investors primarily focused on smaller strata-tilted units in new industrial
50 buildings owing to the smaller lump sums involved.
58 INDUSTRIAL
0
12 13 14 15 16 17F Outlook: Rents face downside risks despite improving trade volumes
Completions Future Supply In view of new supply over the next six months, rents in the higher end of
the market will likely face increased downward pressure in 2017. Rental
Source: JLL
For 2012 to 2016, completions are year-end annual. growth, if any, should mainly be driven by growth in cargo lift access
Future supply is for 2017. warehouses where rents are still trading at a relative discount. Overall, we
forecast rents to end 2017 down 05%.
While the new stamp duty measure in the residential sector could boost
interest for industrial properties, the recent announcement of capital
controls on outbound PRC capital and rising interest rates could taper
investment appetite. All-in-all, capital values are expected to grow by 05%
in 2017, moderating from the 9.6% increase recorded in 2016.
Note: Hong Kong Industrial refers to Hong Kongs industrial warehouse market.
Large-size commitments support net absorption
in 2016, and this is likely to continue in 2017.
BEIJING

Growth
0.9% RMB 1.14 Slowing
3PLs remain the key market driver Financial Indices
Many units left vacant in the previous quarter were taken by 3PLs, which 120
allowed net absorption to reach 20,500 sqm in 4Q16, more than doubling
115
q-o-q. Combined with the two fully pre-committed projects in 1H16, net
take-up for the entire year totalled 200,900 sqm, the highest figure in the 110
last five years. 105
Index
100
Demand showed a polarisation in 2016. Big players remained active in
95
looking for modern facilities better able to meet their requirements. On the
other hand, some small tenants were forced to downsize or relocate to 90
low-end or remote facilities to save costs under the slower economy. This 85
trend is expected to continue in 2017.
80
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
One new project in an emerging area pushes up vacancy Rental Value Index Capital Value Index
GLP Park Pinggu Phase II entered the market on schedule. The single-storey Arrows indicate 12-month outlook
project brought 29,200 sqm of new supply to the market and increased total Source: JLL
stock to 1.97 million sqm.
Despite the vacancy rate dropping at existing projects supported by 3PL

demand, overall vacancy rose slightly, but still remained tight at 2.8% at Physical Indicators
end-4Q16, as there was no pre-commitment at the new project.
300
Stable rents, but hot sales market
250
Chain-linked rents remained stable. However, the lower-than-market
average rents at the new project pulled down overall average spot rents by 200
Thousand sqm
0.3% q-o-q. At end-4Q16, the rental figure rested at RMB 1.14 per sqm per
day. 150
Dongbai Group, a Fujian based retail operator, acquired a project in Beijing 100
Economic-Technological Development Area for RMB 203 million. Dongbai 50

plans to develop the 58,000 sqm property into a high-end warehouse
59 INDUSTRIAL
to enable smooth entry into Beijings competitive and thinly supplied 0
warehouse market with limited future supply. 12 13 14 15 16 17F

Outlook: Vacancy rate to decline continuously in 2017
Source: JLL
With a large future project in Tongzhou Logistics Park postponed, only For 2012 to 2016, completions are year-end annual.
three new projects with a total GFA of approximately 139,000 sqm are Future supply is for 2017.
expected to enter the market in 2017.
Leasing demand is expected to be stable in 2017 with 3PL companies

continuing to drive demand. As a result, the vacancy rate is expected to
decline continuously to less than 2.0% by end-2017. This is likely to lead to
opportunities for slight rental increases, similar to 2016.
Note: Beijing Industrial refers to Beijings prime non-bonded logistics market.

Strong demand in 4Q16 boosts annual take-up to
SHANGHAI record high.

Rents
1.5% RMB 1.30 Stable
Financial Indices Net absorption robust despite lack of new supply
140 Non-bonded net absorption reached 173,000 sqm in 4Q16, pushing
annual take-up to a record high of nearly 550,000 sqm. With space in West
130 Shanghai still limited, absorption in 4Q16 was concentrated in Baoshan
and the Pudong Airport (PVG) submarkets. For example, Goodman leased
120
out approximately 90,000 sqm in the third phase of its PVG project.
Index
110
3PLs continued to play a dominant role in the leasing market. For example,
100 China Post leased 20,000 sqm in the Goodman PVG project. Other
international and domestic 3PLs leased over 100,000 sqm across the city.
90 In addition, automobile companies seeking space for whole car storage
also contributed to the quarters take-up.
80
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
Rental Value Index Capital Value Index No completions
Two projects planned for 4Q16 were pushed back to early 2017. With
Source: JLL leasing activity strong and no new projects completed in the quarter, non-
Financial Indicators are for the Non-bonded bonded vacancy dropped from 10.8% to 7.3%.
market.
Among all submarkets, PVG saw the largest decline in vacancy, falling from
Physical Indicators 29.1% to 4%. The decline was mostly due to strong leasing in Goodmans
project there. In addition, strong leasing in GLPs Baoshan project helped
600
reduce vacancy in Baoshan by 10 percentage points.
500
Rents remain relatively flat despite large take-up
400
Rents edged up only slightly as landlords of projects with vacancy
Thousand sqm
300
continued to be cautious. Rental growth continued to diverge in the city -
average rents increased by 0.6% q-o-q in West Shanghai, compared to a
200 0.2% increase in East Shanghai, where vacancy tends to be higher.
10 Yields have not compressed as quickly as expected, with foreign investors
demanding higher returns following the US Feds interest rate increase.
60 INDUSTRIAL
0
12 13 14 15 16 17F However, some further compression is still possible as the role of domestic
Completions Future Supply investors in the investment market continues to grow.
Outlook: Rents likely to accelerate in 2017

Source: JLL
For 2012 to 2016, completions are year-end annual. Seven projects with a total area of 443,000 sqm (GFA) are scheduled for
Future supply is for 2017. completion in 2017. As demand is expected to remain strong throughout
2017, vacancy should remain at a low level at around 6%. With vacant
space limited in West Shanghai, tenants will be more willing to consider
East Shanghai or the emerging areas like Baoshan and Jinshan.
We expect rental growth in 2017 to accelerate compared to 2016, as an

extended period of low market vacancy is likely to make landlords more
confident in raising rents. In addition, most new supply will be located in
the relatively expensive submarkets where entry rents are higher than the
market average.
Note: Shanghai Industrial refers to high-quality non-bonded modern warehouses in Shanghai City.
Vacancy drops significantly as occupancy rises
in buildings completed in 2016.
TOKYO

Growth
1.1% JPY 4,134 Slowing
Net absorption in 2016 surpasses previous year by 40% Financial Indices
Key performance indicators showed signs of improvement with industrial 150
production holding stable m-o-m in October followed by an increase of
140
1.5% in November. Exports decreased 10.3% y-o-y in October but the
decline slowed in November to 0.4% y-o-y. 130
With new leasing and expansion demand from businesses including third 120
Index
party logistics players (3PL), net absorption in 4Q16 registered 208,000 110
sqm. For the full-year, net take-up totalled 1.1 million sqm, equivalent to
100
about 140% of the previous year. New supply in 2016 was equivalent to
200% of the past 10-year annual average, and this major new supply 90
helped stimulated demand.
80
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
Vacancy dips to around 5% Rental Value Index Capital Value Index
No new supply entered the prime industrial logistics market in Tokyo in Arrows indicate 12-month outlook
4Q16. Source: JLL
The vacancy rate at end-4Q16 was 5.3%, decreasing 270 bps q-o-q and 120
bps y-o-y. Both Bay and Inland areas saw significant decreases in vacancy
of 120 bps and 370 bps q-o-q, respectively. Physical Indicators
Rents grow in Inland area but decrease in the Bay area

1,200
Rents in Greater Tokyo averaged JPY 4,134 per tsubo per month at end-
1,000
4Q16, decreasing 0.1% q-o-q and 1.1% y-o-y. The Bay area saw a decline of
0.4% q-o-q while the Inland area increased 0.1%. Some landlords softened 800
Thousand sqm
their rental stance to improve occupancy.

600
Capital values decreased 0.1% q-o-q in 4Q16, but nonetheless were still
0.4% higher than a year earlier. Notable investment transactions in the 400
quarter included LaSalle Investment Managements sale of Sayama Hidaka

200
Fulfillment Centre and Logiport Hiratsuka Shinmachi. The NOI cap rate for
61 INDUSTRIAL
these two properties along with the sale of AZ-COM MK OSAKA located in 0
Osaka was 4.3%. 12 13 14 15 16 17F

Outlook: Rents to grow moderately in 2017
Source: JLL
According to Oxford Economics 2017 outlook, the industrial production For 2012 to 2016, take-up, completions and
index is expected to rise 1.3% y-o-y, while exports are expected to increase vacancy rates are year-end annual. Future supply
is for 2017.
0.7%.
New supply is expected to reach 722,000 sqm in 2017, equivalent to about

110% of the past 10-year annual average. With healthy forward
commitments to upcoming supply, the vacancy rate is expected to
decrease. As such, rents are likely to grow, albeit modestly. In the
investment market, strong investor interest is expected to persist and this
could place downward pressure on cap rates and underpin capital value
growth.
Note: Tokyo Industrial refers to Greater Tokyos Prime logistics market.
Rent decline stays mild as vacancy rate tightens
SINGAPORE amid tapering supply and steady absorption.
Tay Huey Ying, Head of Research, Singapore

Decline
3.0% SGD 3.70 Slowing
Financial Indices New demand from the technology sector lifts absorption for Business Park
120 The Business Park segment recorded steady absorption as the start of
Googles operations in Mapletree Business City II in November generated
115
new demand given that the firm is relocating from an office development
110
in the CBD.
105
Besides the resilient science, tech and media sectors, demand for Business
Index
100
Park space continued to be supported by the biomedical sector, which
95
continued to power the nations manufacturing output.
90
85
Vacancy rate tightens amid tapering supply and steady absorption
80 Supply stayed low in 4Q16 with GSK Asia House (12,000 sqm) at 23
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17 Rochester Park being the only new completion.
Arrows indicate 12-month outlook The 2016 full-year net increase in supply is the highest annual net increase
Index base: 4Q12 =100 since 2003. This was attributed to the large completion in 1H16 contributed
Source: JLL
mainly by Mapletree Business City II, as well as the re-zoning of factory
space in Technopark@Chai Chee to Business Park in 1Q16.
Physical Indicators Tightening vacancy rate supports yet another quarter of mild rent decline
300 24
The gradual easing of supply overhang amid limited new projects and
steady demand saw rents post another quarter of mild retreat.
250 20 Nonetheless, 2016 posted a full-year rent decline that was a little faster
than in 2015.
200 16
Thousand sqm
Capital value movement closely mirrored that of rents, although the

Percent
150 12
improved investment sales momentum provided support for values to
100 8 hold up marginally better than rents, thus keeping yields relatively
unchanged in 4Q16.
50 4
Outlook: Rents firming amid tightening supply

0 0
62 INDUSTRIAL
12 13 14 15 16 17F Demand for Business Park space is expected to continue to be driven by

Take-Up (net) Completions occupiers in the growth sectors of science, technology and media
Future Supply Vacancy Rate industries. Stock, on the other hand, is expected to stay relatively stable
due to a lack of new completions foreseen for 2017.
Source: JLL
rates are year-end annual. Future supply is for 2017. Tightening supply amid steady demand and limited new completions
should pave the way for rents to firm in 2H17. The interplay of healthy
investors interest, limited buying opportunities and rising interest rates
should see capital values trending similar to rents, bringing about
relatively unchanged yields.
Note: Singapore Industrial refers to Singapores island-wide Business Park market.

Sales push above AUD 2 billion for a fourth
successive year.
SYDNEY

Rents
0.4% AUD 112 Rising
Retail trade sector significantly contribute to take-up Financial Indices
Gross take-up totalled 173,300 sqm across 15 occupier moves in 4Q16. The 140
retail trade sector significantly contributed to this total (42%), with online
based retailers The Iconic (19,100 sqm) and Hello Fresh (9,256 sqm) taking 130
up space in the Outer Central West precinct.
120
The largest amount of space taken up over the quarter was in the Inner
Index
110
West precinct (71,300 sqm), closely followed by the Outer West precinct
(69,400 sqm). The largest move of the quarter was retail trader, Lesso Mall 100
Holdings leasing 21,740 sqm in Chullora, in the Inner West precinct.
90
Completions concentrated in Outer West precincts
80
Five projects completed in 4Q16 totalling 70,700 sqm and with a 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
pre-commitment rate of 64%. The largest facility to complete was a
speculatively constructed warehouse at Building 1 in Mirvacs Calibre Arrows indicate 12-month outlook
Estate (18,935 sqm). Source: JLL
Financial Indicators are for Outer Central West.
Completions totalled 516,700 sqm in 2016 the strongest result since 2012.
Developments in 2016 had an 85% pre-commitment rate upon completion,
and nearly two-thirds of construction activity (62%) was concentrated in Physical Indicators
the Outer Central West.
1,000
Industrial yields continue to compress 900

800
AUD 454.3 million ( AUD 5 million) of asset sales were recorded in 4Q16. 700
The largest single-asset transaction was Propertylink Australian Industrial
Thousand sqm
600
Partnership IIs purchase of 205231 Fairfield Road, Yennora. The asset 500
transacted for AUD 46.6 million and is tenanted by The Iconic, who recently 400
committed to a seven year lease in the asset. 300
200
Prime yields compressed in all precincts with the exception of the Outer 100
Central West and Outer North West. The precinct with the tightest prime
63 INDUSTRIAL
0
yield range is South Sydney (5.50%6.00%), with average prime yields 12 13 14 15 16 17F
(5.75%) being 75 bps below the previous record low (6.50%) achieved in Take-Up (gross) Completions
4Q07. Future Supply
Outlook: Infrastructure development will reshape Sydney Source: JLL

For 2012 to 2016, take-up and completions are year-
Development activity in 2017 is forecast to be the highest figure since 2008. end annual. Future supply is for 2017.
There is currently 329,500 sqm of industrial supply under construction and
another 285,500 sqm with development approval which is expected to
complete in 2017.
The development of Western Sydney Airport as well as arterial road

upgrades in the Outer Western precincts will increase the attractiveness
of the area for industrial occupiers. On the other hand, the withdrawal of
industrial space for alternate use will be a continuing theme in the South
Sydney precinct over 2017.
Note: Sydney Industrial refers to Sydneys industrial market (all grades).
The strength of the Victorian economy is
MELBOURNE
illustrated by the strongest annual industrial
sector take-up since 2005.
Annabel McFarlane, Associate Director Research, Australia

Rents
4.0% AUD 85 Stable
Financial Indices Leasing activity picks up strongly in 4Q16 after a subdued 3Q16
140 Gross take-up picked up strongly to 189,900 sqm in 4Q16 with activity split
between the West (80,400 sqm) and South East (109,500 sqm). Take-up in
130 Melbournes industrial markets totalled 766,400 sqm for the year.
120 In a reversal of the trend earlier in the year, the majority (60%) of take-up
over the second half of 2016 was for existing space. Demand came from a
Index
110
diverse range of industries in 4Q16. The most significant lease transaction
100 was a 15 year lease to Premoso, part of the Walkinshaw Automotive Group
for a facility in Clayton.
90
A strong run of completions provides 196,070 sqm to the market
80
4Q12 4Q13 4Q14 4Q15 4Q16 4Q17 Sixteen new projects totalling 196,070 sqm completed in the quarter and
with 84% leased on completion. Nine of the completions are located in the
Arrows indicate 12-month outlook South East (41%). A further 402,920 sqm is currently under construction
Source: JLL and due to complete in 2017.
Financial Indicators are for South East.
A 37,765 sqm facility was completed for The Reject Shop and a large new
facility for retailer Target (62,870 sqm) is under construction at Charter
Physical Indicators Halls Drystone Industrial Estate in Laverton North. The Reject Shop is
relocating from its existing facility at Tullamarine in the North to the West
800
precinct at lease expiry in early 2017.
700
600 Investment volumes total AUD 348.9 million

Sales volumes for 2016 totalled AUD 1.51 billion (>AUD 5 million). Whilst
Thousand sqm
500
400
this figure is down on the peak recorded in 2015, this represented a third
consecutive year that transaction volumes were close to double the long-
300
term annual average (20002015). Portfolios, large scale assets and assets
200
with long WALEs have attracted investor interest.
100
Prime investment yields compressed to 6.00%6.50% in the South East
64 INDUSTRIAL
0
12 13 14 15 16 17F and remained stable in the North at 6.25%7.50%. The sale of the Coles
Take-Up (gross) Completions distribution facility at Truganina in July 2016 is an example of a rare super
Future Supply prime asset with a very long weighted lease (16 years) which sold with an
analysed yield of 5.50%.
Source: JLL
For 2012 to 2016, take-up and completions are year-
end annual. Futures supply is for 2017. Outlook: Investors demand quality lease covenants and long WALEs
Supply levels are anticipated to be high in 2017, above the strong supply
levels of 20142016. However, 92% of projects under construction have
secured tenant pre-commitment.
Melbournes industrial sector should be supported by a number of major

infrastructure projects that will complete over the next decade. At the
same time, serviced industrial land is becoming limited and this will likely
continue to place upward pressure on land values.
Note: Melbourne Industrial refers Melbournes industrial market (all grades).

Hotels
65 HOTELS
Subdued market outlook due to decline in visitor
arrivals and broader global
HONG KONG economic uncertainty.
Frank Sorgiovanni, Head of Research, Asia Pacific
Hotels & Hospitality Group
REVPAR YTD NOVEMBER 2016 STAGE IN REVPAR CYCLE

GROWTH Y-O-Y
Decline
1.5% HKD 2,634 Slowing
Luxury Hotel Trading Performance Visitor arrivals declining, but showing signs of bottoming
4,000 100 Visitor arrivals to Hong Kong fell 5.7% y-o-y to 46.7 million as at YTD
3,500 90 October 2016, primarily due to the decline in visitors from mainland China.
80 Mainland Chinese visitors dipped by 8.2% y-o-y to 35.4 million arrivals,
3,000
ADR / RevPAR (HKD)
70 which can be attributed to various factors including ongoing socio-political

Occupancy (%)
2,500 60 tensions with mainland China and the strengthening Hong Kong Dollar.
2,000 50
1,500 40 On a brighter note, we observed signs of bottoming despite the decline of
1,000
30 the mainland China market. Meanwhile, as at YTD November 2016, both
20 the long-haul and short-haul markets (excluding mainland China)
500 10
experienced growth in overnight visitors, recording growth of 3.0% y-o-y
0 0
and 9.1%, respectively.
May 11
Nov 11
May 12
Nov 12
May 13
Nov 13
May 14
Nov 14
May 15
Nov 15
May 16
Nov 16
Increase in new supply slows in 2016

ADR RevPAR
Occupancy (%) Approximately 760 rooms were added in 2016, including Hilton Garden Inn
Source: STR Global, JLL Mong Kok, Cruise Hotel, Metro Winner Hotel and Eco Tree Hotel. This
Note: MAA - Moving Annual Average represented a 1.0% increase in stock, which is relatively limited compared
to the past few years.
Supply addition will pick up in 2017, with an additional 3,392 rooms
Major Additions to Hotel Supply expected to enter the market. Some notable hotels slated to open in the
near future include Disney Explorers Lodge (750 rooms), Kerry Hotel by
5,000
Shangri-La (545 rooms) and Rosewood Hong Kong (600 rooms).
4,500
4,000
Trading performance continues to decline
3,500 As at YTD November 2016, the mid-scale and economy hotel segments saw
a decline in Revenue Per Available Room (RevPAR) of 3.4% y-o-y as visitor
No. of rooms
3,000
2,500 arrivals from mainland China continued to contract. Likewise, Upscale
2,000 hotels recorded a 3.3% y-o-y decline in RevPAR, primarily driven by a 4.2%
1,500
decrease in Average Daily Rate (ADR).
1,000 As at YTD November 2016, occupancy for luxury hotels improved by 1.1%
500 to 78.2% while ADR dipped 2.5% y-o-y to HKD 3,369. The decline in ADR is
0 likely to be a compromise by hotel operators to sustain occupancy. As a
12 13 14 15 16 17F
result, RevPAR declined by 1.5% y-o-y. On a moving annual average basis,
Additions to Supply Future Supply
RevPAR declined from HKD 2,698 in November 2015 to HKD 2,666 in
Source: Industry sources, JLL November 2016.
Outlook: Increase in supply and economic uncertainties limit growth
2016 set the stage for further uncertainty in 2017, with a lack of clarity still
surrounding Brexit and the policy stance of the new US government.
As a major corporate hub, Hong Kong is likely to be affected by broader
global economic uncertainties. In addition, investment banks are cutting
jobs in Hong Kong, which is likely to result in weaker corporate demand.
66 HOTELS
Note: Hong Kong Hotels refers to Hong Kongs Luxury hotel market.
Hotel performance driven by balanced supply
additions and the Jing-Jin-Ji regional
economic strategy BEIJING
Frank Sorgiovanni, Head of Research, Asia Pacific -

GROWTH Y-O-Y
RevPAR
3.7% RMB 727 Rising
Continued lack of growth in international visitor arrivals Upscale Hotel Trading Performance
As at YTD November 2016, Beijing Statistics Bureaus data showed 1,200 100
relatively stable international visitor arrivals, with a minor decrease of 90
1,000
1.0% y-o-y to 3.9 million. There was a decline in visitor numbers from both 80
ADR / RevPAR (RMB)

major Asian and European markets. Visitors from South Korea and Japan 800
70
Occupancy (%)
fell 7.0% and 3.9% y-o-y respectively, while French visitors decreased 60
600 50
14.3% amid a depreciation of the Euro.
40
400
Air pollution caused a dent in Beijings tourism market. Figures from 30
Beijing Tourism Bureaus data indicate that visitor numbers fell by 2.8% 200
20
10
y-o-y to 11.2 million during national holidays in China. The Jing-Jin-Ji
0 0
economic strategy is an ongoing action plan to address air pollution issues,
May 11
Nov 11
May 12
Nov 12
May 13
Nov 13
May 14
Nov 14
May 15
Nov 15
May 16
Nov 16
with the government targeting reduced coal use, cleaner manufacturing
and less private car usage. ADR RevPAR
Occupancy (%)
Supply additions moderated by development restrictions
Source: STR Global, JLL
Six hotels became operational in 2016, bringing 1,479 rooms to the Note: MAA - Moving Annual Average
market and increasing stock by 4.3%. Strict restrictions on commercial
developments within the 4th Ring Road slowed the pace of hotel
development in Beijing.
Major Additions to Hotel Supply
In 2017, nine hotels are slated to launch, adding 2,204 rooms or 6.1% of
3,000
existing stock. Post-2018, new projects will add 3,100 rooms if all projects
all materialise.
2,500
Occupancy improvement continues to drive trading performance
2,000
As at YTD November 2016, occupancy continued to improve, growing 3.2
No. of rooms
percentage points to 71.4%. During the same period, Average Daily Rate 1,500
(ADR) remained stable at RMB 1,019. Driven by occupancy, Revenue Per
Available Room (RevPAR) demonstrated a 3.7% y-o-y growth to RMB 727. 1,000
On a moving annual average basis, occupancy reached 70.6% in 500

November, a slight drop y-o-y while ADR was recorded at RMB 1,005,
increasing 7% y-o-y. As a result, RevPAR registered 5.1% y-o-y growth to 0
12 13 14 15 16 17F
RMB 714.
Outlook: Increasing demand but measured supply promises a bright outlook
Source:Yearbook of China Tourism Statistics,
Economic integration with Tianjin and Hebei will drive Beijings tertiary Industry sources, JLL
industry, generating higher value corporate demand. Core business areas
such as Zhongguanzun, Guomao Central Business District, and Wangjing
should remain active with further corporate investment, which is likely to
support demand within the hotel sector.
Enhanced infrastructure and entertainment facilities will support demand
for leisure hotels in Beijing. The 2019 completion of the Jing-Zhang high-
speed railway in preparation for the 2022 Winter Olympics will reduce
Beijing-Hebei travel time, while the upcoming Beijing Universal Studio in
67 HOTELS
Tongzhou is an upcoming key tourist attraction in Beijing.

Note: Beijing Hotels refers to Beijings Upscale hotel market.
Strong visitor demand and greater spending
SHANGHAI power key drivers of hotel performance.


GROWTH Y-O-Y
RevPAR
5.4% RMB 773 Rising
Upscale Hotel Trading Performance Strong growth in international visitors

1,400 100 As at YTD November 2016, Shanghai Statistics Bureaus data showed
90 7.9 million international visitor arrivals to the city, increasing 6.6% y-o-y,
1,200
80 twice the number of foreign visitors to Beijing over the same period.
ADR / RevPAR (RMB)
1,000 70 Growth in international arrivals to Shanghai has improved consistently.

Occupancy (%)
800 60
50 Despite soft economies in major Asian source markets such as Japan and
600 40 Korea, visitors from these countries continued to grow. Visitor arrivals from
400 30 key European source markets likewise registered improvements.
20
200
10 Large addition of hotel developments in Shanghai
0 0
2016 saw the addition of 18 hotels, contributing almost 5,500 rooms to
May 11
Nov 11
May 12
Nov 12
May 13
Nov 13
May 14
Nov 14
May 15
Nov 15
May 16
Nov 16
the upper-midscale and upscale segments. This amounted to 9.1% growth

ADR RevPAR in existing stock. The surge in hotel developments was catalysed by the
Occupancy (%) opening of Shanghai Disneyland.
Source: STR Global, JLL Future supply over the next few years is expected to match the 2010 supply
Note: MAA - Moving Annual Average
influx driven by the Shanghai Expo. 2017 is expected to see over 7,000 new
rooms, or over 10% of existing stock, with 6,000 more rooms planned to
open from 2018 onwards. While indicative of investors confidence, this
Major Additions to Hotel Supply should put downward pressure on trading performance.
8,000 Performance continues to improve despite new supply
7,000 As at YTD November 2016, occupancy continued to improve, growing
4.2 percentage points y-o-y to 73%. Average Daily Rate (ADR) remained
6,000
relatively stable, dropping slightly by 0.7% y-o-y to RMB 1,059. Driven by
5,000 improving occupancy, Revenue Per Available Room (RevPAR) increased by
No. of rooms
4,000 5.4% y-o-y to RMB 773.

3,000 On a moving annual average basis, ADR recorded a slight decrease of 2.9%
2,000
y-o-y to RMB 1,049 as at November. Occupancy continued to improve,
rising 3.5 percentage points y-o-y to 72.2% while RevPAR registered growth
1,000
of 1.8% to RMB 761.
0
12 13 14 15 16 17F Outlook: New demand generators to bolster trading performance
Despite an influx of supply, trading performance is expected to remain
Source: Yearbook of China Tourism Statistics, strong, supported by ongoing city development and greater consumer
Industry sources, JLL spending power. Performance growth is expected for hotels within the
urban core, while peripheral areas such as Jiading, Songjiang and
Chongming should see the large addition of supply diluting performance.
Demand is expected to remain strong supported by new entertainment
facilities (e.g. Shanghai Disneyland and the upcoming Polar Ocean World);
rapidly developing meetings, incentives, conventions and exhibitions
market (benefitting from the opening of the Shanghai International
Exhibition and Convention Centre); as well as ongoing development of the
Hongqiao CBD.
68 HOTELS
Note: Shanghai Hotels refer to Shanghais Upscale hotel market.

Tokyos hotel market shows signs of recovery
from a sluggish summer.
Tom Sawayanagi, Managing Director, Japan
TOKYO

GROWTH Y-O-Y
Growth
2.7% JPY 45,146 Slowing
Inbound visitors build a solid base for lodging demand Luxury Hotel Trading Performance
As at October YTD 2016, visitor arrivals to Japan exceeded 20 million for the 60,000 100
first time in history. Although the rate of growth at 24.7% is softer than the 50,500 90
50,000
49.1% recorded during the same period in 2015, the larger number of 80
40,500
inbound visitors forms a strong base for lodging demand in Tokyo.
ADR / RevPAR (JPY)

70
40,000
Occupancy (%)
30,500 60
A total of 37.9 million visitor nights were observed in Tokyo as at YTD 30,000 50
September 2016, representing 12% of all visitor nights across Japan. 20,500 40
20,000
International guests, which account for 32% of total guests in Tokyo, 10,500
30
decreased marginally by 0.8% y-o-y to 12 million, while domestic demand 10,000

20
10
dropped by 6.8% to 26 million. 5,000
0 0
No major openings of four or five-star hotels in 4Q16
May 11
Nov 11
May 12
Nov 12
May 13
Nov 13
May 14
Nov 14
May 15
Nov 15
May 16
Nov 16
There were no luxury hotel openings in 4Q16. Over the balance of 2016, the ADR RevPAR
84-room Hoshinoya Tokyo opened in July as a Ryokan style lodging facility Occupancy (%)
in the Marunouchi area, and the 250-room Prince Gallery Tokyo Kioicho Source: STR Global, JLL
launched as part of a redevelopment project, also in July. Note: MAA - Moving Annual Average
In anticipation of the 2020 Tokyo Olympic and the post-Olympic period,

there are a number of new luxury hotels openings in the pipeline. New
supply will come from the opening of Ascott Marunouchi Tokyo, a 129-key Major Additions to Hotel Supply
luxury serviced apartment with hotel licencing to open in 2017, and the
500
190-key Four Seasons Otemachi launching in 2020 as the second Four
Seasons hotel in Tokyo.
400
Continuous improvement in RevPAR in spite of slight drop in OCC
In 4Q16, the Tokyo hotel market showed signs of recovery from 3Q16 when
No. of rooms
300
there was a y-o-y decrease in monthly Revenue per Available Room
(RevPAR). The recovery was supported by growth in monthly Average Daily 200
Rate (ADR) despite occupancy remaining lower than that of 2015. On a
moving annual average basis, RevPAR has been on a growth trajectory 100
since 2Q12.
There were no investment transactions in the luxury hotel sector in Tokyo 0
12 13 14 15 16 17F
in 4Q16. The hotel investment market in Japan was generally inactive
during the quarter with the exception of the transaction of Sheraton
Okinawa Sunmarina in December 2016. Source: Industry sources, JLL
Outlook: RevPAR growth to continue but at a slower pace

Visitor arrivals will continue to increase, but at a slower pace than
previously registered. Room rates are expected to grow at a slower rate
and this will result in modest RevPAR growth.
We anticipate a continuation of 2016 trends in 2017, with a small number
of investment transactions but large deal sizes.
69 HOTELS
Note: Tokyo Hotels refers to Tokyos Luxury hotel market.

Hotel trading performance weakening despite
improving visitor arrivals due to healthy
SINGAPORE supply pipeline.

GROWTH Y-O-Y
RevPAR
1.6% SGD 318 Falling
Luxury Hotel Trading Performance Major events support growth in tourist arrivals
450 100 International visitor arrivals continued to rise steadily as at YTD September
400 90 2016, with the number of international visitors increasing by 9.3% y-o-y to
350 80 12.4 million. Major events such the Singapore Airlines Formula 1 Grand Prix
ADR / RevPAR (SGD)
300
70 in September helped to attract visitors and support hotel trading
Occupancy (%)
250
60 performance.
50
200
40 Growth in international visitor arrivals from mainland China continued
150
30 apace, rising 40.7% y-o-y as at YTD September 2016 and remaining the top
100 20 source market comprising 18.3% of total visitor arrivals. Growth was also
50 10
recorded from other top 10 source markets including Indonesia (+5.7%
0 0
y-o-y), India (+8.8%), Thailand (+10.9%), the Philippines (+4.7%), South
May 11
Nov 11
May 12
Nov 12
May 13
Nov 13
May 14
Nov 14
May 15
Nov 15
May 16
Nov 16
Korea (+4.7%) and Japan (+0.9%).

ADR RevPAR
New brands contribute to significant supply pipeline
Occupancy (%)
Source: STR Global, JLL A recent hotel opening was the 634-room JW Marriott Singapore South Beach,
Note: MAA - Moving Annual Average which began operations in December 2016. This addition bought the total
number of new hotel rooms in Singapore in 2016 to approximately 4,720
across 13 hotels ranging from economy hotels to luxury properties.
Major Additions to Hotel Supply Looking ahead, there is still a significant amount of new supply in the pipeline.
Expected openings in 2017 include the 222-room Sofitel Singapore City Centre,
5,000
600-room Yotel Orchard Road, 528-room ibis Singapore on Stevens and 225-
4,500 room Intercontinental Robertson Quay. A total of 3,450 new hotel rooms are
4,000 expected to be added to the market in 2017.
3,500
Trading performance weakens towards end-2016
No. of rooms
3,000
2,500 As at YTD November 2016, occupancy for luxury hotels in Singapore fell
2,000 0.4% y-o-y to 78.9%. Average Daily Rate (ADR) reached SGD 404, a fall of
1,500
1.3% y-o-y.
1,000 As a result of falling occupancy and ADR, Revenue Per Available Room
500 (RevPAR) fell by 1.6% y-o-y to SGD 318. On a moving annual average basis,
0 RevPAR fell by 1.5% from SGD 322 in November 2015 to SGD 317 in
12 13 14 15 16 17F
November 2016.
Outlook: Hotel performance expected to remain stable
Source: Industry sources, JLL
Strong growth in international visitor arrivals, supported by good growth
from top source markets such as China and India, will likely support the
growth of the hotel industry in 2017.
The new Hotel Industry Transformation Map (ITM), which was launched
in November 2016, will help to further support the growth of the hotel
industry through four strategies for sustainable growth building
manpower-lean business models, developing new solutions through
innovation, growing business through internationalisation and building a
strong pipeline of quality talent.
70 HOTELS
Note: Singapore Hotels refers to Singapores Luxury hotel market.

Visitor arrivals are a key driver for the hotel
sector in 2016.
BANGKOK

GROWTH Y-O-Y
RevPar
7.9% THB 4,341 Rising
Most key source markets continue to drive growth Luxury Hotel Trading Performance
International visitor arrivals continued to grow as at YTD October 2016, 7,000 100
increasing by 9.8% y-o-y to 17.3 million, setting a new high in visitor 90
6,000
arrivals. As the government crackdown on zero-dollar tours was launched 80
ADR / RevPAR (THB)

towards year-end, growth in tourists at as YTD October 2016 was still 5,000 70
Occupancy (%)
attributed to the 13% y-o-y increase of Chinese visitors. 4,000 60
50
Japan, India, and South Korea remained key source markets for Bangkok, 3,000 40
growing at 6.5%, 5.3% and 5.2% y-o-y respectively, and accounted for 2,000 30
17.0% of international visitor arrivals. While Russia remained outside the 1,000
20
10
top ten source markets, there was an 8.6% y-o-y pickup in visitors as at YTD
0 0
October 2016.
May 11
Nov 11
May 12
Nov 12
May 13
Nov 13
May 14
Nov 14
May 15
Nov 15
May 16
Nov 16
Over 3,000 keys expected to open in 2017
ADR RevPAR
2016 saw the addition of almost 2,000 rooms. Key openings included the Occupancy (%)
442-key Grande Centre Point Hotel Thonglor, 248-key AVANI Riverside Source: STR Global, JLL
Bangkok Hotel and 240-key Novotel Sukhumvit 20. Midscale and Upscale Note: MAA - Moving Annual Average
hotels dominated openings, with no luxury supply additions in 2016.
2017 is expecting to see an even greater amount of supply additions with
over 3,000 rooms if all projects materialise, over 45% of which is outside Major Additions to Hotel Supply
the Sukhumvit area. While openings are concentrated in the upscale
6,000
segment, notable openings for 2017 include luxury projects carrying over
from prior years, including Park Hyatt Central Embassy and The Bangkok
5,000
EDITION Hotel by Ritz-Carlton.
Assets perform well across all key measures 4,000
No. of rooms
As of November 2016, the Bangkok luxury market saw Revenue Per 3,000
Available Room (RevPAR) growth of 7.9% y-o-y to average THB 4,341.
While Average Daily Rate (ADR) experienced improvement of 2.6% y-o-y, 2,000
the increase in RevPAR was largely driven by occupancy growth of 5.1% to
72.9%. 1,000
On a moving annual average basis, RevPAR grew y-o-y by 7.2% from 0

12 13 14 15 16 17F
THB 4,100 in November 2015 to THB 4,397 in November 2016.
Outlook: Government policies to make key impact on tourism
The crackdown on zero-dollar tour groups towards end-3Q16 has impacted
arrivals from Mainland China. However, the loss of visitation is expected to
be a short-term effect as operators regroup to target higher value tourists
from China and as Thailand focuses on higher spending Free-Independent-
Travellers (FIT).
To alleviate negative impacts from the crackdown, the government
extended its multiple entry visa program, alongside a temporary reduction
and waiver of visa fees for foreign visitors from 19 countries. Bangkok will
likely benefit from this focus on high value and FIT tourists, which will
71 HOTELS
likely drive further demand within the hotel sector.

Note: Bangkok Hotels refers to Bangkoks Luxury hotel market.
Supply pressures continue to put a dampener on
KUALA LUMPUR hotel trading performance.


GROWTH Y-O-Y
Decline
1.0% MYR 336 Slowing
Upscale Hotel Trading Performance Visitor arrivals improve but corporate demand remains subdued
550 100 International visitor arrivals in Malaysia increased by 3.8% y-o-y to 17.6
500 90 million as at YTD August 2016. Mainland China and Thailand were two key
450 80 growth markets from the top ten source markets, increasing by 26.3% and
400
ADR / RevPAR (MYR)
70 34.8% y-o-y respectively.

Occupancy (%)
350
60
300
50 However, weak demand from the corporate sector, especially the oil and
250
200
40 gas segment, as well as meeting, incentives, conventions and exhibitions
150 30 events, continued to put downwards pressure on hotel trading
100 20 performance in a predominantly corporate demand-driven market.
50 10
0 0 Large number of new rooms enter the market in 2016
May 11
Nov 11
May 12
Nov 12
May 13
Nov 13
May 14
Nov 14
May 15
Nov 15
May 16
Nov 16
The market remains under pressure from the extensive supply pipeline and
ADR RevPAR in 2016 approximately 1,950 hotel rooms were added across all market
Occupancy (%) segments. In addition, close to 700 new serviced apartments also boosted
Source: STR Global, JLL stock.
New openings in the luxury and upscale segments included the 208-room
St Regis Hotel in Kuala Lumpur Sentral and its adjoining 160-residences.
In addition, the completion of Ritz-Carlton Residences added a further 296
Major Additions to Hotel Supply units. Looking ahead, upcoming openings in 2017 include the Sofitel Kuala
Lumpur Damansara, Banyan Tree Signatures Pavilion and Royale Pavilion
3,000
Hotel.
2,500 Hotel performance improves as ADR and occupancy rise
2,000
As at YTD November 2016, Revenue Per Available Room (RevPAR) grew
by 1.0% y-o-y to MYR 336. Growth was supported by increasing flight
No. of rooms
1,500 connectivity between major key source markets and Kuala Lumpur, higher
international visitor arrivals as well as destination marketing initiatives by
1,000 the government.
500 Occupancy rose marginally by 0.1% y-o-y to 67.1% as at YTD November

2016, while Average Daily Rate (ADR) increased by 1.0% y-o-y to MYR 501.
0 On a moving monthly average basis, RevPAR has increased by 1.2% y-o-y
12 13 14 15 16 17F
from MYR 332 in November 2015 to MYR 336 in November 2016.
Outlook: Over supply remains a concern in an already competitive market
Significant supply in the pipeline in coming years should continue to place
pressure on hotels to reduce rates to maintain occupancy.
Headwinds are expected to persist with corporate demand remaining
weak in light of the contraction in the oil and gas industry, depreciation of
the Malaysian Ringgit and uncertainty in the regional economy.
72 HOTELS
Note: Kuala Lumpur Hotels refers to Kuala Lumpurs Luxury and Upscale hotel market.
Sydney continues to strengthen in a constrained
market amid rising demand.
Troy Craig, Managing Director
SYDNEY
Hotels & Hospitality Group, Australia

GROWTH Y-O-Y
RevPAR
5.9% AUD 222 Rising
Strong corporate demand and busy events calendar fuel high occupancy Marketwide Hotel Trading Performance
Sydney maintained a high occupancy rate of 88.7% as at YTD November 300 100
2016. 275 90
250
80
The opening of the AUD 1.5 billion International Convention Centre Sydney 225
ADR/RevPAR (AUD)
70
200
Occupancy (%)
in 4Q16, which has the capacity to hold 8,000 delegates, will help create 175 60
further meetings, incentives, conventions and exhibitions (MICE) demand 150 50
throughout the city. 125 40
100
30
A net decrease in rooms in 2016 but new supply in the pipeline 75
20
50
10
In 2016, two hotels comprising a total of 673 rooms closed, while two hotel 25
0 0
extensions and one new build hotel were completed totalling 335 rooms,
May 11
Nov 11
May 12
Nov 12
May 13
Nov 13
May 14
Nov 14
May 15
Nov 15
May 16
Nov 16
resulting in a net decrease of 338 rooms.
ADR RevPAR
Room stock growth is anticipated to average 3.7% per annum between
Occupancy (%)
2016 and 2021, with major additions during this period to include the
Sofitel Sydney Darling Harbour (590 rooms), Crown Hotel at Barangaroo Source: STR Global, JLL
(352 rooms) and the Ribbon Hotel and Residences (402 rooms).
Strong fundamentals continue to support positive trading performance
As at YTD November 2016, occupancy levels increased 1.0% y-o-y, which Major Additions to Hotel Supply
coupled with Average Daily Rate (ADR) growth of 4.8% resulted in a 5.9%
increase in Revenue Per Available Room (RevPAR) to AUD 222. 800
700
The moving annual average for RevPAR in Sydney for the 12 months to
November 2016 was AUD 224, which is a record high. 600
Outlook: Positive market performance is expected to persist 500

No. of rooms
400
Stable occupancy and ADR growth are expected to further push RevPAR
upwards. 300
While a relatively large number of rooms are anticipated to enter the 200
Sydney market in the next three years, demand created by the recent 100
opening of the International Convention Centre Sydney and the remaining
0
two commercial office towers at Barangaroo should help support the 12 13 14 15 16 17F
additional supply. Additions to Supply Future Supply
Source: Australian Bureau of Statistics, JLL

73 HOTELS
Note: Sydney Hotels refers to all grades of accommodation and includes both hotels and serviced
apartments.
JLL Research - Asia Pacific
ASIA PACIFIC Shenyang Indonesia

Dr Megan Walters Alex Wang James Taylor
Head of Research - Asia Pacific Associate Director - Strategic Consulting Head of Research - Indonesia
+65 6494 3649 +86 24 3109 1300 +62 21 2992 3888
megan.walters@ap.jll.com chuan.w@ap.jll.com james.taylor@ap.jll.com
GREATER CHINA Wuhan The Philippines
Hong Kong Peggy Shao Claro Cordero
Denis Ma Assistant Manager Head of Research Philippines
Head of Research Hong Kong +86 27 5959 2142 +63 2 902 0887
+852 2846 5135 peggy.shao@ap.jll.com claro.cordero@ap.jll.com
denis.ma@ap.jll.com
Xian Thailand
China Lisa Zou Andrew Gulbrandson
Joe Zhou Assistant Manager Head of Research Thailand
Head of Research China +86 29 8932 9835 +66 2 624 6420
+86 21 6133 5451 lisa.zou@ap.jll.com andrew.gulbrandson@ap.jll.com
joe.zhou@ap.jll.com
Taipei Vietnam
Beijing Jamie Chang Trang Le
Steven McCord Head of Research - Taiwan Head of Research - Vietnam
Head of Research - North China +886 2 8758 9886 +84 8 3910 3968
+86 10 5922 1371 jamie.chang@ap.jll.com trang.le@ap.jll.com
steven.mccord@ap.jll.com Macau Malaysia
Guangzhou Mark Wong Veena Loh
Silvia Zeng Manager Head of Research - Malaysia
Head of Research South China +853 2871 8822 +603 226 0764
+86 20 3891 1238 mark.wong@ap.jll.com veena.loh@ap.jll.com
silvia.zeng@ap.jll.com NORTH ASIA WEST ASIA
Chengdu Japan India
Frank Ma Takeshi Akagi Ashutosh Limaye
Head of Research West China Head of Research Japan Head of Research - India
+86 28 6680 5072 +81 3 5501 9235 +91 22 6620 7575
frank.ma@ap.jll.com takeshi.akagi@ap.jll.com ashutosh.limaye@ap.jll.com
Qingdao South Korea AUSTRALASIA
Celia Chen Yongmin Lee Andrew Ballantyne
Assistant Manager, Research Head of Research South Korea Head of Research Australasia
+86 532 8579 5800 ext 817 +82 2 3704 8888 +61 2 9220 8412
celia.chan@ap.jll.com yongmin.lee@ap.jll.com andrew.ballantyne@ap.jll.com
Tianjin SOUTH EAST ASIA New Zealand
Chelsea Cai Dr Chua Yang Liang Tom Barclay
Head of Research - Tianjin Head of Research - South East Asia Head of Research - New Zealand
+86 22 8319 2233 +65 6494 3721 +64 9 363 0226
chelsea.cai@ap.jll.com yangliang.chua@ap.jll.com tom.barclay@ap.jll.com
Chongqing Singapore HOTELS & HOSPITALITY
Sherry Li Tay Huey Ying Frank Sorgiovanni
Senior Research Analyst Head of Research - Singapore Head of Research,
+86 23 6366 9062 +65 6494 3761 Asia Pacific - Hotels & Hospitality Group
sherry.li@ap.jll.com hueyying.tay@ap.jll.com +65 6536 0606
frank.sorgiovanni@ap.jll.com
Note: All physical indicators charts are based on the local measurement standard - GFA or NLA.
Office rental figures at the top of each market page refer to the main submarket in each city.
JLL offices
ASIA PACIFIC AMERICAS EMEA

9 Raffles Place 200 East Randolph Drive 22 Hanover Square
#39-00 Republic Plaza Chicago IL 60601 London W1A 2BN
Singapore 048619 tel +1 312 782 5800 tel +44 20 7493 6040
tel +65 6220 3888 fax +1 312 782 4339 fax +44 20 7408 0220
fax +65 6438 3361 www.us.jll.com www.jll.co.uk
www.jll.com.sg
JLL worldwide
ASIA PACIFIC AMERICAS EMEA
Adelaide Melbourne Atlanta New York Abu Dhabi London
Auckland Mumbai Austin Orange County Amsterdam Luxembourg
Bangalore Nanjing Baltimore Orlando Antwerp Lyon
Bangkok New Delhi Boston Parsippany, NJ Barcelona Madrid
Beijing Osaka Buenos Aires Philadelphia Berlin Manchester
Brisbane Pasig Chicago Phoenix Birmingham Marbella
Canberra Perth Cincinnati Pittsburgh Brussels Milan
Cebu City Phuket Cleveland Portland, OR Bucharest Moscow
Chandigarth Pune Columbus Rio de Janeiro Budapest Munich
Chengdu Qingdao Dallas Sacramento Dubai Norwich
Chennai Quenzon Dayton St. Louis Dublin Paris
Chongqing Seoul Denver Salt Lake City Dusseldorf Prague
Christchurch Shanghai Detroit San Diego Edinburgh Rotterdam
Coimbatore Shenyang Ft. Lauderdale San Francisco Eindhoven Seville
Colombo Shenzhen Houston Santiago Frankfurt Stockholm
Guangzhou Singapore Kansas City Sao Paulo Glasgow St. Petersburg
Hanoi Sydney Los Angeles Seattle Gothenburg Tel Aviv
Ho Chi Minh City Taguig McLean, VA Tampa The Hague Utrecht
Hong Kong Taipei Mexico City Toronto Hamburg Valencia
Hyderabad Tianjin Miami Vancouver Helsinki Warsaw
Jakarta Tokyo Minneapolis Washington DC Kiev Wiesbaden
Kolkata Wellington Monterrey Leeds
Macau Wuhan Montreal Lisbon
Manila Xian New Orleans Liverpool
www.jll.com
COPYRIGHT JONES LANG LASALLE 2017. All rights reserved. For further details or to unsubscribe, please email joneslanglasalle.research@ap.jll.com. The items in this publication have been
compiled from the various sources acknowledged. The information is from sources we deem reliable; however, no representation or warranty is made to the accuracy thereof.

Asia Pacific Property Digest 4q 2016

Enviado por

Dados do documento

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

Asia Pacific Property Digest 4q 2016

Enviado por

Direitos autorais:

Formatos disponíveis

Asia Pacific Property Digest

4 Asia Pacific Economy and

8 Asias Silicon Valley rivals Osaka

9 Hangzhou - pioneer of Chinas

10 Foreign developers prevail:

11 Low office vacancy to boost

ASIA PACIFIC ECONOMY

Resilience despite uncertainty

Real GDP Growth (%)

Source: Oxford Economics, February 2017

ASIA PACIFIC PROPERTY MARKET

Leasing and investment markets prove

Japan China Australia Singapore

Rental Values Capital Values Hong Kong South Korea Other

Grade A Office Prime Retail

Prime Residential Industrial

Shanghai Jakarta Hong Kong

Tokyo, Beijing, Auckland

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

Source: JLL (Real Estate Intelligence Service), 4Q16

in 2017, lingering uncertainty surrounding the economic and

Asias Silicon Valley rivals

To get to the heart of what drives office location choice for

Size matters, so does cost

Attracting the right talent is critical

0 0 ABOUT THE AUTHOR

specialising on the Shanghai office market.

She authors market commentary and analysis

Foreign developers prevail: Melbourne CBD

Source : JLL Research

ABOUT THE AUTHOR

Rental growth (y-o-y %)

Table 1: City-level total and vacant office stock

Mumbai Bengaluru NCR-Delhi Chennai Pune Hyderabad Kolkata

RENTAL SQ FT PER MONTH, STAGE IN CYCLE

Financial Indices Limited availability curbs leasing activity

RENTAL SQM PER MONTH, STAGE IN CYCLE

finance tenants to fill modest vacancies. 105

Note: Beijing Office refers to Beijings overall Grade A office market.

RENTAL SQM PER DAY, STAGE IN CYCLE

Financial Indices Fringe CBD markets flourish in 2016

RENTAL SQM PER MONTH, STAGE IN CYCLE

90,000 sqm in 4Q16. 90

Large office sales transactions driven by self-use demand were observed in

Self-use demand is expected to further improve investment market

Note: Guangzhou Office refers to Guangzhous overall Grade A office market.

RENTAL PING PER MONTH, STAGE IN CYCLE

Financial Indices Relocations support demand

Given uncertainty surrounding the economic climate and relatively

Note: Taipei Office refers to Taipeis overall Grade A office market.

RENTAL TSUBO PER MONTH, STAGE IN CYCLE

Rents continue up trend while capital value growth picks up

the nineteenth consecutive quarter of growth, accelerating for the first

RENTAL TSUBO PER MONTH, STAGE IN CYCLE

Financial Indices A shortage of supply weighs on net absorption

120 Despite sustained demand from sectors including information and

the tenth consecutive quarter of growth and third straight quarter of

Note: Osaka Office refers to Osakas 2 Kus Grade A office market.

RENTAL PYUNG PER MONTH, STAGE IN CYCLE

(GFA 16,011 pyung) which is located in the CBD. Daishin Securities 85

relocated from a Grade B office building in Yeouido to occupy 80

Outlook: Net absorption to slow in 2017 0 0

Note: Seoul Office refers to Seouls overall Grade A office market.

RENTAL SQ FT PER MONTH, STAGE IN CYCLE