Asia Pacific Property Digest 4q 2017 PDF

Asia Pacific Property Digest
Q4 2017
Sustained momentum leads

to record-breaking investment
volumes
13
Office
35
14 Hong Kong
4
15 Beijing
16 Shanghai
17 Guangzhou
18 Taipei
19 Tokyo
20 Osaka
21 Seoul
22 Singapore Retail
Feature 23 Bangkok
24 Jakarta
36 Hong Kong
37 Beijing
Articles 25 Kuala Lumpur

26 Manila
27 Hanoi
38 Shanghai
39 Guangzhou
40 Tokyo
04 Solid prospects
28 Delhi 41 Seoul
08 2017 in review: Top real estate trends
29 Mumbai 42 Singapore
09 Investor hotspots for Singapore
30 Bengaluru 43 Bangkok
property
31 Sydney 44 Jakarta
10 Redrawing Hong Kong’s CBD2
boundaries 32 Melbourne 45 Mumbai
11 Alternative investments in New 33 Perth 46 Sydney
Zealand 34 Auckland 47 Melbourne
Editor's Note
2017 ended on a positive note, and this will follow through to 2018.
Investment volumes in the last quarter of 2017 reached a new high of US$52 billion in Asia Pacific,
up 16 per cent compared to the same period in 2016.
Within the office sector, tech companies, professional and financial services firms continued to
drive demand.
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
49 59 67
Residential Hotel
50 Hong Kong
51 Beijing
Industrial 68 Hong Kong
52 Shanghai 60 Hong Kong 69 Beijing
53 Singapore 61 Beijing 70 Shanghai
54 Bangkok 62 Shanghai 71 Tokyo
55 Jakarta 63 Tokyo 72 Singapore
56 Manila 64 Singapore 73 Bangkok
57 Sydney 65 Sydney 74 Kuala Lumpur
58 Brisbane 66 Melbourne 75 Sydney
4 – Features
ASIA PACIFIC ECONOMY
Solid prospects
A healthy growth performance continues to take hold in the region as the upturn in global demand remains remarkably
strong. The US and Europe are witnessing healthy rates of expansion while China is holding up and sentiment in Japan
has improved.
The cyclical recovery in world trade continues to benefit many of the region’s exporters as strength in external demand
has underpinned an increase in business investment, while a relatively accommodative macro policy is supporting
domestic demand.
Positive trade picture the year up 2.2%, ending a three handful of markets. In an unexpected
The strength of the global upturn year decline. An ongoing revival in move, the Bank of Korea raised the
has been an unexpected surprise inbound tourism, in particular from key policy rate by 25 bps in November,
and helped bolster growth across China, coupled with strong domestic marking the first increase in six years.
many export-oriented economies in consumption, has underpinned the Malaysia followed suit in January, as
the region. There has, perhaps, been improvement. In China, the shift it increased interest rates for the first
no bigger beneficiary than South from investment-led growth to time in nearly four years.
Korea, which has seen exports soar to consumption continues to take place
with retail sales sustaining double- Sustained momentum
new highs on the back of a boom in
digit growth. The annual Singles’ Day Short-term growth projections have
semiconductor shipments. Its North
shopping festival held in November generally been revised up across the
Asian neighbour, Japan, has also seen
further solidified its position as the region as global growth is expected
a buoyant performance with exports
world’s largest online shopping event to accelerate in 2018 and with risks
recovering throughout 2017, and
with more than USD 25 billion in tilted to the upside. Trade is expected
recording its strongest growth since
transactions being logged during to maintain solid momentum
the global financial crisis. With recent
the 24-hour period and with more while investment is firming despite
manufacturing activity expanding at
than 90% of sales taking place via slowing growth in China. Although
a decent pace, and signs of resilience
mobile phones. interest rates are expected to rise in
in new orders, the current situation
many countries, muted inflationary
bodes well for the outlook and Policy tightening in select pressures should lead to only gradual
sustainability of momentum in 2018.
markets but generally monetary tightening. After a setback
Consumer spending remains on neutral stance in 2017, India is set to regain the title
a firm track Macro policy generally remained of the fastest-growing major economy
neutral across most markets, although with disruptions related to the recently
The retail sales rally in Hong Kong
interest rates did increase slightly in a Goods and Services Tax abating.
gathered further traction and finished
5 – Features
Table 1: Outlook for Major Economies
Real GDP Growth

Country (y-o-y change) 2018 Outlook
2017E 2018F
Consumption and service sector growth to remain strong. Fiscal spending less buoyant but still
China 6.9 6.4
healthy.
Solid business investment and resilient trade performance. Wage gains amidst tight labour market to
Japan 1.8 1.7
see consumer spending slowly improve.
Consumption and infrastructure spending to support pick up in growth, as the impact of government
India 6.2 7.5
initiatives/reforms ease.
South Korea 3.2 2.9 Healthy export performance and increased public spending key growth drivers.
Domestic demand mixed - subdued household spending while private business investment may
Australia 2.2 2.4
provide a boost. Export volumes to rise.
Indonesia 5.1 5.3 Domestic consumption and infrastructure investment to remain key pillars of growth.
Private consumption to hold up while ongoing infrastructure projects to support investment. Export
Hong Kong 3.6 2.8
performance to remain positive.
Externally focused industries to be supportive of growth. Recovery in residential investment and

Singapore 3.5 3.1
consumer spending to be gradual.
Source: Oxford Economics, February 2018
ASIA PACIFIC PROPERTY MARKET
Investors drawn to the region’s positive outlook

The region’s property markets remained a magnet for investors as healthy fundamentals and strong prospects heightened
interest, leading to record levels of investment activity in 2017. The sale of a stake in The Center in Hong Kong highlighted the
record year, with this transaction reportedly the largest sale of a single real estate asset globally ever. On the occupier front,
office leasing volumes were down slightly from a year earlier; however, this is not necessarily reflective of weakness in the
underlying fundamentals as tight vacancy in some key markets partly contributed to the fall.
New office leasing declines up marginally for the full year. Most mostly contributed by Shanghai,
Overall leasing activity dropped Asia Pacific cities saw healthy broad- Mumbai and Jakarta.
more than 20% y-o-y in Asia Pacific based occupational demand, driven in Vacancy rates continued to decline
in 4Q17, contributing to a full-year large part by financials and tech firms. in more than half of the Asia Pacific
decline of 5%. The quarterly decline The strongest take-up was recorded markets during 4Q17, including
was in part due to low vacancy and in markets such as Mumbai, Shanghai notable drops in Taipei and Singapore.
strong pre-commitment rates in and Bengaluru.
Singapore office rental rebound
several key markets. Delhi recorded Healthy supply with good continues
the highest level of leasing volumes commitment rates
In aggregate, Asia Pacific office rents
in both 4Q17 and full-year 2017. High More than half of all Asia Pacific increased 1.1% q-o-q (up 3.8% y-o-y).
levels of activity were also recorded markets saw new completions in Singapore continued to record the
in Bengaluru, Tokyo, and Manila. New 4Q17. China and most Southeast Asian strongest quarterly office rental
leasing was down in Sydney, but in markets recorded new completions growth on the back of improved
large part due to limited available while the Australian cities had very occupancy levels, with landlords of
space as demand is still solid. limited or no new supply. Supply quality buildings increasing rents and
In contrast, net absorption was down volumes declined slightly relative to some scaling back incentives. Sydney
only slightly by 3% y-o-y in 4Q17, but a year earlier, and completions were remained the regional leader for annual
growth, with incentives continuing in Hong Kong, market sentiment account for one-quarter of the quarterly
6 – Features
to decline. Quarterly rent growth was remained intact and buyers snapped up volume. Cross-border investment
limited in Tokyo as landlords remained flats in new launches. Sales activity in activity lifted again, accounting for 38%
focused on securing tenants ahead Singapore was dominated by secondary of quarterly transaction volumes.
of a supply wave. Sustained demand transactions due to a lack of major new Strong investor demand underpins
from PRC firms against a tight vacancy launches in the prime districts. capital value growth
environment supported a further uplift Investment volumes soar to new heights Asia Pacific office capital value growth
in Hong Kong Central rents during 4Q17.
Investment activity across the Asia edged up slightly to 1.7% q-o-q.
Tenant mix adjustments and asset Pacific region surprised on the upside Investor demand for Hong Kong office
enhancement initiatives persist assets continued to drive growth in
in 4Q17, reaching a new record of USD
Many landlords across the region 52 billion, up 15.8% y-o-y. As a result, capital values. Flat yields saw Tokyo
continued to adjust tenant mixes to full-year transaction volumes also set a capital values move in line with
bring in more crowd-pleasing retailers. new high, coming in at USD 149 billion, rents while Singapore capital values
In Sydney, retailers are opening new up 13.4% on the previous year. increased sharply, driven largely by
concept stores that offer greater rapid rental growth.
customer engagement and experience. Australia, Japan and Hong Kong all
supported the stronger than expected Healthy fundamentals lead to
Mass market fashion brands remained optimism about the outlook
amongst the most active retailers 4Q17 volumes, while China, Singapore
and South Korea were all marginally Regional leasing volumes for full-year
in Beijing and Shanghai, with select
down on 4Q16. The office sector made 2017 declined slightly from 2016, in
international sports apparel brands
up half of all transaction volumes, part due to low vacancy and high pre-
expanding their presence. Leasing
while the retail sector bounced back to commitment rates for quality buildings
activity in Hong Kong was dominated
by renewals and cost-saving initiatives,
with F&B, lifestyle and entertainment Figure 2: Office Rental & Capital Value Changes, Yearly % Changes, 4Q17
operators the most active. Retailers 30
continued to exhibit caution in 25
Singapore despite signs that retail 20
sales improvements are broadening. 15
Demand for logistics space robust
y-o-y %
10
E-commerce and 3PLs continued to 5

be the most active in the China Tier 1 0
leasing markets. Given the continued -5
slowdown in container throughput, -10
3PL leasing activity in Hong Kong was -15
yo
e
ey
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ng
ng
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ila
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ai
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i
or
ba
ou
ko
largely characterised by relocation and

k
gh
dn
an
ur
Ko
iji
ka
ap
To
um
ng
Se
Be
bo
an
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Sy
Ja
ng
ng
Ba
Sh
el
downsizing, while some retailers were

Si
Ho
M
Rental Values Capital Values

active, signing new leases and expanding
amid strong domestic consumption. Figures relate to the major submarket in each city.
Strong demand persisted in Tokyo from Source: JLL (Real Estate Intelligence Service), 4Q17
e-commerce and 3PLs, while Singapore

saw an uplift in activity supported by Figure 3: Direct Commercial Real Estate Investment 2008-2017
healthy economic, manufacturing and 2017
trade performances. The logistics sector $149 bill
13% y-o-y
drove demand in Melbourne, boosted 160
by increased service provisions to 140
agribusiness and wine sectors.
120
Sustained momentum in Hong Kong
100
and Singapore residential markets
USD Billion
80
Home purchase restrictions and limited
issuance of pre-sales certificates 60
impacted sales activity in Shanghai. 40

Some local governments in China 20
have offered strong incentives to spur
0
development of the leasing market 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
including offering land sites for rental- Japan China Australia Hong Kong South Korea
only housing. With limited new measures Singapore Other
announced in the latest policy address Figures refer to transactions over USD 5 million in office, retail, hotels and industrial.
Source: JLL (Real Estate Intelligence Service), 4Q17
7 – Features
Figure 4: Rental Property Clocks, 4Q17
Grade A Office Prime Retail
Auckland
Wellington Taipei Beijing Beijing
Tokyo, Hong Kong, Auckland Wellington
Kuala Lumpur Tokyo*
Shanghai Kuala Lumpur
Growth Rents Growth Rents

Shanghai
Manila Slowing Falling Jakarta
Slowing Falling
Sydney, Manila, Seoul*
Melbourne Jakarta
Osaka
Rents Decline Rents Decline
Guangzhou,
Bangkok,
Rising Slowing Rising Slowing
Canberra Mumbai
Bengaluru Singapore
Ho Chi Minh City Seoul
Singapore Bangkok, Delhi
Delhi Bengaluru
Chennai Chennai Hong Kong*
Hanoi
Mumbai Perth, Brisbane, Guangzhou, Melbourne (Regional),
Adelaide Sydney (Regional),
SE Queensland (Regional)
*Clock positions for the office sector relate to the submarket in each city *High Street Shops/Multi-level High Street
Prime Residential Prime Industrial
Bangkok Jakarta
Tokyo
Beijing, Auckland
Guangzhou
Wellington
Growth Rents Growth Rents

Manila, Slowing Falling
Hong Kong Sydney, Slowing Falling
Manila
Beijing
Rents Decline Rents Decline
Rising Slowing Kuala Rising Slowing
Lumpur Melbourne
Shanghai
Singapore* Singapore (Business Park)

Shanghai Singapore (Logistics),
Hong Kong, Brisbane
*Luxurious * Logistics space (Hong Kong, Shanghai, Beijing, Greater Tokyo)
Source: JLL (Real Estate Intelligence Service), 4Q17
in several key markets. However, with Asia Pacific investment volumes amid continued appetite for real
a positive outlook for regional and surpassed our earlier expectations estate in the core markets and
global economies in 2018, we are in 2017, and at this stage, we are increased interest for investing in
optimistic that leasing activity will hold projecting 2018 volumes to hold steady emerging locations.
up relatively well and remain on par
with 2017. The performance amongst About the author
markets will be mixed, and new growth Dr Megan Walters joined JLL in 2010 and in October 2016 was
segments of the technology industry appointed as Head of Research – Asia Pacific. In this role, Megan
(e.g. e-commerce, co-working) should leads a team of 160 professional researchers in the region, which
forms part of a network of over 400 researchers in 65 countries
be key sources of demand. around the globe.
8 – Features
2017 in review: Top real estate trends

Technology has disrupted the status quo bringing real estate in Asia beyond brick 3. Co-working/Co-living
and shaped some of the top real estate and mortar.
Driven by the millennial generation which
trends in 2017. Here’s a look back at the
embraces the sharing economy (especially
most significant trends that have shaped 2. Future of Work
good for splitting high usage or ownership
the real estate landscape – and are likely JLL introduced its Future of Work model in costs, and for under-utilised assets),
to flow through into 2018. April. This is our outlook on the changing things the older generation did not feel
1. Proptech world of work and its impact on the next comfortable sharing-or would not even
generation of corporate real estate. The think of sharing-in the past can now be
A convergence of property and technology: model highlights areas that companies borrowed/lent or portioned, most times
proptech has changed the way we use real should address to navigate seismic by or with someone else you do not know
estate. From data analytics to artificial shifts in the market. It encompasses five personally. These include car rides, office
intelligence, the Internet of Things, virtual pillars: human experience, digital drive, space (‘co-working’), and more recently
reality and blockchain; proptech’s influence continuous innovation, operational living space (‘co-living’).
has been so pervasive that it’s virtually excellence and financial management. 1
what we breathe here in JLL. In particular, the availability of open,
As part of JLL’s Power Up: Proptech drive, In embracing this aforementioned “digital flexible workspace and such arrangements
we held our first hackathon in Singapore in drive”, we launched JLL Spark, our global are not only common nowadays; they
October where the firm selected innovators business to identify and deliver new are expected in an office setting. The
from across Asia Pacific to build new apps technology-driven real estate service co-working style in our new Shanghai
and technologies. Following that, we offerings; as well as Concrete, a partnership office “allows colleagues to collaborate
streamed our first learning session: “Will I with Seedcamp and Starwood Capital effectively in a flexible, smart office
have a job in five years?” which saw thousands Group to identify and support the most environment, as well as providing an
of colleagues logging in and watching. promising proptech startups. This model inclusive and inspiring atmosphere for
was brought to life with our new office in clients to visit and work within.” 2
JLL kickstarted its proptech journey with Shanghai, which has recently received the
the sponsorship of Southeast Asia’s first first WELL Platinum certification in Asia These are just a few of the hot property
proptech hackathon, Hood Disrupt, in Pacific and is the third in the world to do trends in 2017 and no doubt 2018 will see an
August. We sponsored and spoke at Tech so. The WELL Building Standard™ measures equally interesting assortment of property
in Asia’s first-ever proptech event in March, and monitors features of buildings that trends. We here at JLL look forward to
and also collaborated with them to launch impact the health and wellness of the sharing more insights about the future of
a report about how proptech startups are people who live, work, and learn in them. 2 real estate!
About the author

Hui Yan Koh is a Director for JLL, based in Singapore. She oversees
the regional operations of JLL's subscription-based Real Estate
Intelligence Service. In her current role, Hui Yan liaises heavily with
stakeholders to provide clients with access to quarterly outputs
including historical and forecast data for key property market
indicators, and market reports.
9 – Features
Investor hotspots for Singapore property
Optimism is running high in Singapore’s Residential Marina Bay financial district for over
property investment sales market – a market SGD 2 billion and the Beach Road GLS site
With prime home prices having bottomed in
that is defined by private assets worth SGD for SGD 1.6 billion. Both deals took place
2Q17 following the 11.6% correction since
5.0 million (USD 3.8 million) and above, and in September. So eager are developers to
end-2013, this sector remains a hotspot for
all government land sales (GLS). secure land for office development to ride
investors looking to bottom-fish in safe-
the rental upturn that the top bid of SGD
Investors have snapped up more assets in haven Singapore.
1,706 per sq ft per plot ratio received for
value terms in 2017 than they did in 2016. the Beach Road GLS site located on the
Developers’ appetite for land has surged
Total investment sales reached SGD 41.3 fringe of the CBD surpassed the SGD 1,689
as their unsold stock dwindles amid the
billion in 2017, 60.1% more than the SGD per sq ft per plot ratio paid for a CBD site
robust home sales market. Given the limited
25.8 billion accumulated in 2016. in the Marina Bay financial district in
state land supply from the GLS programme,
developers have turned their attention to November 2016!
Residential and office properties have been
investor hotspots. Together, these two the private sector, particularly the collective
These two deals boosted the 2017’s total
sectors accounted for 74% of the value of all sales market. 27 such deals worth SGD 8.1
sales value of office assets transacted to an
investment deals concluded in 2017. billion were sealed in 2017, far exceeding the
estimated SGD 9.4 billion, accounting for
three transactions totalling SGD 1.0 billion
almost a quarter of all the deals concluded
Figure 1: Composition of investment sales concluded in 2016.
in the year.
by value, 2017
Developers and investors sunk SGD 21.1
Conclusion
billion in residential investment assets
Office
22.9% (including land) in 2017, more than twice of Singapore’s property market has largely
Industrial what they committed to in 2016. turned the corner. Against this backdrop,
10.7% and underpinned by a brightening
Composition Office economic outlook, investor sentiment is
of investment Retail
7.9% CBD Grade A office assets were also sought expected to stay elevated. Residential and
sales by value
after, buoyed by the recovery in the leasing prime CBD Grade A office assets are poised
Residential Mixed Use
6.1% market. JLL’s research showed that by the to remain as investors’ hot picks in 2018.
51.1% Nonetheless, yield-accretive industrial
Hotel & end of 2017, Grade A CBD office rents had
Others Hospitality
0.8% recovered by 9.4% from the bottom in 1Q17. assets and quality retail assets such as
0.5%
Jurong Point, a suburban mall, which
The two largest deals sealed in 2017 were changed hands for SGD 2.2 billion in April
Source: JLL Research, January 2018
the sale of Asia Square Tower 2 in the 2017, are likely to remain on their radar.
About the author

Tay Huey Ying is the Head of Research and Consultancy for JLL in
Singapore. She oversees a team of analysts in conducting market
research and publishing thought leadership papers on all sectors
of Singapore’s property market. Huey Ying is also JLL’s media
spokesperson on matters relating to the Singapore property
market.
10 – Features
Redrawing Hong Kong’s CBD2 boundaries

In the 2011 Policy Address, Donald Tsang, The three major areas that make up This is more than double the amount
the then-Chief Executive announced his the Kowloon East submarket have very achieved in Kwun Tong and Kowloon
“Energising Kowloon East” initiative to distinct characteristics that attract a broad Bay. Kai Tak’s rental premium is further
promote the development of the former range of different occupiers. Looking evidenced from the recent sale of 8 Bay
Kai Tak Airport, Kwun Tong and Kowloon ahead, we believe that Kowloon East East in Kwun Tong, where a 3% yield on
Bay business areas — collectively referred will splinter into at least two distinct the purchase price equates to a monthly
to as Kowloon East — into a second CBD submarkets: Kai Tak and Kowloon Bay/ rent of about HKD 50 (USD 6) per sq ft,
for the city. Kwun Tong. on a NFA basis.
Since then, Kowloon East has added about Kai Tak likely to emerge as the leading Hoi Bun Road Financial Corridor
3.8 million sq ft of Grade A office space and office location
Outside of Kai Tak, developers are also
is now the second largest office submarket Kai Tak is likely to emerge as the leading trying to push the development of a
in the city. With a wave of government land office location in Kowloon East due to the ‘Financial Corridor’ along the section of
sales and improving infrastructure on the large amount of government land available Hoi Bun Road nearest to Ngau Tau Kok MTR
horizon, the future looks bright. for development and proximity to the station. The new buildings built in the area
future Shatin-to-Central Link, a new mass are already drawing plenty of interest from
The uniqueness of Kowloon East
transit railway (MTR) line that will reduce the big financial institutions, with Citibank
Although treated as a single office travel time to Central to just 15 minutes. and JPMorgan the most notable banks
submarket, Kowloon East is anything committing to the area.
but homogeneous. The submarket covers At end-4Q17, there were no rental
a land area of 74.4 million sq ft, which benchmarks in Kai Tak, as there were no Kowloon East still has plenty of room to
is only slightly less than the 81.7 million commercial Grade A offices in the area. grow and will likely be treated as a single
sq ft covered in the three major office However, by using the latest government submarket over the near term. However,
submarkets on Hong Kong Island; land sale result in the area as a guide, it as it develops and matures, we expect the
Central, Wanchai/Causeway Bay and appears that developers are pricing future occupier and rental markets to become
Hong Kong East. office rents in Kai Tak at around HKD 70 more fragmented, which will inevitably lead
(USD 9) per sq ft per month, on a NFA basis 1. to the submarket boundaries being redrawn.
About the author

Henka Darsono is an Analyst for JLL, based in Hong Kong. He
provides market analysis and forecasts for the office sector and
1 In May, Nan Fung Development acquired a mixed-use also contributes to quarterly publications. Henka is also involved
development site for HKD 24.6 billion (accommodation value HKD
12,864 per sq ft). Assuming a gross development value of about in consultancy projects.
HKD 20,000 per sq ft for the site and 3% yield, monthly office rents
would need to be set close to HKD 70 per sq ft, on a NFA basis.
11 – Features
Alternative investments in New Zealand
New Zealand remained a destination for 14% of total transactions were attributed Major infrastructural projects to drive
international capital in 2017. While real to alternatives, demonstrating the investment opportunities
estate transaction volumes moderated continuation of investor interest and The relationship between convention
year-on-year, in large part due to a lack of opportunities in this growing sector. centre and hotel is symbiotic in that
stock available for sale, offshore investor the convention business relies heavily
activity remains above historical norms. Unique opportunities in the
alternatives sector on the ability to offer a range of quality
New Zealand provides an opportunity to accommodation options for delegates
One such opportunity was recently to choose from. This is particularly
diversify commercial property portfolios
announced in the South Island’s largest pertinent in Christchurch where 1,250 CBD
in a mature and highly transparent
city, Christchurch, with the offering buildings were demolished following the
market with stable governance and solid
of a five-star hotel. What makes this earthquake, including the majority of the
growth prospects. This is true both in
opportunity unique is the fact the hotel city’s hotels.
the traditional commercial real estate
site is located directly adjacent to the
sectors as well as New Zealand’s growing With a dearth of five-star hotel options
Christchurch Convention Centre, one
alternatives market. in Christchurch, there is an opportunity
of New Zealand’s largest construction
With competition tight for big-ticket assets projects. for an astute investor to capitalise on the
such as traditional CBD office buildings demand created by the convention centre.
The convention centre is being funded Prior to the earthquake, Christchurch
and shopping centres, both local and
by the New Zealand government at a captured 24% of the national convention
offshore investors looking for scale are
cost of NZD 475 million. The state-of- business.
now considering alternative markets to
the-art facility will have capacity for up
achieve yield and asset diversification. The growth of tourism in Christchurch,
to 2,000 delegates and its completion in
early 2020 will mark perhaps the most given its position as the gateway to
Rise in alternative investments in significant milestone in the city’s the wider South Island, is another key
last three years NZD 40 billion rebuild after the February demand driver for room nights. By 2023, an
Over the past three years, the volume 2011 earthquake. estimated 4.9 million international tourists
of sales for alternatives, namely hotels, are expected to visit New Zealand annually,
student accommodation, retirement The hotel site adjoining the convention spending NZD 15.3 billion in the process.
villages and medical properties has centre has been designated for a true
increased markedly as a proportion of international five-star operator, with Opportunities such as this, which
total property transactions. JLL seeking an investor to develop the centre on major infrastructure projects
property. Given the site’s position, the like convention centres, are placing
Over 2013 and 2014 less than 10% of completed hotel will enjoy internal access New Zealand on a global platform as a
transactions in New Zealand were for through to the convention centre and a destination for international investors
alternative assets, whereas 2015 and 2016 number of shared services and facilities. seeking allocation into alternative assets.
achieved 18% and 16%, respectively. In
the nine months ending October 2017,
About the author

Tom Barclay is an Associate Director for JLL New Zealand, based in
Auckland. He heads the Research and Consulting team providing
analysis and commentary on commercial property markets across
New Zealand.
Real Estate Services
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Office
Hong Kong
“Record-breaking deals
drive the investment
market higher.”
14 – Office
sq ft per month, Stage in Cycle

Denis Ma, Head of Research, Rental Growth Y-O-Y
5.6%
net effective on NLA Growth
Hong Kong
HKD 118.6 Slowing
Financial Indices
Tenant decentralisation and uptick in PRC leasing bolster demand
150 • Amid a widening rental gap, tenant decentralisation picked up as tenants
sought out cost-effective options. Baker & McKenzie, a US law firm, reportedly
140
pre-committed to several whole floors at One Taikoo Place in Quarry Bay,
130 becoming the largest legal sector tenant outside of Central.
120 • PRC firms resumed their expansionary plans in the city after the National
Congress in October, accounting for 53% of all new lettings in Central. Notably,
Index
110 Huarong Financial Services Asset Management leased 24,200 sq ft at Bank of

100 China Tower to expand in-house, contributing to net take-up of 87,300 sq ft in
the submarket.
90
Two offices outside Central receive Occupation Permits
80
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 • During the quarter, Lee Garden Three in Causeway Bay and Kingston
Rental Value Index Capital Value Index International Centre in Kowloon Bay were issued with their Occupation Permits,
adding 320,600 sq ft and 436,100 sq ft, respectively, to Grade A office stock.
Arrows indicate 12-month outlook
Index base: 4Q13 = 100 • Plans announced during the quarter to redevelop Goldin Financial Global
Financial Indicators are for Central. Square in Kowloon Bay and the former How Ming Street Bus Depot in Kwun
Source: JLL
Tong will add a combined 592,900 sq ft of Grade A offices to the Kowloon East
market by end-2021.
Physical Indicators
Rental and investment markets continue to climb higher
300 6
• Led by a 1.1% q-o-q growth in Central, rentals in the overall market advanced
250 5 by 0.9% q-o-q in 4Q17, bringing full-year growth up to 3.8%. Rentals in Kowloon
200 East advanced by 0.4% q-o-q in 4Q17, ending the year down 2.3%; the only
4
Thousand sqm
submarket to record negative growth in 2017.

150
Percent
3 • Cheung Kong sold its 75% stake of The Center in Central for HKD 40.2 billion
100
2 or HKD 33,001 per sq ft to a PRC-backed consortium, setting a new benchmark
50 for the sector, in terms of lump sum. Supported by a string of record-breaking
0 1 transactions, capital values in the overall market advanced by 2.5% q-o-q,
bringing full-year growth to 17.5%.
–50 0
13 14 15 16 17 18F
Take-Up (net) Completions Outlook: Rental markets to broadly edge higher in 2018
Future Supply Vacancy Rate • Given the low vacancy rate environment across most major office submarkets,
For 2013 to 2017, take-up, completions and vacancy rates are
we expect rentals to grow in the range of 0-5% in 2018. Kowloon East is likely to
year-end annual. Future supply is for 2018. be the exception, with rentals forecasted to decline in the range of 5-10% owing
Physical Indicators are for the overall market. to the elevated vacancy and new completions scheduled in the year ahead.
Source: JLL
• With plenty of buyers in the market and yields still carrying a premium over
risk-free rates, capital values in the overall market are expected to grow in the
range of 0-5% in 2018, with capital values in Central leading the way, up in the
range of 5-10%.
Note: Hong Kong Office refers to Hong Kong’s overall Grade A office market.
Beijing
“Strength of domestic firms
helps new projects fill up,
reaffirming that pent-up
15 – Office
Rental Growth Y-O-Y sqm per month, Stage in Cycle demand remains.”
-2.7%
net effective on GFA Rents Joe Zhou, Head of Research, China
RMB 384 Stable
Financial Indices
New, recent completions relieve pent-up demand
• Net absorption was strong as new completions entered the market with 120
significant pre-commitment. Demand was dominated by domestic finance 115
and IT firms, as foreign companies remained slow to expand in the market.
110
• Several IT companies started to consider recent completions in Olympic Area
105
as an alternative to Zhongguancun, where large vacant space was lacking.
100
Two new projects open in Olympic Area Index 95
• China Overseas Fortune Centre completed and was half-committed in 4Q17.
90
The building received strong overflow demand from IT tenants who were
unable to find space in the tight Zhongguancun submarket. Nearby, Hengyi 85
Building entered the market more than half-committed; PetroChina secured 80
a sizeable space at the new building. 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
Rental Value Index Capital Value Index
• Vacancy rates for recent completions continued to fall as they attracted
tenants. Despite this downward pressure, Grade A vacancy rose slightly in the Arrows indicate 12-month outlook
quarter due to the new supply, reaching 7.1% by end-4Q17. Index base: 4Q13 = 100
Financial Indicators are for the CBD.
Source: JLL
Finance Street rents climb 3.2% q-o-q
• Finance Street recorded a new high, as rents rose for a thirty-fifth consecutive Physical Indicators
quarter. Due to the unique advantages of being close to national regulators,
finance firms with high rental affordability continue to prove how important the 1000 8
area is for business. By contrast, CBD rents were flat due to supply pressures. 900 7
800
• China Merchants Group sold a portfolio containing several floors of China 700
6
Thousand sqm
Merchants Building to PAG Asia. The purchase was an exception to the current 600 5 Percent
trend, where domestic investors dominate the market. 500 4
400 3
Outlook: Key trends to carry over to 2018 300
2
• Domestic demand is expected to further dominate the office market. Rents 200
100 1
are forecast to follow similar trajectories, with CBD and Finance Street rents
continuing to diverge in the coming months. 0 0
13 14 15 16 17 18F
• Co-working operators are expected to push forward with fast-paced growth Take-Up (net) Completions
around the city. As they continue to expand in the market, we expect to see Future Supply Vacancy Rate
some co-working growth at Grade A buildings.
year-end annual. Future supply is for 2018.
Physical Indicators are for the overall market.
Source: JLL
Note: Beijing Office refers to Beijing’s overall Grade A office market.

Shanghai
“Co-working operators
a significant source of
demand in 2017.”
16 – Office
Daniel Yao, Head of Research, sqm per day, Stage in Cycle

Rental Growth Y-O-Y
East China
-1.4%
net effective on GFA Rents
RMB 10.3 Falling
Financial Indices
2017 net absorption doubles from 2016
130 • Grade A net absorption reached over 1.3 million sqm in 2017, with the
Decentralised submarket contributing the majority. Domestic financial services,
120 retail and TMT companies were the most active sectors in the CBD. Co-working
operators became a significant demand driver in both the CBD and Decentralised
110 submarket as they aggressively expanded.
• Large supply met the demand for consolidation, upgrade and expansion. The
Index
100 CBD continued to feel the pressure from the Decentralised submarket, especially
the fringe CBDs as companies continued to seek cost-saving options.
90
Supply reaches record high and vacancy increases
80 • Over 2.2 million sqm of new supply entered the market in 2017, with 1.6 million
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 sqm in the Decentralised submarket and 0.6 million sqm in the CBD. Vacancy
Rental Value Index Capital Value Index increased 2.0 percentage points y-o-y to 10.2% in the CBD and 8.8 percentage
points y-o-y to 26.8% in the Decentralised submarket.
Index base: 4Q13 = 100
• In 4Q17, there were no new completions in the CBD. In the Decentralised
Source: JLL submarket, five projects reached completion - two in Puxi and three in Pudong.
Rents in the fringe CBDs continue to rise despite large supply

Physical Indicators
• The Decentralised submarket recorded a 4.4% y-o-y rental increase in 2017. In
700 12 particular, the fringe CBDs’ excellent metro access and completion of higher
600
quality projects continued to drive leasing demand for these areas. On the other
10
hand, the CBD was affected by supply pressures, from within the CBD and fringe
500 CBDs, causing landlords to lower rental expectations.
8
Thousand sqm
400
Percent
6 • After a quiet 3Q17, investment transactions picked up towards year-end as

300 several deals previously under negotiation closed. Notable investment deals in
4 the quarter involved SOHO Linkong and Cross Tower. Foreign investors were
200
2
active in 2017, and the Decentralised submarket saw more activity with cap rates
100
compressing throughout the year.
0 0
13 14 15 16 17 18F Outlook: New supply volume to remain high in 2018
Take-Up (net) Completions
Future Supply Vacancy Rate • A large amount of new supply is in the pipeline for 2018, especially in the
Decentralised submarket. While current stock in the Pudong Decentralised
For 2013 to 2017, take-up, completions and vacancy rates are submarket is much smaller compared to Puxi, we expect to see areas like
year-end annual. Future supply is for 2018. Qiantan and Pudong Expo gain momentum. The core CBD will receive several
Physical Indicators are for the CBD.
Source: JLL projects in 2018, but new supply should ease post-2018.
• Due to supply pressures, overall rental growth will likely remain limited in 2018.
However, some decentralised submarkets still have room for rental growth due
to an improving business environment and attractive rental gap with the CBD.
Note: Shanghai Office refers to Shanghai’s overall Grade A office market consisting of Pudong, Puxi and
decentralised areas.
Guangzhou
“Dynamic leasing activity
observed from tech
companies in emerging
17 – Office
Stage in Cycle
Pazhou.”
Rental Growth Y-O-Y sqm per month,
4.1%
net on GFA Rents Silvia Zeng, Head of Research,
RMB 179 Rising South China
Financial Indices
Pazhou’s large space availability favoured by tech industry
• Overall demand was broadly stable with active lease enquiries. Tech firms 150
drove demand for large units, with Pazhou standing out in particular due to its
abundant leasable units. For instance, Alibaba’s cultural and entertainment 140
subsidiary secured three floors in Baoland Plaza. 130

• Existing vacant space in Zhujiang New Town (ZJNT) was absorbed at a rapid
Index
120
pace. As a result, a large number of Grade A buildings in ZJNT have attained
relatively high occupancy rates. ZJNT remained a major contributor to the 110
nearly 100,000 sqm of overall net absorption in the quarter.
100
Vacancy returns to single digits after six quarters
• Noble Center, a Grade A office building with a total GFA of 77,700 sqm entered 90
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
the market in the quarter. The building is located in Panyu and is the first
Grade A office in this emerging submarket.
• The overall vacancy rate dropped 0.5 percentage points q-o-q to 9.8% in Index base: 4Q13 = 100
4Q17, supported by less supply pressure and solid demand growth. Continued Financial Indicators are for Zhujiang New Town.
absorption in ZJNT and active leasing in Pazhou effectively contributed to this Source: JLL
vacancy decline.
Physical Indicators
Improved occupancy boosts landlords’ confidence in raising rents
• Overall rental values rose by 1.6% q-o-q, largely propelled by the mild rental 600 14
increase in the majority of Grade A office buildings in ZJNT. Pazhou also
500 12
witnessed rising rents as good absorption continued and the overall conditions
of the submarket kept improving. 10
Thousand sqm
400
8
Percent
• Sentiment in the investment market was generally optimistic. Domestic 300
financial institutions and SOEs actively enquired about purchasing space for 6
self-use. Notably, the number of en bloc transactions in 4Q17 was higher than 200
4
previous quarters in 2017, and mostly involved under construction non-Grade A 100 2
projects in emerging areas.
0 0
Outlook: Core CBD to lead overall rental upsurge in the near term 13 14 15 16 17 18F
• Space in ZJNT is expected to remain in high demand; the submarket’s vacancy Future Supply Vacancy Rate
rate, as well as other old CBDs, will keep sliding given no new supply in 2018.
Pazhou should see a further rise in demand, but two new buildings in 2018 may
cause the submarket’s vacancy rate to increase. For 2013 to 2017, take-up, completions and vacancy rates are
• Healthy demand, lack of new supply in ZJNT, and the improving maturity of Physical Indicators are for the overall market.
Source: JLL
Pazhou as a Grade A submarket, is expected to result in a continued, yet steady,
rise in the overall rental value in 2018, up in the range of 4-5%.
Note: Guangzhou Office refers to Guangzhou’s overall Grade A office market.

Taipei
“Leasing and investment
activity rebounds at
year-end.”
18 – Office
Jamie Chang, Head of Research, ping per month, Stage in Cycle

Rental Growth Y-O-Y
Taiwan net on GFA Rents
0.4% NTD 3,121 Stable
Financial Indices
Relocations and upgrades support demand
130
• Quarterly net absorption reached 10,800 ping in 4Q17. Large units were in
demand by corporate tenants for consolidation and upgrade purposes. IT,
125
high-tech and financial firms were the most active occupiers in the quarter.
120
• Annual net absorption for 2017 reached 43,100 ping, a new record high.
115 However, 70% of this take-up was attributed by owner-occupied space. Tenants
maintained a caution stance and lease negotiations remained prolonged. Some
Index
110
105
deals signed in 4Q17 commenced the negotiation process in 2016.
100 Some projects delay completion until 2018

95 • There was only one building, Taiwan Cooperative Bank Headquarters,
90
completed in 2017 and the majority of its 32,639 ping of office space was for
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 owner occupation. No new supply coupled with positive take-up pushed the
Rental Value Index Capital Value Index overall vacancy rate down to 7.1% at end-4Q17.
Arrows indicate 12-month outlook • Some Grade B office tenants relocated to new Grade A offices or industrial
Index base: 4Q13 = 100 offices in the city fringe. This movement resulted in the Grade B vacancy rate
Financial Indicators are for Xinyi.
Source: JLL edging up by 0.1 percentage points to 3.7%, while average rent remained stable
at NTD 1,768 per ping per month.
Physical Indicators
Rents hold firm
200 • With business sentiment remaining cautious and landlords competing for
12
180 tenants, rentals for most buildings held relatively stable. The average rent for
160 10 the overall market increased slightly by 0.3% q-o-q to NTD 2,651 per ping
140 per month.
Thousand sqm
120 8
Percent
100 6
• Several large investment deals closed in 4Q17, pushing overall transaction
80 volumes for the full year to NTD 61.2 billion. This was in line with 2016’s
60 4 performance. However, the market was quiet when compared with longer
40
2
term averages and the amount of domestic capital available to be deployed.
20
0 0 Outlook: Market prospects positive for 2018
13 14 15 16 17 18F
• With a large amount of high-quality supply to be released in 2018, this space
Future Supply Vacancy Rate is likely to attract tenants planning to consolidate operations or to upgrade.
Rental growth should remain moderate in the near future amid increased
For 2013 to 2017, take-up, completions and vacancy rates are competition. However, rental growth may pick up later the year as the new
year-end annual. Future supply is for 2018. space is taken up and vacancy declines.
Source: JLL • Local investment activity was relatively slow in 2017, due mainly to investors
being unable to find investment opportunities that suitably meet their targeted
returns. Investment volumes are unlikely to improve significantly until the price
gap between buyers and sellers narrows.
Note: Taipei Office refers to Taipei’s overall Grade A office market.

Tokyo
“Occupier demand
remains robust, while the
investment market sees
19 – Office
some transactions.”
tsubo per month, Stage in Cycle
Rental Growth Y-O-Y Takeshi Akagi, Head of Research,
gross on NLA Growth
1.4% JPY 36,733 Japan
Slowing
Financial Indices
Strong pre-commitment activity amid low vacancy
• The December Tankan Survey indicated that business sentiment of large 170
manufacturers was at its highest level in more than a decade. However, there 160
was a slight deterioration in sentiment about the outlook that reflected caution due
to a labour market shortage. In November, the unemployment rate decreased to a 150
24-year low of 2.7% while the job-to-applicant ratio rose to a 43-year high of 1.56. 140
• Robust demand in 4Q17 came from sectors including information and 130
communication, professional services and manufacturing. However, with low Index 120
vacancy and no new supply, net absorption slowed down to 40,000 sqm, as
110
much of the leasing activity was pre-commitments to upcoming supply. For
full-year 2017, net absorption totalled 155,000 sqm. 100
90
Vacancy moves below 3% again 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
• No new supply entered the market in 4Q17. For full-year 2017, new supply Rental Value Index Capital Value Index
totalled 202,000 sqm and increased total stock by 3%.
• The vacancy rate stood at 2.5% at end-4Q17, decreasing 50 bps q-o-q. A major Index base: 4Q13 = 100
Source: JLL
decline in vacanct space was evident in Otemachi/Marunouchi while further
tightening was also seen in Shibuya and Shinjuku.
Rental and capital value growth accelerates slightly Physical Indicators

• Rents averaged JPY 36,733 per tsubo per month at end-4Q17, increasing
700 5
0.3% q-o-q. This marked 23 straight quarters of growth. On an annual basis,
rents rose for the sixth straight year. 600
4
• Capital values grew 0.4% q-o-q and 2.9% y-o-y in 4Q17. This was the 23rd 500
consecutive quarter of growth. In the investment market, transaction activity 3
Thousand sqm
400
increased with the price gap between buyers and sellers narrowing. A major
Percent
300 2
transaction in the quarter involved Nippon Building Fund acquiring Roppongi
T-Cube for JPY 62.8 billion (NOI cap rate of 3.6%). 200
1
100
Outlook: Rents and capital values to grow moderately
0 0
• Oxford Economics revised up Japan’s real GDP growth forecast for 2018 to 13 14 15 16 17 18F
1.7%, while CPI is projected to rise 0.7%. Notable risks to the economic outlook Take-Up (net) Completions
include volatility in financial markets and uncertainties in the global economy. Future Supply Vacancy Rate
• In spite of new supply in 2018 expected to be more than double the past For 2013 to 2017, take-up, completions and vacancy rates are
10-year annual average and amongst the highest on record, vacancy is expected year-end annual. Future supply is for 2018.
to only rise moderately. Sustained robust demand and high pre-commitment Source: JLL
rates should help lessen the impact of new supply on vacancy. As such, rents
are expected to continue to edge up. Capital values are also anticipated to rise,
largely reflecting the upward rental trend. There is likely little room for further
cap rate compression.
Note: Tokyo Office refers to Tokyo’s 5-Kus Grade A office market.

Osaka
“Vacancy decline supports
rental growth; investment
activity strengthens.”
20 – Office
Yuto Ohigashi, Associate Director - tsubo per month, Stage in Cycle

Rental Growth Y-O-Y
Research, Japan
7.6%
gross on NLA Rents
JPY 18,799 Rising
Financial Indices
Net take-up slows despite of robust demand due to limited supply
230 • According to the December Tankan Survey, business sentiment of large
manufacturers remained at a high level. However, firms were slightly less
210
optimistic about the short-term outlook due to an ongoing labour shortage. In
190 September, the unemployment rate was 3.2% and jobs-to-applicant ratio 1.46.
170 • In spite of healthy relocation demand sustaining from business sectors
Index
including manufacturing, wholesale and retail trade, as well as information and

150
communication, net absorption was only 13,000 sqm in 4Q17. For full-year 2017,
130 net take-up totalled 134,000 sqm, supported by new supply in 2Q17 and 3Q17.
110 Vacancy moves below 2% for the first time since 2008
90 • No new supply entered the market in 4Q17. For full-year 2017, new supply
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 totalled 103,000 sqm, increasing total stock by 6%. A notable completion in the
year was Nakanoshima Festival Tower, which entered the market in 2Q17 and
with a high pre-commitment rate.
Source: JLL • The vacancy rate stood at 1.9% at end-4Q17, decreasing 70 bps q-o-q and
200 bps y-o-y. This marked the fourth straight quarter of decline. Submarkets
including Nakanoshima and Midosuji saw major absorption.
Physical Indicators
Rent and capital value growth accelerates
180 12 • Rents averaged JPY 18,799 per tsubo per month at end-4Q17, increasing
160 3.0% q-o-q. Growth was registered for the 14th straight quarter. For full-year
10 2017, rents grew 7.6% compared with 6.8% in 2016. This was the fourth straight
140
120 8 year of growth.
Thousand sqm
100
Percent
6 • Capital values grew 6.9% q-o-q and 20.0% y-o-y. This was the 17th straight
80 quarter of growth. Investor interest remained strong and continued to spill over
60 4 from Tokyo; however, there were no major Grade A office transactions recorded
40 in the quarter.
2
20
0 0 Outlook: Rents and capital values to grow moderately
13 14 15 16 17 18F • Oxford Economics revised upwards their GDP growth forecast for Osaka to 0.5%
Take-Up (net) Completions in 2018. Risks to the outlook include uncertainties in the global economy such
Future Supply Vacancy Rate
as geopolitical tensions and volatility in financial markets.
For 2013 to 2017, take-up, completions and vacancy rates are • Robust occupier demand is expected to be sustained while new supply will
Source: JLL remain limited, equivalent to only 47% of the past 10-year annual average. As
such, the vacancy rate is expected to remain below 2% and support further
rental growth. Capital values should also rise, reflecting rent growth and further
compression of cap rates amid sustained interest from investors.
Note: Osaka Office refers to Osaka’s 2-Kus Grade A office market.

Seoul
“Slower demand alongside
relocations into owner
occupied stock leads to
21 – Office
Stage in Cycle
negative net absorption.”
Rental Growth Y-O-Y pyung per month,
-3.6%
net effective on GFA Decline Sungmin Park, Head of Research,
KRW 91,704 Slowing Korea
Financial Indices
Tenant exits and subdued demand leads to weak net take-up
• Negative net take-up was recorded in the overall market during 4Q17, with the 130
weak result led by Yeouido and Gangnam. In Yeouido, the move of LG affiliates
into their new campus in Magok led to most of its negative net absorption. In
120
Gangnam, exits of several major tenants including Samsung Life and Kyobo Life
contributed to the district’s negative net absorption.
• The CBD recorded positive net absorption as Shinhan Card (11,000 pyung)
Index
110
completed their move-in at 101 Pine Avenue. The property also signed several
notable deals during the quarter - Hotel Shilla (690 pyung) and Ocean Networks
100
(836 pyung). WeWork signed new leases at Seoul Square and The-K Twin Tower,
actively expanding its presence in Seoul.
90
Vacancy slightly rises due to occupier exits at key buildings 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
• Overall vacancy increased to 11.7% as several landmark buildings in Yeouido Rental Value Index Capital Value Index
and Gangnam saw sizeable negative take-up due to recent move outs. In the CBD,
vacancy declined 170 bps q-o-q to 13.4%, aided by Shinhan Card’s arrival at Index base: 4Q13 = 100
101 Pine Avenue. Financial Indicators are for the CBD.
Source: JLL
• No new major supply completed in three major districts during the quarter.
Physical Indicators
Soft leasing demand limits rental growth
• Rents declined 1.5% q-o-q in 4Q17, mostly due to more generous rent incentives in 500 16
the CBD and Yeouido. Landlords held an accommodative stance in light of lingering 450 14
vacancy and scheduled upcoming departures. 400
12
350
Thousand sqm
• Notable investment deals during the quarter included the sale of Metro Tower 300 10 Percent
(GFA 9,827 pyung) which traded from Angelo Gordon to Anda Asset Management 250 8
for KRW 240 billion, and Hyundai Group’s purchase of Hyundai Group Building for 200 6
KRW 245 billion, its former headquarter building which was owned by Koramco. 150
4
100
Outlook: Leasing and investment activity to improve in 2018 50 2
• Aided by a strong economic outlook, overall leasing demand will likely improve 0 0
13 14 15 16 17 18F
alongside healthy prospects for the IT and co-working industries. Furthermore,
the trend of major tenant relocations into owner occupied stock, the issue which Future Supply Vacancy Rate
weighed on the market over 2017, is likely to be concluded by early 2018. This
should help three major business districts manage existing vacancy. For 2013 to 2017, take-up, completions and vacancy rates are
• Solid investor sentiment and strong liquidity should continue to strengthen Physical Indicators are for the overall market.
investment activity, which has been limited due to geopolitical tensions in the Source: JLL
Korean peninsula over the past few quarters. Significant domestic and international
liquidity in addition to the greater availability of quality stock in the market should
support the investment market.
Note: Seoul Office refers to Seoul’s Grade A office market.

Singapore
“Strengthening market
fundamentals fuel another
quarter of strong growth in
22 – Office
rents and capital values.”

Rental Growth Y-O-Y
Tay Huey Ying, Head of Research, gross effective on NLA Rents
Singapore 8.1% SGD 9.23 Rising
Financial Indices
CBD net absorption soars to highest in 11 quarters
130 • Occupier demand continued to improve with overall CBD net absorption in
4Q17 reaching the highest level in 11 quarters. This brought the full-year 2017
120 net absorption to more than double that of 2016.
• The growth spurt in the economy motivated some occupiers to secure more
110 space. The leasing sentiment on the ground continued to be positive, with
demand remaining broad based. The worst for financial institutions seemed to
Index
100 be over as consolidation efforts tapered off.
90 Vacancy embarks on the declining path

• New supply took a breather after the injection of approximately 2.0 million sq ft
80 from the completion of Marina One in 3Q17. There was no new en bloc building
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 completion in 4Q17.
• With stock remaining stable, the gradual moving in of tenants into the recently
Arrows indicate 12-month outlook completed buildings resulted in vacancy improving from 3Q17.
Source: JLL Rents and capital values climb further
• The CBD rental recovery entered its third straight quarter, with 4Q17 growth
Physical Indicators coming in as equally strong as 3Q17. On the back of better occupancy levels,
landlords of quality buildings increased their signing rents, with some scaling
250 12 back on their lease incentives.
200 10 • Capital values stayed on a positive growth trajectory in 4Q17, although easing
marginally from 3Q17. The investment market remained buoyed by continuing
Thousand sqm
8 interest and liquidity, as exemplified by the sale of Chevron House.

150
Percent
6
100
Outlook: Growth foreseen to extend into 2018
4 • Demand from occupiers could grow to meet the needs of businesses in light of
50
2
optimistic economic growth. Supply, on the other hand, will taper sharply in
2018, resulting in tightening vacancy. These factors should drive further rental
0 0 growth in 2018.
13 14 15 16 17 18F
Take-Up (net) Completions • Investment sales activity is expected to stay robust although the cumulative
Future Supply Vacancy Rate effect of the gradual increases in the US Federal Reserve’s interest rates could
potentially slow down capital value growth.
Physical Indicators are for the CBD.
Source: JLL
Note: Singapore Office refers to Singapore’s CBD Grade A office market in Marina Bay, Raffles Place, Shenton
Way and Marina Centre.
Bangkok
“Robust demand and a
lack of new supply are
expected to drive rent and
capital value growth higher
23 – Office
Stage in Cycle
in 2018.”
Rental Growth Y-O-Y sqm per month,
2.0%
gross on NLA Rents Andrew Gulbrandson, Head of
THB 835 Rising Research, Thailand
Financial Indices
Net absorption declines q-o-q but remains positive
• Net absorption fell to 2,800 sqm in 4Q17 amidst a flurry of relocation and 140
expansion activity. Most downward pressure in the quarter came from several
business units of Krungsri / Bank of Ayudhaya that vacated leased premises to 130
relocate to a new (owner-occupied) headquarters (HQ) due to officially open in
120
early 2018.
Index
• Leasing activity across the market was also strong, with at least 15 notable 110
deals being inked encompassing more than 22,000 sqm that will be taken up
100
in 2018.
Vacancy declines to near historical low 90
• No new supply completed in 4Q17. Total Grade A office stock in the CBA 80
remained at 1.9 million sqm. 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
• With no new supply in the quarter and positive net absorption figures, the
Grade A vacancy rate in the CBA declined to 7.7%. This is the second lowest Arrows indicate 12-month outlook
level we have recorded in the last 25 years after an all-time low of 6.1% in 4Q14. Index base: 4Q13 = 100
Source: JLL
New office REIT announced for IPO in early 2018
• Average gross rents in the CBA increased by 0.5% q-o-q in 4Q17. Capital values Physical Indicators
rose at the same pace as rents, leading market yields to remain stable.
140 10
• The Bhiraj Buri Group formally announced that Bhiraj Tower @ EmQuartier, 9
completed in 2015, would be divested into a REIT that will IPO in late January 120
8
2018. Estimates suggest a value of between USD 150 and 180 million once 100 7
Thousand sqm
trading begins. 6
80
Percent
5
Outlook: Lack of supply should put upward pressure on rents 60 4
• Two new projects should complete in 2018. The new Krungsri / Bank of 40 3
Ayudhaya HQ near BTS Ploenchit station will add 30,000 sqm of space to the 2
20
market. The T-One project near BTS Thonglor station will add 22,000 sqm to the 1
market in 2H18. Pre-leasing is reportedly very strong. 0 0

13 14 15 16 17 18F
• With a limited amount of new supply entering the market in 2018, robust Take-Up (net) Completions
demand and rising land prices, we expect to see vacancy continue to decline Future Supply Vacancy Rate
while rents and capital values should continue to rise.
Source: JLL
Note: Bangkok Office refers to Bangkok’s CBA Grade A office market.

Jakarta
“Healthy net absorption
in 4Q17.”
24 – Office
James Taylor, Head of Research,

sqm per annum, Stage in Cycle
Indonesia Rental Growth Y-O-Y
net effective on NLA Rents
-11.0% IDR 3,429,623 Falling
Financial Indices
Take-up driven by pre-commitments in new completions
120 • Technology firms, co-working space providers as well as occupiers from a broad
range of sectors continued to seek space in 4Q17, and net absorption continued
110 to be driven by take-up in the quarter’s new completions.
100 • Space availability remains high in a market that has seen unprecedented
levels of supply over the past three years. With rents continuing to fall, upgrade
90 demand remains a theme and we expect tenants to continue to move out of
Index
Grade B and C buildings in favour of recently completed Grade A premises.

80
Three Grade A completions in 4Q17
70 • Huge volumes of supply have come online since early 2015 and there was no
let-up in 4Q17. Just under 190,000 sqm of space was delivered in the form of
60
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 PCPD Tower (SCBD), Mangkuluhur Tower (Gatot Subroto) and Sopo Del Tower
Rental Value Index Capital Value Index A (Mega Kuningan).

• The quarter’s new completions meant that more than 420,000 sqm of Grade A
Index base: 4Q13 = 100 space was completed in the whole year. This made 2017 a record supply year
Source: JLL despite the delayed completion of three towers at the District 8 development in
the SCBD. We now expect these projects to be completed in early 2018.
Physical Indicators Rents fall for the tenth consecutive quarter
700 35 • Net absorption levels were relatively strong in each of the final three quarters
of 2017. However, despite improving demand, the sheer volume of supply was
600 30
such that the market vacancy rate ended the year above 30% and because of
500 25 this, many landlords remained willing to offer attractive rental packages to lure
Thousand sqm
tenants. Therefore, Grade A rents came down by around 1.7% q-o-q in 4Q17.
Percent
400 20
300 15 • Despite strong interest, en bloc sales of existing cash-generating assets are
extremely rare. Due to the tightly held nature of the market, the most likely entry
200 10
points for foreign investors are development sites or joint ventures with local
100 5 groups with access to an existing land bank. Sites with easy access to upcoming
0 0 infrastructure projects are of particular interest to investors.
13 14 15 16 17 18F
Take-Up (net) Completions Outlook: Huge volume of supply and strong demand expected
• We expect the strong demand recorded in 2017 to carry over into 2018. Rapid
For 2013 to 2017, take-up, completions and vacancy rates are expansion by e-commerce, online gaming and fintech companies as well as
year-end annual. Future supply is for 2018. co-working operators is likely in 2018, along with upgrade demand to remain
Source: JLL
a theme.
• Despite improving demand, we do not expect net absorption levels to match
supply. As such, the average market vacancy rate is likely to rise even further
and many landlords are likely to remain flexible in order to capture demand.
Single digit, quarterly rental declines are likely throughout the year.
Note: Jakarta Office refers to Jakarta’s CBD Grade A office market
Kuala Lumpur
“Marginal rent growth in line
with the current economic
recovery and a fast evolving
25 – Office
Stage in Cycle
co-working market.”
sq ft per month,
Rental Growth Y-O-Y
gross on NLA Growth James Short, Head of Markets,
1.1% MYR 6.26 Malaysia
Slowing
Financial Indices
Leasing demand remains robust
• Leasing demand generally improved in 4Q17, thanks to the recovery of the 120
economy and global oil prices. 115
• The co-working industry is leading demand for office space as it continues 110
to expand.
105
Vacancy stable despite completion of new building 100
• JKG Tower completed in 4Q17, adding 390,000 sq ft to the office market in Index
95
Kuala Lumpur City Centre (KLC). This pushed total office stock to 33.7 million
sq ft at end-2017 in the KLC submarket. 90
85
• The KLC vacancy rate rose marginally by 10 bps q-o-q to 14.7%, as a result of
the completion of the new building. 80
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
Rents rise in KLC
• Rents in the city centre improved in 4Q17 amidst a slow recovery in the oil Arrows indicate 12-month outlook
and gas industry. Landlords continued to have confidence in the market and Index base: 4Q13 = 100
Source: JLL
their buildings.
• There were no sales transactions recorded in the quarter in KLC.
Physical Indicators
Outlook: Unsustainable momentum with the incoming supply
300 20
• With major buildings such as The Exchange 106 in KLC expected to complete in
18
2018, the large volume of incoming supply should impact occupancy rates and 250
16
rents. As a result, the upward momentum in rents is unlikely to be sustained 200 14
Thousand sqm
and instead, rents in KLC are expected to decline. 12

Percent
150
• However, the current economic recovery and general confidence in the market 10
100 8
should lessen the impact of the large incoming supply and the threat of
50 6
oversupply in the market over the next 12 months. 4
0
2
-50 0
13 14 15 16 17 18F

Source: JLL
Note: Kuala Lumpur Office refers to Kuala Lumpur City Centre’s Grade A office market.
Manila
“Office demand remains
healthy amid improved
O&O leasing activity.”
26 – Office
Sharon Saclolo, Associate Director - sqm per month, Stage in Cycle

Rental Growth Y-O-Y
Research, Philippines
3.5%
PHP 1,012 Slowing
Financial Indices
Net absorption rises, underpinned by stable demand
150 • Net absorption was recorded at 113,600 sqm in 4Q17, up 32.0% q-o-q. The
healthy take-up may be attributed to stable demand from traditional office
140
space occupiers and online gaming firms. Leasing activity from Offshoring &
130
Outsourcing (O&O) firms started to gain momentum owing to the improved
relations between the Philippines and USA.
120
Index
• A large part of the office space demand for 4Q17 in Makati CBD and BGC was
due to O&O, online gaming, telecommunications, consulting, financial services
110
and logistics firms. Notable lease transactions included O&O firms leasing a
100
total of 8,900 sqm in BGC and gaming firms occupying 900 sqm of office space
in Makati CBD.
90
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 Large supply completions push vacancy upwards
Rental Value Index Capital Value Index • Four office developments completed in 4Q17, adding approximately
138,400 sqm of space to existing stock. Developments completed in BGC
Index base: 4Q13 = 100 included High Street South Corporate Plaza Tower 1 and Metrobank Center,
Source: JLL while completed developments in Makati consisted of Circuit Makati Corporate
Center 1 and Luz Building.
Physical Indicators • Completion schedules of three developments expected to complete in 4Q17

were moved to 1Q18. The vacancy rate increased slightly yet remained low at
600 8 3.0% in 4Q17.
500 7
Capital value growth exceeds rent growth
6
Thousand sqm
400
5
• Average monthly office rents in Makati CBD and BGC in 4Q17 were PHP 1,012 per
Percent
300
sqm per month, increasing 0.7% q-o-q and 3.5% y-o-y. Growth was supported by
4
steady demand for office space, along with the renewed take-up by O&O firms.
200 3
2
• Capital values posted growth of 7.4% y-o-y. Meanwhile, investment yields
100 contracted further to 8.8%, down about 30 bps y-o-y, as capital values rose
1
faster than rents.
0 0
13 14 15 16 17 18F
Outlook: Positive investor prospects to support office demand
Future Supply Vacancy Rate • Twenty-one office developments are expected to complete in 2018, adding
more than 500,000 sqm of office space to total existing stock in Makati CBD and
For 2013 to 2017, take-up, completions and vacancy rates are BGC. Forecasts show the large upcoming supply is likely to absorb the resurging
Source: JLL demand from the O&O sector.
• Fitch Ratings recently upgraded the long-term foreign currency issuer default
rating (IDR) of the Philippines from BBB- to BBB due to the country’s strong
economic growth and tax reform initiative. The positive investment sentiment is
expected to support office demand.
Note: Manila’s Office refers to Makati CBD and BGC Grade A office market.
Hanoi
“Market turning favourable
for landlords, with rents on
27 – Office
the rise.”
sqm per month, Stage in Cycle
Rental Growth Y-O-Y Trang Le, Head of Research, Vietnam
2.5% USD 23.1 Stable
Financial Indices
Demand remains moderate
• More than 5,700 sqm of Grade A office space was taken up in 4Q17, helping 110
total net absorption for full-year 2017 to reach 40,700 sqm. Notably, the second
tallest building in the city, Lotte Center Hanoi, recorded full occupancy after
three years in operation. 100
• Office demand for expansion and new set-up purposes continued to be the
main drivers in the Hanoi Grade A office market. 90
Index
No new supply
80
• No new supply completed in 4Q17, keeping total stock unchanged at
459,300 sqm.
• Available space in the Hanoi Grade A office market continued to decline. 70
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
The vacancy rate decreased to 8.6% in 4Q17, from 9.8% in 3Q17, thanks to Rental Value Index
positive office demand.
Rents move higher Index base: 4Q13 = 100
Source: JLL
• The average net effective rent was recorded at USD 23.1 per sqm per month
in 4Q17, an increase of 0.9% q-o-q and 2.5% y-o-y, due to the rise in rents
at several buildings with improved occupancy rates. Meanwhile, some Physical Indicators
buildings with poor management services or notable vacant space recorded
softening rents. 100 35
90
• There were no major investment transactions recorded in the quarter. 30
80
70 25
Outlook: Rise in both supply and demand is expected
Thousand sqm
60 Percent
20
• A new wave of Grade A office supply is expected to enter the market in 2018, 50
adding approximately 95,000 sqm of premium office space to the Hanoi market. 40 15
30 10
• Demand for new office space is expected to be positive in 2018, on the back of 20
positive economic prospects. Demand for office space for new set-up purposes 10
5
is also expected to increase, in line with the likely rise in the number of newly- 0 0
registered companies in 2018. 13 14 15 16 17 18F

Source: JLL
Note: Hanoi Office refers to Hanoi’s Grade A office market.

Delhi
“Cautious corporates
coupled with a shortage
of quality space brings
2017 net take-up to a
28 – Office
four-year low.” Rental Growth Y-O-Y sq ft per month, Stage in Cycle
Rohan Sharma, Associate Director - 0.0%

gross on GFA Rents
Research, India INR 140 Rising
Financial Indices
Weak leasing activity and occupier exits sees net take-up drop
110 • Technology occupiers continued to drive the bulk of take-up, but demand
also came from financial services, consulting and e-commerce firms. Serviced
105 office and co-working operators were again active. Mid to large-sized lease
transactions were led by consolidation and relocation activity; with some
100
expansion-driven activity observed.
Index
95 • The CBD saw occupier exits outpace new leasing, while less quality supply saw
net absorption in the SBD fall further. Gurgaon’s net absorption fell by 23.7%
90
q-o-q despite positive take-up in DLF Cybercity and the new completion, while
85 Noida saw a marginal increase in net absorption despite tenant exits.
80 Quarterly supply additions at a three-quarter low

4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
• The completion of three new buildings and a refurbished project added 0.8
million sq ft to stock. Two new buildings were added in Gurgaon, one in Noida,
and one refurbishment project finished in the SBD.
Financial Indicators are for the SBD. • The overall vacancy rate dropped by 60 bps q-o-q to 30.1%. Vacancy remained
Source: JLL low in prime office corridors and premium office buildings amid ongoing churn
due to lease expiries and relocations.
Physical Indicators
Rents and capital values edge up in Gurgaon, Noida and SBD
1,400 33 • Rents in Gurgaon were up on account of continued gains in DLF Cybercity and in
1,200 32 prominent SEZ. Rents rose in the SBD and Noida because of increases in select,
31 quality buildings and also SEZ buildings in the latter. CBD rents softened further.
1,000
30 • Capital values rose sharply in 3Q17 but growth slowed in 4Q17 and was in
Thousand sqm
800
line with rents. Institutional interest remains largely focused on leased assets;
Percent
29
600
28 however, some opportunities in under-construction supply are garnering investor
400 attention, depending on project quality, potential and pre-leasing activity.
27
200 26 Outlook: Demand momentum expected to be sustained
0 25 • Demand is expected to be driven by high-end analytics, software development,
13 14 15 16 17 18F
consulting, financial services, manufacturing, e-commerce, and co-working
Future Supply Vacancy Rate companies; with technology firms expected to drive big-ticket leasing
transaction activity. However, much of the demand from technology firms
For 2013 to 2017, take-up, completions and vacancy rates are will be for consolidation and relocation strategies, as increased automation
year-end annual. Future supply is for 2018. encourages firms to undergo operational realignment.
Source: JLL
• We expect rental growth to be led by premium buildings with high occupancy
levels and quality upcoming projects. Capital value growth is likely to be driven
by leased assets and mild yield compression is anticipated.
Note: Delhi Office refers to Delhi NCR’s overall Grade A office market.
Mumbai
“Mumbai sees the
completion of one of its
largest built-to-suit facilities.
Co-working operators
29 – Office
sq ft per month, Stage in Cycle continue leasing space.”
Rental Growth Y-O-Y
1.5%
gross on GFA Rents Subash Bhola, Director - Research,
INR 214 Rising India
Financial Indices
Net take-up rises sharply
• In 4Q17, net absorption increased by almost 50% from 3Q17 to reach 3.23 120
million sq ft. Buildings that commenced operations in the quarter had
significant pre-commitments. There was steady demand from BFSI, co-working, 115
pharmaceutical and FMCG companies for premium Grade A space. Navi
110
Mumbai continued to be the favoured destination among the IT/ITeS sector.
Index
• IT tenants remained cautious as national and global headwinds are impacting 105
the industry’s growth prospects, and thus many firms are prudently evaluating
100
their expansion plans.
Strong pre-commitments to new completions 95
• In 4Q17, three projects completed, providing a total area of over 1 million sq ft. 90
With this new supply, Mumbai’s total stock grew to 114.2 million. 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
• Developers with sizable pre-commitments to their projects were observed
to be speeding up construction to meet delivery timelines. With demand Arrows indicate 12-month outlook
in IT subdued, developers are looking at the SBD and Suburbs to launch Index base: 4Q13 = 100
Financial Indicators are for the SBD BKC.
commercial/non-IT projects. Source: JLL
Rents and capital values move higher in most submarkets

Physical Indicators
• On an overall basis, financial indicators increased marginally q-o-q. The
majority of renewals and new leases transacted were with rental rates 0.5-1.0% 800 25
higher than the previous quarter’s average. 700
20
• In the CBD, rents continued to decline, causing yields to decrease slightly 600
y-o-y. However, the eastern and western submarkets witnessed capital value 500
Thousand sqm
15
appreciation of 0.6% q-o-q.
Percent
400
10
Outlook: Net absorption to marginally increase 300
200
• Mumbai’s office market is expected to see a slight increase in absorption during 5
2018, with the IT industry remaining the main office driver of activity despite 100
expansion plans for select firms being put on hold. Co-working operators 0 0
13 14 15 16 17 18F
should also remain active, bolstering demand in the short to medium term.
• Annual supply in 2018 is projected to be higher than 2017, and projects nearing Future Supply Vacancy Rate
completions already have healthy pre-commitment levels. Cost-conscious
corporates and IT/ITeS tenants will continue to take up office space in the For 2013 to 2017, take-up, completions and vacancy rates are
Suburbs submarket. Rents and capital values should grow steadily, and yields Physical Indicators are for the overall market.
are likely to compress marginally, especially in non-IT pockets. Source: JLL
Note: Mumbai Office refers to Mumbai’s overall Grade A market

Bengaluru
“Space rationalisation
initiatives by corporates
bring about net absorption
30 – Office
drop.”
Stage in Cycle
Trivita Roy, Associate Director - Rental Growth Y-O-Y sq ft per month,
Research, India 5.2%
gross on GFA Rents
INR 77.6 Rising
Financial Indices
Softer demand leads to reduction in net absorption
140 • Bengaluru saw net absorption of 1.6 million sq ft in 4Q17, down from 2.6
million sq ft in the previous quarter. Pre-commitments signed in prior quarters
130 contributed most of the quarerly absorption, as tenants moved into newly
completed buildings. As the SBD witnessed tenant exits, Whitefield contributed
120
more significantly to net take-up in 4Q17.
Index
110 • Key occupiers who leased space in 4Q17 were DXC, Accenture, TCS,
Digicaptions and Synechron.
100
Vacancy edges up
90
• Five buildings started operations in 4Q17, adding 2 million sq ft to the total
80 stock, which stood at 108 million sq ft at end-4Q17. A few buildings came online
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
with more than 50% occupancy levels.
• Vacancy increased to 3.6% in 4Q17 from 3.4% in 3Q17, due to new supply and a
Arrows indicate 12-month outlook few occupiers consolidating space in the quarter.
Financial Indicators are for the SBD.
Source: JLL Moderate uptick in rents across the city
• In the SBD and Whitefield submarkets, rents increased by 1.5% and 1.4% q-o-q,
Physical Indicators respectively.
• Sustained investor interest drove capital values upwards by 0.5-2.8% q-o-q
1,200 10
across the city in 4Q17, with the highest growth recorded in the SBD submarket.
9
1,000 8
Outlook: Strong pre-commitments likely to keep vacancy below 4%
800 7
• A pick up in construction activity at projects underdevelopment should support
Thousand sqm
6
a healthy level of new supply in 2018. While new project launches in 4Q17
Percent
600 5
4 should strengthen the supply pipeline in the medium term.
400
3
• Rents are likely to show moderate growth in the next 12 months; however,
2
200 capital value growth is likely to outpace rents and lead to mild yield
1
0 0 compression. High-quality buildings with good occupancy levels should
13 14 15 16 17 18F continue to attract investor interest.

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

Sydney
“Centralisation activity and
office withdrawals contribute
to the Sydney CBD vacancy
rate falling to a 16-year low of
31 – Office
Rental Growth Y-O-Y sqm per annum, Stage in Cycle 5.4%.”
20.5%
gross effective on NLA Growth Andrew Ballantyne, Head of Research,
AUD 964 Slowing Australia
Financial Indices
Centralisation continues to be a key driver of demand
• Professional services and finance firms made up a large portion of tenant 190
moves over 4Q17. A number of tenants consolidated their operations from 180
multiple locations into one tenancy – these included Origin (7,850 sqm) and 170
Hannover Re (2,400 sqm) at International Towers Sydney Tower 1.
160
• Centralisation continues to be a key driver of demand in the Sydney CBD. A 150
Index
further three tenants relocated to the CBD over the quarter – two from Sydney 140
Fringe and one from St Leonards. The largest centralisation for 4Q17 was
130
Melbourne IT, relocating from the Sydney Fringe to 680 George Street (5,310 sqm).
120
Sydney CBD vacancy rate the lowest level in 16 years 110
• We withdrew a further five assets from Sydney CBD stock over the quarter, 100
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
which totalled 57,500 sqm. This takes the yearly withdrawal figure to 150,400
sqm, the highest annual figure for the Sydney CBD since 1997. Nearly 63,000
sqm of the withdrawals were for the Sydney Metro infrastructure project. Arrows indicate 12-month outlook
• Withdrawal activity and continued tenant demand from a broad range of Source: JLL
industry sectors resulted in the CBD vacancy rate trending down to 5.4%.
Tenants upgrading into better quality space has also resulted in the premium
grade vacancy rate trending down 8.0 percentage points over the year to 6.7%. Physical Indicators
Yields continue to trend down to record lows 300 12
• Asset owners wanting to capitalise on strong investor demand in the CBD 250
resulted in nine sales totalling AUD 1.52 billion. The largest sale was Charter Hall 10
200
Direct Property Fund purchasing 231 Elizabeth Street from Bright Ruby for an 8
Thousand sqm
150
estimated price of AUD 342.0 million.
Percent
100 6
• The secondary yield range compressed by 25 bps on both ends to range between
50
4.75-5.50%. This is the first time the upper yield range (4.75%) is below the 5% 4
threshold, and can be attributed to purchasers expecting strong rental uplift in 0
2
secondary assets, as net effective rents have increased by 66% over the past two years. -50
–100 0
Outlook: Positive demand and positive rental growth in 2018 13 14 15 16 17 18F
Take-up (net) Completions
• Tight market conditions are expected to continue over 2018. We forecast the
Sydney CBD vacancy rate should continue to trend below 5% over 2018. With
limited availability of contiguous space, leasing activity is expected to be For 2013 to 2017, take-up, completions and vacancy rates are
concentrated in small to mid-sized organisations. year-end annual. Future supply is for 2018.
Source: JLL
• Rents are projected to move higher over 2018, though not at the levels we have
seen over the past three years. However, prime and secondary rental growth is
expected to remain above the long-term average growth rates, which should be
supported by continued competition for limited space options in the CBD.
Note: Sydney Office refers to Sydney’s CBD office market (all grades).
Melbourne
“Net absorption rebounds
strongly in Melbourne’s
CBD office market in 4Q17.”
32 – Office
Stage in Cycle
Annabel McFarlane, Director – Rental Growth Y-O-Y
sqm per annum,
Research, Melbourne gross effective on NLA Rents
12.2% AUD 503 Rising
Financial Indices
2017 records third straight year of above-average net absorption
190 • CBD net absorption for the year was 91,100 sqm (29,400 sqm in 4Q17) and
180 this follows two years of extraordinary expansion. Net absorption slipped into
170 negative territory in Melbourne’s Fringe submarket (-3,100 sqm) and expanded
160 strongly in the SES (14,700 sqm) in 4Q17.
150
• Strength in the small business sector was apparent in 4Q17 with 83% of demand
Index
140
concentrated in the sub 1,000 sqm segment (134,000 sqm). Melbourne’s Fringe
130 submarket was impacted by the centralisation of larger tenants to the CBD.
120
110 CBD vacancy declines to 6.4%
100 • Minimal supply in 2017 resulted in CBD vacancy tightening to the lowest level
90 in five years at 6.4% in 4Q17. Following nine quarters of minimal construction
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 activity, new supply is expected to pick up in 1Q18. Ten projects are currently
under construction and expected to add 410,900 sqm to the market by 2020.
Arrows indicate 12-month outlook The three assets expected to complete in 2018 are all Docklands projects and
Index base: 4Q13 = 100 are 97% pre-leased as at end-4Q17.
Source: JLL
• The Fringe submarket vacancy edged up to 7.4% in 4Q17 after five consecutive
quarters of decline. Withdrawals of assets for redevelopment will continue to
impact the Fringe submarket in 2018 but the cycle of withdrawal of office assets
Physical Indicators for residential conversion has come to an end. The office sector supply cycle is
picking up in the Fringe submarket. Three projects are under construction and
200 12 12 others have the potential to add 154,000 sqm to the market by 2021. There
will be no new supply additions in the SES submarket until late 2018.
150 10
Low vacancy, robust demand supporting rises in effective rents

Thousand sqm
8
100
Percent
• Yields remained broadly stable but yields for Melbourne’ s CBD and Fringe
6
50 prime assets tightened further in 4Q17. Melbourne’s CBD and Fringe prime
4 office market yields tightened to 4.75-5.50% and 5.25-6.25% respectively.
0 • Melbourne effective rental growth moderated but remained robust in 4Q17.
2
CBD prime and secondary gross effective rents increased by 12.2% and 10.8%
-50 0
13 14 15 16 17 18F y-o-y respectively. Prime Fringe gross effective rents also increased strongly
Take-Up (net) Completions over the year (9.4%). The SES prime market is benefiting from the hiatus in
Future Supply Vacancy Rate supply, with rents up 6.6% in the year.

Outlook: Demand to moderate from recent strong levels
year-end annual. Future supply is for 2018. • Melbourne’s CBD office market supply cycle should pick up and accelerate over
Source: JLL
2018-2020. Vacancy is expected to remain well below average throughout 2018
and 2019 before increasing in 2020.
• Melbourne CBD office market yields are at record lows and minimal further
tightening is expected.
Note: Melbourne Office refers to Melbourne’s CBD office market (all grades).
Perth
“The Perth CBD records
positive net absorption in
2017, the first positive result
33 – Office
sqm per annum, Stage in Cycle since 2012.”
Rental Growth Y-O-Y
0.8%
gross effective on NLA Rents Andrew Ballantyne, Head of Research,
AUD 435 Stable Australia
Financial Indices
Centralisation continues to drive CBD leasing activity
• As CBD office space has become more affordable, there has been a steady 110
flow of tenants moving into the Perth CBD from suburban locations, as
well as tenants upgrading within the CBD. Prime grade vacancy decreased 100
throughout 2017 as demand for large requirements remained directed
90
towards higher quality buildings.
• As a sign of improving conditions in the wider Perth market, sub-lease vacancy 80
declined over 2016 and 2017, as multiple occupiers either re-occupied or no Index
70
longer marketed their premises for sub-lease.
CBD vacancy stable over 4Q17 60
• The Perth CBD recorded no change in headline vacancy over 4Q17, remaining at 50
21.8%. Prior to this, the vacancy rate had declined for four consecutive quarters. 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
• There is a minimal supply pipeline for the Perth CBD, with just one major
office project under construction. Capital Square (48,500 sqm) is due for Arrows indicate 12-month outlook
completion in 2018, and is fully pre-committed by Woodside Petroleum. Index base: 4Q13 = 100
Source: JLL
Speculative construction is unlikely in the current market.
Four major CBD sales transactions in 2017

Physical Indicators
• Perth CBD office investment volumes for 2017 totalled AUD 515.9 million, over
four transactions. In the largest sale of the year, The Insurance Commission of 200 30
Western Australia sold the Westralia Square office building at 141 St Georges
150 25
Terrace to GDI Property Group for AUD 216.3 million.
100 20
• Prime net face rents remained stable over 4Q17; however, incentives remain
Thousand sqm
high across the market. Prime yields remained stable over the year. Limited 50 15
Percent
prime grade investment opportunities have driven investment interest

0 10
towards secondary grade assets.
-50 5
Outlook: The Perth CBD is expected to recover steadily
-100 0
• The Perth CBD is likely to continue to attract tenants from suburban locations, 13 14 15 16 17 18F
with attractive rents a key driver for tenant migration. Activity from existing Take-up (net) Completions
CBD tenants is likely to remain driven by lease expiry and the opportunity to Future Supply Vacancy Rate
upgrade office facilities.
• Investment activity in the tightly held Perth CBD is anticipated to remain year-end annual. Future supply is for 2018.
limited, with a small number of assets brought to market for sale. We expect Source: JLL
to see further stabilisation in effective rents and prime incentives as prime
vacancy tightens.
Note: Perth Office refers to Perth’s CBD office market (all grades).
Auckland
“High levels of offshore
investment into the
Auckland CBD office
34 – Office
market push yields to

Stage in Cycle
record lows in 2017.” Rental Growth Y-O-Y sqm per annum,
2.4%
net on NLA Growth
Tom Barclay, Head of Research, New NZD 489 Slowing
Zealand
Financial Indices
White collar job growth underpins continued demand
170 • Occupier demand remains robust. Business growth and high net migration
160 levels are driving demand for office space. Occupier preference is skewed
150 towards prime stock with new options to become available over the next
140 18 months.
130
120 • Demand for secondary stock is less pronounced; however, vacancy levels are
Index
110
being regulated by the removal of stock for refurbishment or conversion. We
100 expect to see landlords upgrading secondary space to remain competitive.
90
Premium vacancy still low
80
70
• Premium vacancy increased marginally over 2H17 to 1.8%. Vacancy within
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 the top end of the market is forecast to remain tight until the completion of
Rental Value Index Capital Value Index the Commercial Bay development in 2H19, which will deliver 39,000 sqm of
premium space.
Index base: 4Q13 = 100 • Vacancy across secondary stock decreased slightly over 2H17, a result of
Source: JLL
refurbishments and conversions. A spike in demand from smaller occupiers
also assisted in preventing a spike in vacancy levels across lower grade space.
Offshore buyers remain keenly interested in office assets

Physical Indicators
• Offshore investors remain active in the Auckland office market, with two large
60 15%
transactions occurring over 4Q17. The NZ Post Centre and NZI Centre were
both sold over the period, transacting for NZD 30 million and NZD 63 million
respectively.
40 10%
• The average prime yield firmed by 5 bps in 4Q17 to 6.05%. There is potential
Thousand sqm
for further yield compression given the weight of offshore capital seeking
Percent
20 5%
prime assets.
0 0% Outlook: Prime vacancy forecast to firm further over 2018

13 14 15 16 17 18F
• Available space across prime stock is forecast to remain minimal over 2018,
-20 -5%
as the new supply entering the market has solid pre-commitment. However,
Take-up (net) Completions
secondary vacancy is expected to increase as occupiers move into new or
Future Supply Vacancy Rate refurbished premises. Apartment or student accommodation conversions may
moderate the rise in vacancy, although construction costs and competing
For 2013 to 2017, take-up, completions and vacancy rates are supply could offset some of this downward pressure on vacancy.
Source: JLL • Cross-border investors pushed yields to record lows in 2017 and we expect
to see sustained investor interest continue in 2018, given the strength of the
occupier market and the solid economic outlook for the country. While further
yield compression is possible, we expect rental uplift to be the main driver of
capital value growth in 2018.
Note: Auckland Office refers to Auckland’s CBD and Viaduct Harbour office markets.
Retail
Hong Kong
“Revival in tourism and retail
sales fuels market recovery.”
Terence Chan, Head of Retail, sq ft per month, Stage in Cycle
Hong Kong Rental Growth Y-O-Y
net on GFA Decline
-10.5% HKD 424.8 Slowing
Financial Indices
Visitor arrivals and retail sales increase
110 • Boosted by the holiday season, total visitor arrivals rose 6.8% y-o-y in the
October-November period, with mainland visitors surging 8.5% y-o-y. Led by
100 a resurgence in jewellery and watch sales, which were up 8.2% y-o-y through
36 – Retail
the October-November period, retail sales grew by a solid 5.7% y-o-y, bringing
90
growth through the first eleven months up to 1.8% y-o-y.
Index
80 • Leasing demand generally remained weak, with activity largely dominated by

renewals and cost-saving initiatives. F&B operators and mass retailers, notably
70 lifestyle and entertainment sectors, remained the bright spot in the market.
60
Foreign retailers were also active, with Korean fashion house MLB Korea leasing
two street shops, one each in Mongkok and Central.
50
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 New supply boosts the non-core prime shopping centre market
RV Index (High Street Shop) • Three prime shopping centre projects were completed in 4Q17, adding about
CV Index (High Street Shop)
RV Index (Premium Prime Shopping Centre) 300,600 sq ft to overall stock.
RV Index (Overall Prime Shopping Centre)
• Both Lee Garden Three (90,000 sq ft) in Causeway Bay and Ocean PopWalk
Index base: 4Q13 = 100 (80,384 sq ft) in Tseung Kwan O obtained their Occupation Permits in 4Q17. The
Source: JLL extension project of Maritime Square (130,243 sq ft) had its soft-opening in mid-
December with over 90% of floor space leased.
Physical Indicators
Rental correction further narrows on high streets
300
• The slide in high street shop rentals persisted through 4Q17, down 1.8% q-o-q,
250 albeit at a slower pace, on the back of improving sector indicators. Supported
by stronger sales and fewer malls undergoing repositioning works, overall prime
Thousand sqm
200 shopping centre rentals edged up by 0.2% q-o-q in 4Q17.

150 • Investors continued to buy into Hong Kong’s retail recovery, focusing largely on
neighbourhood centres in non-core areas. A consortium led by GAW Capital
100 Partners acquired 17 assets, including car-parking space, from Link REIT for a total
50 consideration of HKD 23 billion, with estimated initial yields ranging from 2.3% to
3.2%.
0
13 14 15 16 17 18F Outlook: Market to bottom out in 2018
Completions Future Supply • The ongoing improvements in inbound tourism and retail sales should
continue to render support to the leasing market. Looking forward, we expect
For 2013 to 2017, completions are year-end annual. Future supply an ‘L-shaped’ recovery to take place in 2018, with high street shop rentals to
is for 2018.
Source: JLL increase in the range of 0-5%.
• Despite potential interest rate hikes in 2018, retail properties should continue to
draw plenty of interest as investors look to buy into the market recovery. As a result,
we expect capital values of high street shops to grow in the range of 0-5% in 2018.
Note: Hong Kong Retail refers to Hong Kong’s overall prime shopping centres and high street retail markets.
Beijing
“Six new projects open,
marking the largest Urban
supply quarter since 2004.”
Rental Growth Y-O-Y Joe Zhou, Head of Research,
1.7% RMB 874
China
Slowing
Financial Indices
Flagship stores make a splash in 4Q17
• Flagship openings were popular at the newly opened WF Central mall in 120
Wangfujing. Lingerie retailer Victoria’s Secret opened its three-floor Asia
flagship, making it the first store in Beijing to provide access to full product 115
37 – Retail
lines. Also at the mall, Pandora opened its global flagship store and Superdry
110
opened its China flagship store.
Index
• Sports and sub-brands brands were also active in the quarter. Key openings 105
included Lululemon, Adidas Terrex, Adidas Neo, Adidas Young Athletics and
100
Nike Kicks Lounge.
95
Peak supply quarter unmatched since 2004
• It was a peak supply quarter, with 4Q17 marking the largest quarterly supply 90
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
for the Urban market since 2004. A total of six new projects entered the market,
adding 395,400 sqm of Urban supply and 470,000 sqm of Suburban supply.
• Key openings included the WF Central mall along the busy Wangfujing Arrows indicate 12-month outlook
pedestrian street and MixC Miyun, the first large-scale shopping mall in the far Index base: 4Q13 = 100
Source: JLL
north of Beijing. WF Central opened with high commitment, while MixC Miyun
was fully committed. Meanwhile, IN88 department store closed its upper floors
and is likely to convert the space.
Physical Indicators
Slow rental growth persists
1000
• Urban rental growth remained slow, but recorded a slight increase from the
900
previous quarter as landlords of market-leading projects had greater bargaining
800
power; rents grew 0.7% q-o-q and 1.7 y-o-y. The Suburban market continued
700
to outpace the Urban market, registering 0.9% growth q-o-q and 3.2% growth
Thousand sqm
600
y-o-y.
500
• Experienced developers continued to search the Beijing market for retail 400
opportunities, as their confidence in Tier 1 cities remained high. Retail-to-office 300
conversions also continued to attract attention from investors in the market. 200
100
Outlook: Suburban malls to dominate future supply pipeline 0
• In 2018, new supply should start to shift its focus from the Urban market to 13 14 15 16 17 18F
the Suburban market. Over the next twelve months, new Suburban supply is Completions Future Supply
expected to make up the majority of new supply (at nearly 60%). By 2019, new
Suburban supply is expected to dominate new supply (at nearly 90%). For 2013 to 2017, completions are year-end annual. Future supply
is for 2018.
• F&B and children’s brands should remain strong. Premium and luxury Source: JLL
cosmetics will have strong growth potential at destination and regional malls.
New retail supermarkets will consider entering malls, as the most competitive
players in this rising sector look to upgrade from low-end projects.
Note: Beijing Retail refers to Beijing’s Urban retail market.

Shanghai
“Polarisation in mall
performance intensifies in
decentralised markets.”
sqm per day, Stage in Cycle
Joe Zhou, Head of Research, China Rental Growth Y-O-Y
net on NLA Growth
2.6% RMB 51.7 Slowing
Financial Indices
Retailers strive to offer interactive shopping experiences
130 • Mall operators and retailers have gradually made unique shopping experiences
a prevailing focus in order to improve customer retention. Starbucks Reserve
Roastery debuted at Taikoo Hui in the quarter, offering an interactive, multi-
38 – Retail
120
sensory coffee experience.
• “New retail” concepts gained traction as retailers sought to leverage digital
Index
110 strategies. For example, online-integrated supermarkets He Ma Xian Sheng

and Super Species opened flagship stores in decentralised malls, while many
100 online retailers opened pop-up stores in popular malls to boost sales during the
“Double 11” online shopping festival.
90 Four projects deliver 550,000 sqm, the largest supply of 2017

4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
• Overall supply in both Prime and Decentralised submarkets came in at 1.3
million sqm in 2017, down slightly from 2016’s 1.4 million sqm, but still one of
the largest years on record. Nearly half of 2017’s supply was completed in 4Q17,
Index base: 4Q13 = 100 including the refurbished No.1 Shopping Center and mega projects: Gala Mall,
Financial Indicators are for the Prime market. Aegean Shopping Mall and Xuhui ASE Mall.
Source: JLL
• Vacancy decreased to 9.2% in prime areas as a result of improved occupancy in
Physical Indicators new malls such as Raffles City Changning and mature malls such as Mosaic. Due
to supply pressures, Decentralised vacancy slightly increased to 8.7%, despite
600 new projects’ high occupancy.
500 Rental growth slows in both Prime and Decentralised submarkets

• Prime open-market ground floor base rents increased by 2.6% y-o-y to RMB 51.7
400
Thousand sqm
per sqm per day, as growth was hindered by underperforming malls in West
300 Nanjing Road and Lujiazui. Decentralised rents rose 2.5% y-o-y to RMB 19.8
per sqm per day, as strong performances by malls such as Kerry Parkside were
200 balanced out by struggling malls in saturated areas.
100 • Park Lane, a 5,779 sqm retail podium of a serviced apartment project in
Changning, was sold by HKSH Alliance to a Malaysian buyer for RMB 260 million.
0
13 14 15 16 17 18F
Completions Future Supply
Outlook: Supply pressure to force operators to change strategies
• F&B, health and children’s brands are still expected to drive most demand. Mall
For 2013 to 2017, completions are year-end annual. Future supply operators are expected to integrate online platforms, adopt new technologies,
is for 2018.
Physical Indicators are for the Prime market.
and collaborate with art and culture institutions to attract customers in a
Source: JLL crowded and increasingly homogeneous retail market.
• City-wide supply may reach a peak in 2018, and is likely to intensify the polarisation
of performance across Shanghai, with the separation of winners and losers
particularly acute in decentralised submarkets already under supply pressure.
Note: Shanghai Retail refers to Shanghai’s overall prime and decentralised retail markets.
Guangzhou
“Investors willing to pay a
premium for assets with
greater improvement
Stage in Cycle
potential.”
sqm per month,
Rental Growth Y-O-Y
net on NLA Rents Silvia Zeng, Head of Research,
0.8% RMB 749.4 Stable South China
Financial Indices
Brands targeting millennials drive leasing demand
• Demand in urban precincts continued to be stable in 4Q17. Fashion and 150
accessories retailers that target the younger generation were actively
140
expanding, thanks to the strengthening purchasing power of this demographic
39 – Retail
group. Automobile retailers were another bright spot recently, as several “new 130
energy” car and luxury car brands took up space in urban malls.
Index
120
• Suburban precincts saw mass market chain brands remaining the main source
of demand. The continued growth of the residential population drove sales in 110
the Suburban retail sector, as seen with optimal footfalls and performances in
inner suburban malls. 100
Trade-mix adjustments push up urban vacancy rate 90

4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
• There were no new completions in 4Q17. The Urban vacancy rate increased Rental Value Index Capital Value Index
slightly, affected by several malls’ trade-mix adjustments; while the Suburban
vacancy rate edged down, as occupancy at recently opened malls rose. Arrows indicate 12-month outlook
• The overall vacancy rate was stable at around 4.5%, largely balanced by the Source: JLL
opposite movements in Urban and Suburban vacancy rates.
Investors active as they place greater value on asset potential

Physical Indicators
• A mild rise in Urban rentals was observed, mainly from malls that opened in
recent years which saw improved footfalls. Suburban rentals also had moderate 600 14
growth, benefiting from steady sales performances in inner Suburban malls. 12
500
• Rock Square was transacted in the quarter. Since there are very limited en bloc 10
Thousand sqm
400
options available on the market, experienced retail investors have become
8
Percent
more willing to accept relatively lower yields in exchange for malls they regard 300
as having a good potential for future upgrade. 6
200
4
Outlook: Vacancy rate to decline despite substantial supply 100 2
• Leasing demand is likely to improve mildly. “New retail” concepts are likely to
0 0
gather momentum in Guangzhou, while brands appealing to young consumers 13 14 15 16 17 18F
are expected to remain active. Supply in next 12 months is projected to exceed Take-Up (net) Completions
400,000 sqm, but the overall vacancy rate is expected to decline, owing to Future Supply Vacancy Rate
smooth pre-leasing progress.
For 2013 to 2017, completions are year-end annual. Future supply
• The rental performance is expected to see moderate improvement, following is for 2018.
the enhancement in leasing demand. Low availability of investment-grade Source: JLL
assets is likely to persist, as transactions in recent years leave very few saleable
core assets in the market.
Note: Guangzhou Retail refers to Guangzhou overall prime retail market.

Tokyo
“Further cap rate
compression amid strong
interest from investors.”
tsubo per month, Stage in Cycle
Takeshi Akagi, Head of Research, Rental Growth Y-O-Y
gross on NLA Growth
Japan 0.9% JPY 79,490 Slowing
Financial Indices
Healthy occupier demand continues in Ginza and Omotesando
170 • Consumer confidence in November improved for the third straight month,
160 reaching its highest level since September 2013. Department store sales in
Tokyo posted an increase of 3.8% y-o-y during the same month, as spending
40 – Retail
150
by domestic and foreign customers on higher priced goods was strong. Visitor
140
arrivals continued set new benchmarks, supporting an increase in tourist
consumption of 26.7% y-o-y in 3Q17.
Index
130
120 • Healthy demand continued to come from international retailers and F&B
110 operators. In 4Q17, new store openings included Rolex Boutique Lexia, one of
100 their largest direct operating stores in Japan, alongside Namiki-dori, and the
relocation of the Asics Harajuku flagship store, the largest in Japan, to a site
90
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 fronting the crossing of Meiji-dori and Takeshita-dori.
Tokyo Ginza Asahi Building completes
Arrows indicate 12-month outlook • The redevelopment of the Tokyo Ginza Asahi Building completed in 4Q17. In
Index base: 4Q13 = 100 the retail podium, Rolex, Sun Motoyama and Louis Vuitton opened stores. The
Source: JLL
upper floors of the building will be occupied by the Hyatt Centric Ginza Hotel,
the first lifestyle concept hotel by the group.
Retail Sales • The Ginza 7-chome Project started construction and is scheduled to complete
in 2019. Located on Sotobori-dori, the 10-storey project with a GFA of 1,500 sqm
10 will be offered for lease to multiple tenants and with a strong focus on F&B.
8
Rents hold firm near peak levels
6
• Rents held stable in 4Q17. Annual growth was recorded at 0.9%, slightly lower
4
than the 2.1% growth in the previous year.
2
y-o-y (%)
0 • Capital values increased 2.9% q-o-q and 3.0% y-o-y in 4Q17 due to further cap
-2 rate compression. In the investment market, a joint venture between Norges
-4 Bank Real Estate Management (NBREM) and Tokyu Land Corporation acquired
-6
five retail properties in Omotesando and adjacent submarkets. This was
–8
NBREM’s first real estate investment in Asia.
–10
3Q12 3Q13 3Q14 3Q15 3Q16 3Q17
Outlook: Rents and capital values to edge up
Sales Growth of Large-scale Retail Stores in Tokyo • Private consumption is expected to continue to pick up in 2018 amid
improvements in employment and income. According to Oxford Economics,
Source: Ministry of Economy, Trade and Industry private consumption is expected to grow 0.9% in 2018. Strength from inbound
tourism should continue to support retail sales.
• In spite of limited vacant space and healthy demand, further rental increases
are likely to be limited as current rental levels are near the previous peak’s level.
With cap rates expected to hold relatively stable, capital values are likely to
move in line with rents.
Note: Tokyo Retail refers to Tokyo’s prime retail markets of Ginza and Omotesando.
Seoul
“Retail demand improves
despite a continuous
slowdown in tourist arrivals.”
pyung per month, Stage in Cycle
Rental Growth Y-O-Y Sungmin Park, Head of Research,
net on NLA Rents
-1.4% KRW 1,960,417
Korea
Falling
Financial Indices
Consumer sentiment remains high; tourist arrivals slow further
• The Consumer Sentiment Index for December remained near a six-year high. 150
In addition, November retail sales increased by 5.6% m-o-m, the highest
monthly gain since February 2009. However, foreign tourist arrivals remained 140
41 – Retail
weak, decreasing 16.5% y-o-y in November, adversely affecting high street sales.
130
• High street leasing activity was focused on Gangnamdaero and Hongdae as
Index
Olive Young (365 pyung) and TWICE Store (168 pyung) opened new stores. 120
Times Square mall benefitted from its recent tenant adjustment, as it welcomed
110
global sports brands New Balance (87 pyung) and FILA (74 pyung).
100
Occupancy improves in both high street and shopping malls
• Shopping mall vacancy declined 1.3 percentage points q-o-q as Times Square 90
and Coex Mall nearly completed their tenant remixing. New major leases at 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
Coex Mall included fashion retailer H&M, and health and beauty brand Boots. Rental Value Index Capital Value Index
For high streets, vacancy declined 250 bps q-o-q to 8.9%, driven by new leases Arrows indicate 12-month outlook
in Gangnamdaero and Hongdae. Index base: 4Q13 = 100
Financial Indicators are for Myeondong.
• Yeoksam-dong 808 Building (total GFA 8,663 sqm) in Gangnam completed Source: JLL
during the quarter; Adidas opened a new flagship store on the first four floors
of the building.
Retail Sales
Rents decline despite positive consumer sentiment
• High street rents declined by 0.6% q-o-q, led by Cheongdam, reflecting high 18
vacancy in the district. Rental growth was also limited in Myeongdong and 15
Garosugil due to the ongoing slowdown in foreign tourist arrivals. For shopping 12
malls, rents grew only marginally by 0.1% q-o-q, impacted by growing online 9
y-o-y (%)
sales.
6
• Investment volumes recovered on the back of strength from institutional 3
investors. Notable deals included KB Reit’s acquisition of Homeplus Namhyeon 0
Building (GFA 32,282 sqm) for KRW 162 billion and IGIS’ purchase of the Swatch -3
flagship store building in Garosugil for KRW 31.7 billion.
-6
Outlook: Retail conditions expected to improve -9
3Q12 3Q13 3Q14 3Q15 3Q16 3Q17
• Retail spending is likely to benefit from robust economic growth, along with an Sales Growth of Large-scale Retail Stores in Seoul
expected gradual recovery in Chinese tourist visits over 2018. The upcoming
Pyeongchang Winter Olympics should serve as a catalyst to drive improving
retail sentiment, helping boost overall retail sales. Source: Statistics Korea
• A modest decline in vacancy is likely for core high street locations and shopping
malls given a paucity of new supply and location advantage; however, rental
growth is expected to be hindered by the growing online retail marketplace and
slow recovery in foreign tourist arrivals.
Note: Seoul Retail refers to Seoul’s prime retail market.

Singapore
“Cautious optimism
approaching end-2017,
following stronger sales and
slowing rental declines.”
Angelia Phua, Director - Research, Rental Growth Y-O-Y
Singapore
gross effective on NLA Decline
-2.3% SGD 33.30 Slowing
Financial Indices
Retailers enjoying improved sales, but are wary of expansion
110 • Consumer sentiment continued on an upward streak, with total retail sales,
excluding motor vehicles, recording more than two consecutive quarters of
growth ending 3Q17. The consistent increase in sales for watch and jewellery
42 – Retail
retailers, department stores and wearing apparel, paints a positive picture for
100
the retail sector.
Index
• While existing retailers are cautious of expansion, the quarter witnessed a flurry
of new-to-market retailers - ranging from multi-concept stores to F&B operators -
90
entering the Orchard and Marina submarkets to leverage on the festive season.
Vacancy rates have decreased accordingly.
80
Over half of 2017 retail supply opens in 4Q17
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
• The fourth quarter saw the opening of the retail podium in Marina One – The
Heart, adding about 140,000 sq ft to the Marina submarket. Occupancy rates
Arrows indicate 12-month outlook were above 70%, with anchor tenants including fitness club Virgin Active, Cold
Index base: 4Q13 = 100 Storage and Cookhouse by Koufu that will cater to the working population
Financial Indicators are for Orchard Road.
Source: JLL within the CBD.
• The Suburban submarket witnessed two openings in 4Q17 – SingPost Centre
Physical Indicators (178,000 sq ft), which opened in early October, as well as Northpoint City
(305,000 sq ft) in late December. The latter is the newly constructed extension of
200 the popular suburban mall, Northpoint Shopping Centre.
180
160
Rent decline slows in Orchard and Suburban
140 • Rents declined at a slower than expected rate in the Orchard and Suburban
submarkets in 4Q17. The Marina submarket continued to record the steepest
Thousand sqm
120
100 decline, as it continues to be marred by weak occupier demand, especially for
80 trades such as fashion and accessories.
60
• In terms of investment sales, the 4Q17 total value more than doubled from
40
the previous quarter. Shophouses continued to provide the most significant
20
contribution to value, most likely due to their conservation and heritage status.
0
13 14 15 16 17 18F
Outlook: Slight rent growth projected in Orchard submarket
• Looking forward, increases in retail sales and tourist arrivals should drive
For 2013 to 2017, completions are year-end annual. Future supply demand growth for prime retail space. Coupled with the limited supply, this
is for 2018. should bring about a quicker recovery in rents in the Orchard submarket
Source: JLL compared to the Marina and Suburban submarkets.
• Capital values are expected to mirror the rental trend, keeping yields
moderately stable.
Note: Singapore Retail refers to Singapore’s Orchard, Marina and Suburban prime retail markets.
Bangkok
“Strong leasing activity by
both local and international
brands driving rents and
Rental Growth Y-O-Y
sqm per month, Stage in Cycle capital values up.”
gross on NLA Rents
1.0% THB 2,493
Andrew Gulbrandson, Head of
Rising Research, Thailand
Financial Indices
Net absorption softens but remains in positive territory
• International retailers continue to show strong interest in entering the Bangkok 120
market as well as expanding existing footprints. In 4Q17, at least six internationally
115
recognised retailers opened their first stores in Thailand.
43 – Retail
110
• Net absorption declined by 5.7% q-o-q to 5,500 sqm in 4Q17. The decrease in net
105
absorption was largely driven by ongoing renovations at several Central (CPN)
Index
shopping malls and the lack of new large-scale supply. 100
95
Mega Bangna opens first of several planned extensions
90
• Both King Power Complex Rangnam (2,500 sqm NLA) and Mega Bangna
(10,000 sqm NLA) opened new extensions to their existing centres in 4Q17, with 85
all space being committed on opening. The new extension at Mega Bangna 80
is the first step in a larger integrated precinct development plan currently 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
underway. Rental Value Index Capital Value Index
• With the new additions above, market-wide prime grade retail stock reached Arrows indicate 12-month outlook
3.1 million sqm at end-4Q17 while the vacancy rate was largely unchanged Index base: 4Q13 = 100
Source: JLL
at 4.9%.
Capital values and rental rates grow modestly

Physical Indicators
• Net effective rents grew moderately by 0.5% q-o-q on improved consumer
confidence. We expect upward pressure on rents in early 2018 as newly 400
renovated space comes to the market. 350
• Capital values increased also increased by 0.5% q-o-q causing market yields 300
to remain unchanged. That said, yields compressed by 42 bps y-o-y as rising 250
Thousand sqm
land costs and ongoing capital expenditure on renovation activity drove capital
200
value growth.
150
Outlook: Investment to remain targeted on asset enhancement 100
• ICONSIAM from Siam Piwat is the only notable greenfield project that will
50
complete in 1H18 while Gateway Bangsue from the TCC Group should open
towards year-end. The next sizeable new project is not expected to complete 0
13 14 15 16 17 18F
until 2020. Completions Future Supply
• With most investment focused on renovations, we expect the vacancy rate to
hover around the 5% mark over the next 12 months as tenants move out and is for 2018.
move back in. Based on the reputation of Siam Piwat, we expect ICONSIAM Source: JLL
to open fully let or very nearly so, keeping vacancy rates stables later in 2018.
After launching a number of new projects outside of Bangkok, major retail
developers/operators appear to be slowing growth plans to avoid saturating
provincial markets.
Note: Bangkok Retail refers to Bangkok’s prime retail market.

Jakarta
“No new completions;
rents flat.”
James Taylor, Head of Research,
Stage in Cycle
Indonesia Rental Growth Y-O-Y
sqm per annum,
3.3% IDR 6,182,769 Rising
Financial Indices
Limited expansion space for tenants
130 • Malls with attractive F&B and entertainment options as well as crowd-pleasing,
125 fast-fashion tenants continued to enjoy healthy footfall. Some landlords
continued to re-jig tenant mixes in order to offer more of these types of tenants in
44 – Retail
120
place of less attractive occupiers.
115
• Limited supply and low vacancy rates are such that we typically only see net
Index
110 absorption spike in quarters which observe new completions; these malls offer
105 tenants the opportunity to expand. With no new supply in 4Q17, net absorption
100
was relatively low.
95 No new completions in 4Q17

90 • A moratorium on standalone shopping malls has been in place since 2011,
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
and the supply pipeline is extremely thin; only Aeon Mall (60,000 sqm) was
completed in the whole year, and no new malls were delivered in 4Q17.
Arrows indicate 12-month outlook • The moratorium does not affect locations outside of DKI Jakarta city limits and
Source: JLL the sprawling townships to the west, east and south of the city offer expansion
opportunities. Aeon’s first project in Jakarta, delivered in 2015, is located in the
Bumi Serpong Damai (BSD) township in Tangerang, Greater Jakarta and more
are expected in other locations.
Physical Indicators
Rents flat q-o-q
450
• F&B and entertainment tenants as well as fast fashion retailers, which are also
400
active, may not be in a position to pay the highest rents in the market. Average
350 rents across the prime retail market in DKI Jakarta remained relatively flat
q-o-q, while full-year growth was recorded at 3.3%.
Thousand sqm
300
250
• The situation in the shopping mall investment market remained unchanged
200
in 4Q17. The prime retail market in DKI Jakarta is extremely tightly held. Given
150
the relatively attractive supply demand dynamics, most landlords have been
100 unwilling to offload and there have been no en bloc deals that we can point to
50 in recent history.
0
13 14 15 16 17 18F Outlook: No completions expected in 2018
Completions Future Supply • Our outlook for the coming year remains unchanged. There is nothing to indicate
that the moratorium on shopping mall development will be lifted. Now that Aeon
For 2013 to 2017, completions are year-end annual. Future supply Mall has been completed at Jakarta Garden City, we only have one further prime
is for 2018.
Source: JLL completion in our five-year supply pipeline.
• Demand from F&B and entertainment is likely to remain strong and some
landlords may re-jig tenant mixes to accommodate such tenants. Those landlords
which are able to adjust to customer preferences are likely to be best placed to
attract visitors. Single digit annual rental growth is expected in 2018.
Note: Jakarta Retail refers to Jakarta’s overall prime retail market.
Mumbai
“The performance gap
between premium malls
and other malls becomes
Stage in Cycle
sharper.”
sq ft per month,
Rental Growth Y-O-Y
gross on GFA Rents Ashutosh Limaye, Head of Research,
0.0% INR 257 Rising India
Financial Indices
Improvement in net absorption, particularly in the Suburbs
• Net absorption in 4Q17 stood at 12,200 sq ft, moderately higher than the 120
8,200 sq ft recorded in 3Q17. The bulk of net take-up was attributable to leasing
in malls that completed over the past two years in the Suburbs. 115
45 – Retail
• Fashion and F&B operators were the most active in the quarter and focused 110
their attention on space in quality malls.
Index
105
No new supply in 4Q17
100
• Total shopping centre stock remained unchanged in 4Q17 at 18.3 million sq ft.
The last major completion was in 2Q17. 95
• Overall vacancy decreased slightly from 12.4% in 3Q17 to 12.3% in 4Q17. 90

However, vacancy in the Prime South edged up 0.3 percentage points q-o-q 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
to 5.4%, due to a few retailers exiting malls of average quality. Rental Value Index Capital Value Index
Overall rents edge up Arrows indicate 12-month outlook

• The Suburbs drove rental growth in the quarter as the Prime South and Prime Financial Indicators are for the Prime South.
North recorded stable rents. Source: JLL
• Investment yields remained unchanged at 11.1% in 4Q17 as capital values

tracked rental movements. Physical Indicators
Outlook: Premium malls to drive rent and capital value growth 45
• Entertainment and experiential retail operators are likely to be key sources of 40

demand for prime malls as landlords look at enhancing consumer experience 35
and drawing greater footfall.
Thousand sqm
30
25
• International retailers in the lifestyle and premium categories are expected to
20
continue to enter the city and look for quality space.
15
10
5
0
13 14 15 16 17 18F

is for 2018.
Source: JLL
Note: Mumbai Retail refers to Mumbai’s overall prime retail market.

Sydney
“Tactical store closures being
undertaken by some retailers
are disproportionately
impacting lower-quality
centres.” Rental Growth Y-O-Y
net on GLA Rents
Andrew Quillfeldt, Director – Research, 0.6% AUD 1,945
Australia Stable
Financial Indices
Amazon began operating in Australia in 4Q17
120 • Retail spending growth slowed further in 4Q17 in New South Wales (3.2% y-o-y)
and is now only 0.4 percentage points above the 2.8% y-o-y national average.
Food retailing outperformed with supermarket and grocery store sales up 4.5%
46 – Retail
110
y-o-y as at November 2017.
• Retailer performance continued to diverge with the announcement of more
Index
retailers going into voluntary administration. Leasing demand remained

100 subdued in the fashion segment as many retailers continue to consolidate,
notably Specialty Fashion Group.
Completions above-trend in 2017, but down q-o-q in 4Q17

90 • Retail completions totalled 188,200 sqm in 2017, above the 144,400
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
Rental Value Index sqm long-term 10-year annual average. Major completions over 4Q17
included Barangaroo South, a new retail precinct in Sydney’s CBD and four
neighbourhood centre projects. Completions are expected to decrease in 2018
Index base: 4Q13 = 100 and 2019 before rising to 214,600 sqm in 2020.
Financial Indicators are for regional shopping centres.
Source: JLL • Specialty shop vacancy rates in both the regional and CBD sub-sectors
increased over 2H17 in Sydney. Vacancy is largely concentrated in secondary
Physical Indicators centres. Retail trade in Sydney’s CBD has been disrupted by the infrastructure
and development projects currently underway.
250
Transaction volumes of AUD 1.4 billion in 4Q17
200 • The AUD 1.1 billion swap transaction between Vicinity Centres and GIC in
November 2017 was the largest transaction for 2017. Three regional sale
transactions over 2017 have provided transactional evidence for the tightly held
Thousand sqm
150
sector. Median regional yield sharpened 25 bps q-o-q to 4.75% in 4Q17.
100 • Sydney is recording low levels of rental growth, particularly in the core shopping
centre categories. Annual growth rates range between 0.6% and 2.0% across
50 the different categories. Re-leasing spreads are dependent on asset quality and
performance with a divergence continuing to be observed between prime and
0 secondary centres.
13 14 15 16 17 18F
Completions Future Supply Outlook: Rents to increase below the inflation rate until 2019
• Retailer margins are likely to remain under pressure as online competition
is for 2018. grows, operating costs rise and retail spending continues to slow. Nevertheless,
Source: JLL prime quality shopping centres should continue to attract and retain tenants.
• Divergence is expected to remain a key theme. Retail yield ranges are likely to
widen to reflect the variation in asset performance. Despite the changes at either
end of the range, yields are likely to remain stable on average in the short term.
Note: Sydney Retail refers to Sydney’s overall retail market.

Melbourne
“While still exposed to national
industry challenges, Melbourne’s
retail market is underpinned by
a range of positive economic
Stage in Cycle
Rental Growth Y-O-Y
sqm per annum, drivers.”
net on GLA Rents
0.2% AUD 1,490 Andrew Quillfeldt, Director – Research,
Stable
Australia
Financial Indices
Melbourne a hotspot for international flagship stores
• Amazon launched in the Australian market in December 2017 and choose 120
Dandenong North in Melbourne for their first fulfilment centre. Kaufland also
purchased their second Australian supermarket site in Melbourne in 4Q17.
47 – Retail
Apple announced its first Victorian flagship store will be located at Federation
110
Square in the Melbourne CBD.
Index
• Retail spending growth in Victoria was 3.8% in the 12 months to November
2017, aligned with South Australia as Australia strongest performing
100
markets. The divergence in retailer performance continued in 4Q17 with the
announcement of a further four retailers falling into voluntary administration
and a number of retailers, notably Specialty Fashion Group, to initiate
significant store rationalisation strategies. 90
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
Secondary centres challenged as retailers consolidate stores Rental Value Index
• The sub-regional vacancy rate in Melbourne increased to 3.4% in 2H17 from
2.3% in 1H17. This is above the national rate of 3.2% in 2H17. However, Arrows indicate 12-month outlook
Melbourne’s regional vacancy rate improved in 2H17 decreasing from 1.3% in Financial Indicators are for regional shopping centres.
1H17 to 1.0%. The poor performance of the traditional anchor tenants in sub- Source: JLL
regional centres has deterred some speciality tenants.
• Supply additions were down in 4Q17, with only one 6,413 sqm extension project Physical Indicators
completing. A total of 143,500 sqm was completed in Melbourne over 2017,
down 26.0% from the long-term 10-year annual average. Supply additions in 350
Melbourne are expected to remain low over 2018 and 2019 before increasing to 300
109,900 sqm in 2020.
250
Thousand sqm
Investor appetite softens for secondary grade 200

• Retail yields stabilised in 4Q17, on average, with the weighted average retail yield
in Melbourne unchanged at 5.83%. The sub-regional yield range compressed 25 150
bps at both the upper and lower end to 5.00-6.75% in 4Q17, but the median yield 100
was stable at 6.00%.
50
• Rental growth remained low in 4Q17 with all retail sub-categories recording
annual rental growth below the current rate of inflation (1.9% per annum). CBD 0
13 14 15 16 17 18F
and Large Format Retail were the only sub-sectors to record growth in 4Q17. Completions Future Supply
Outlook: Retail yields are likely to stabilise over 2018 For 2013 to 2017, completions are year-end annual. Future supply
• A divergence in retail yields is likely to continue over the next 12-24 months as is for 2018.
Source: JLL
the performance gap between prime and secondary assets widens.
• New retailer entrances and expansions should continue to gravitate to Melbourne
given the solid population growth, strong tourism and healthy labour market
conditions. However, overall leasing demand is expected to remain somewhat
challenging.
Note: Melbourne Retail refers to Melbourne’s overall retail market.
The data to back up your real

estate decisions.
jll.com/AsiaPacific

Residential
Hong Kong
“Primary launches draw
the focus of buyers as
capital values reach new
record highs.” sq ft per month, Stage in Cycle
Rental Growth Y-O-Y
Denis Ma, Head of Research,
net on SA Growth
2.9% HKD 42.6
Hong Kong Slowing
Financial Indices
Market sentiment heads into the holiday season on a high
140 • Primary launches continued to draw the focus of buyers against a lack of new
cooling measures announced in the government’s October Policy Address.
130 Of the 451 units launched at Cullinan West II—developed by Sun Hung Kai
Properties—over 90% were sold within the first two weeks.
120
• New lettings were largely focused on higher quality stock in traditional luxury
Index
110
areas. Activity at the top end of the market primarily involved renewals, with
100 most landlords still holding firm on asking prices.
90 Government to release two sites for sale in 1Q18

• In the latest quarterly land sale programme, the government announced that
80
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
two residential sites, one each in Kai Tak and Tsing Yi, will be released for sale
50 – Residential

by tender in 1Q18.
• A total of 144 luxury units are expected to be issued with Occupation Permits
Arrows indicate 12-month outlook in 4Q17, including 54 units at 8-12 Deep Water Bay Drive in Island South by Nan
Source: JLL Fung and 22 units at 3 MacDonnell Road in the Mid-Levels by Chinachem.
Up, up and away for housing prices in 2017

Physical Indicators • Total considerations of properties priced over HKD 50 million were down
3.3% q-o-q and 34.4% y-o-y despite several record-breaking transactions.
1000
Two apartment units at Mount Nicholson Phase III on the Peak sold for a
900 combined HKD 1.17 billion or HKD 132,071 per sq ft, SA, setting a record high for
800 apartments in Asia, in terms of unit price.
700
600 • Luxury rents rose 0.5% q-o-q in 4Q17, moderating from the 1.5% q-o-q growth
Units
500
recorded the previous quarter amid the holiday season. Luxury capital values
400
grew 4.0% q-o-q, surging 15.3% for the full year, bolstered by record highs being
achieved and a still strong land sales market.
300
200 Outlook: Market outlook over the near term remains positive
100
• Any new supply-side measures initiated by the government will take time to be
0
13 14 15 16 17 18F realised and are unlikely to have any negative impact on market sentiment over
Completions Future Supply the near term. Given that the impending interest rate hikes have been factored
into most purchasing decisions, we forecast luxury capital values to trend up in
For 2013 to 2017, completions are year-end annual. Future supply the range of 5-10% in 2018.
is for 2018.
Source: JLL
• Despite a mild strengthening in demand, the leasing market is expected to
remain affected by downgrading trends, which will keep vacancy at elevated
levels at the top-end of the market and pressure on rents. Hence, we expect
rents to decline in the range of 0-5% in 2018.
Note: Hong Kong Residential refers to Hong Kong’s overall luxury residential market.
Beijing
“New joint-ownership
and leasing initiatives will
promote greater housing
sqm per month, Stage in Cycle affordability in Beijing.”
Rental Growth Y-O-Y
gross on GFA Rents Joe Zhou, Head of Research,
4.0% RMB 138.1 Rising China
Financial Indices
Strong performance of newer projects boosts sales volumes
• Luxury apartment sales volumes increased 76.5% q-o-q in 4Q17, after a strong 130
performance was recorded due to lower prices resulting from the price caps
implemented by the local government. High-end villa sales were restrained by
120
limited new supply, decreasing 15.4% q-o-q in 4Q17.
• The tight-policy environment persisted in the quarter. For mortgage lending
Index
110
rates, many banks in Beijing charged first-time home buyers up to a 10%
premium over the benchmark rate (4.9%), while second-home buyers were
charged up to a 20% premium. 100
Pressure remains on developers to launch projects

• Housing authorities continued to urge developers to launch projects: 772 luxury 90
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
51 – Residential
apartment units were released in 4Q17. Six villa projects also launched new
phases, adding 129 units to the market.
• One new serviced apartment building with 195 units, Ascott Riverside Garden Arrows indicate 12-month outlook
Beijing, fully entered the market. Despite its outer location by the Fourth Ring Road, Financial Indicators are for the overall Luxury market.
the project reached high occupancy due to its very competitive rental strategy. Source: JLL
Luxury apartment primary capital values growth still negative

Physical Indicators
• Primary capital values growth for luxury apartments remained negative, registering
-0.7% q-o-q as prices continued to be restricted by policy. Meanwhile, stable 9,000
demand and limited supply supported primary capital values growth for high-end 8,000
villas (0.9% q-o-q). 7,000
• Due to stable leasing demand, rents for luxury apartments and high-end villas 6,000
inched up 1.2% q-o-q and 0.6% q-o-q, respectively.
Units
5,000
4,000
Outlook: Focus on joint-ownership housing, leasing market
3,000
• With steady supply and limited price growth, luxury apartment sales
2,000
volumes are likely to remain stable in 2018. Despite price caps set by the
1,000
local government, supply should be steady as authorities continue to urge
developers to launch new projects in the market. 0
13 14 15 16 17 18F
• Less land supply is expected for the high-end residential market as the Completions Future Supply
government focuses on developing the residential rental market and joint-
ownership housing over the next five years. Government support for several is for 2018.
REITs, and financial derivatives for long-term residential rental projects, is Physical Indicators are for the overall market.
Source: JLL
projected to further support the rental market.
Note: Beijing Residential refers to Beijing’s overall luxury and high-end residential market.
Shanghai
“High-end prices stable as
inventory remains low.”
Joe Zhou, Head of Research,
Stage in Cycle
China Rental Growth Y-O-Y
sqm per month,
gross on GFA Rents
1.4% RMB 142.7 Stable
Financial Indices
Sales volumes contract further
130 • Higher mortgage rates and down payments continued to rein in demand in both
the mass and high-end markets in 4Q17. Combined with limited supply, mass
market sales fell to 8,851 units, down 47% y-o-y, while high-end sales fell to 150
120
units, down 19% q-o-q and 80% y-o-y in 4Q17.
• Despite slow sales through the year, inventory remained low at end-2017 due to
Index
110
limited supply. In 4Q17, high-end inventory fell around 6% q-o-q and 27% y-o-y.
As a result, prices stayed firm despite the slowdown in sales.
100
Pre-sale permit controls continue to curb supply
• New supply hit record lows in both the mass and high-end markets. There were
90 no new high-end launches for a second consecutive quarter, owing to strict
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
52 – Residential
controls on pre-sales permits. Developers also delayed new launches in hopes

of a more favourable policy environment in the future.
Arrows indicate 12-month outlook • Developers remained cautious in the land sales market, with most residential-
Source: JLL use land plots sold at reserve prices. In an effort to diversify housing product,
21 land lots, for developing rental-only housing, were sold to state-owned
enterprises (SOEs) in the past five months in Shanghai.
Physical Indicators
High-end prices stay flat due to government price caps
6,000 • Prices stayed largely flat in the high-end segment in both the primary and
secondary markets. Landlords were unwilling to offer price discounts as
5,000 supply remained low. Rents stayed stable mostly due to seasonality, as well as
consistent demand from senior executives.
4,000
• There were no en bloc sales transactions in 4Q17 given limited tradable
Units
3,000 stock. However, as land plots for new developments continue to be scarce
in Shanghai’s core areas, investors’ interest in acquiring en bloc residential
2,000
buildings or serviced apartments remains intact.
1.000
Outlook: Sales expected to rebound slightly in 2018
0 • Under the expected tight monetary policy, developers are likely to accelerate
13 14 15 16 17 18F
new launches in 2018 in order to ease rising cash flow pressure. Combined
with pent-up demand, sales are likely to experience a slight rebound. However,
For 2013 to 2017, completions are year-end annual. Future supply prices should stay largely flat as government intervention remains tight.
is for 2018.
Source: JLL • A strong year for leasing is predicted for 2018, as central and local authorities
continue to spur the development of rental housing with strong incentives.
Although state-owned enterprises (SOEs) currently play the leading role, more
private investors and developers will likely join the competition amid huge
market potential, robust demographic fundamentals and government support.
Note: Shanghai Residential refers to Shanghai’s high-end residential market.

Singapore
“Sales market recovery
moves ahead of leasing
market.”
sq ft per month, Stage in Cycle Ong Teck Hui, National Director-
Rental Growth Y-O-Y
gross on GFA Decline Research, Singapore
-2.1% SGD 4.60 Slowing
Financial Indices
Positive sentiment supports year-end demand
• In 4Q17, sales transaction volumes in prime districts eased slightly q-o-q, 110
due to the year-end holiday period. Sales have continued to be dominated
by secondary market transactions as there were no major new launches during
100
the quarter.
• Expectations of prices strengthening in 2018 has resulted in more buyers
Index
90
bringing forward their acquisition plans, thereby supporting transaction
volumes.
80
New completions in 2017 reach an 18-year low
• Newly completed supply in prime districts remained moderate in 4Q17. As a
70
result, full-year new completions dropped to the lowest level in 18 years. With 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
53 – Residential
leasing demand also slowing down in the year-end season, vacancy rates RV Index (Luxury) CV Index (Luxury)
RV Index (Prime) CV Index (Prime)
continued to climb marginally in 4Q17. In the near term, new supply is likely to
remain moderate, which would help vacancy rates to improve.
• In the medium term, supply is expected to pick up, with the sale of two prime Index base: 4Q13 = 100
Source: JLL
residential sites at Jiak Kim Street and Fourth Avenue under the government
land sales programme in 4Q17. Tender for another two sites at Handy Road
and Holland Road will close in 1Q18. These four sites could yield about 1,680 Physical Indicators
residential units in the prime districts upon completion.
5,000
Collective sales market gaining momentum in prime districts
• Collective and en bloc sales in the prime districts gathered steam in 4Q17, with 4,000
the closure of seven sites, amounting to SGD 967.5 million. This exceeds the
total recorded in the first nine months of the year of SGD 289.5 million from the 3,000
Units
sale of four sites. Positive investment sentiment helped capital values of prime
2,000
residential properties climb at their fastest pace since turning around more
than a year ago.
1,000
• Affected by the seasonal slowdown in leasing demand, rents stepped into the
negative territory once again in 4Q17, after rising in 3Q17. 0
13 14 15 16 17 18F
Outlook: Prices to continue rising, while rents firm
• Upcoming launches could inject new variety and create some buzz in the prime
residential market. This would, in turn, attract more buyers back to the market, For 2013 to 2017, completions are year-end annual. Future supply
thereby supporting further price increases. is for 2018.
Source: JLL
• Rents are expected to firm or even increase slightly amid healthy economic and
business conditions, as well as a reduction in new supply and leasing stock.
Note: Singapore Residential refers to Singapore’s overall prime and luxury residential markets.
Bangkok
“Developers ramp up new
condominium launches as
confidence returns.”
Andrew Gulbrandson, Head of Rental Growth Y-O-Y
gross on NLA Rents
Research, Thailand 3.0% THB 532 Stable
Financial Indices
Newly-launched condominium projects are well-received
120 • Eight new projects were launched in the CBA in 4Q17, with a combined pre-sales
rate of 53.4%. As individual investors scour the market for affordable properties,
115
it is unsurprising that the least expensive of these projects sold out while the
110
highest priced projects, those selling for more than THB 250,000 per sqm only
managed to achieve an average pre-sales rate of 34.7%.
Index
105
• Demand for luxury rental apartments improved in the quarter causing the
100 vacancy rate to decline to 6.5%.
95 Five new condominium projects complete in the quarter

• Nearly 1,800 new units across five projects completed in 4Q17, with a combined
90 sales rate of 89.3%. CBA prime condominium stock now stands just shy of
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
54 – Residential
46,000 units with an overall first-hand sold rate of 97.5%.

• No new luxury apartments were launched in the quarter as the result of
Arrows indicate 12-month outlook high land prices and higher prospective investment yields offered by other
Source: JLL development types. We expect one project to be withdrawn from the market
in 2018 when its land lease expires.
Strong interest in securing freehold development sites

Physical Indicators
• In 4Q17, prime condominium net effective rents increased by 1.1% q-o-q and
10,000 3.0% y-o-y, while luxury apartment net effective rents remained unchanged.
9,000 While prime condominium capital values increased q-o-q and caused yields to
8,000 expand, in y-o-y terms yields compressed by 14 bps.
7,000
• Sansiri PCL acquired a 50% share in Prime Area 38 Co., Ltd.; a holding company
6,000
that owns a prime plot of land (3,344 sqm) on Soi Sukhumvit 38. We estimate
Units
5,000
the value of this development site to be roughly THB 450,000 per sqm or
4,000
THB 1.8 million per square wah.
3,000
2,000 Outlook: Pre-sales of newly launched projects to improve
1,000 • More than 7,800 new prime segment condominium units across 28 projects are
0
scheduled to complete in 2018. The overall pre-sales rate of 82.4% for these
13 14 15 16 17 18F
projects highlights strong demand in the CBA. The majority of the units are
located in the Central East submarket.
is for 2018. • Demand for prime grade residential condominiums is expected to remain
Source: JLL strong in 2018. Domestic demand for prime segment condominiums in the CBA
is expected to increase, as economic conditions improve. Additionally, foreign
demand should continue to grow as more developers invest in international
sales and marketing campaigns.
Note: Bangkok Residential refers to Bangkok’s Central high-end and luxury residential market.
Jakarta
“Unique selling points of
some residential projects
attract buyers.”
sqm per annum, Stage in Cycle James Taylor, Head of Research,
Rental Growth Y-O-Y
net effective on NLA Rents Indonesia
0.1% IDR 3,428,925 Stable
Financial Indices
Some projects selling well
• While luxury and super luxury taxes continue to impact demand in the higher 140
end of the market, projects with unique selling points, such as Fifty Seven
130
Promenade and Pakubuwono Menteng, have been able to achieve healthy
sales figures in recent quarters. Buyers are drawn to attractive pricing, good 120
developer quality, good location and accessibility, and superior amenities.
Index
110
• The serviced apartment market remained relatively stable in 4Q17 with the
market vacancy rate around 23%, but this is likely to rise in early 2018 when 100
new projects are delivered.
90
Two high-profile launches in 4Q17
80
• Two condominiums were launched in the sales market. The Stature is a 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
55 – Residential
mixed-use development by CapitaLand, located close to the Monas National Rental Value Index Capital Value Index
Monument, while Pakubuwono Menteng is a high-end development also
located in Central Jakarta. Arrows indicate 12-month outlook
• Two towers were also physically completed in the quarter – The Orchard and Source: JLL
The Residence are both part of the Ciputra World Two development on Jalan
Satrio in the CBD. No new serviced apartments were completed in 2017.
Physical Indicators
Small price increments for lower end condos
• Rents in the serviced apartment market have remained relatively flat for some 600
time and this trend continued in 4Q17.
500
• While two major deals were closed in 3Q17 – GIC’s joint venture with Intiland at
400
Fifty Seven Promenade and The Ascott Limited’s acquisition of Ascott Sudirman
– none were closed in the final quarter. However, interest remained strong
Units
300
with local developers as well as groups from around the region looking for
200
opportunities in and around the city.
100
Outlook: Improving demand for some unit types
• We have seen some developers rethink configurations to incorporate smaller, 0
13 14 15 16 17 18F
more affordable units in order to appeal to more buyers. While this is a trend
that is likely to continue, some developers may be more optimistic selling Completions Future Supply
higher end units given the good performance of a handful of recently launched
developments. For 2013 to 2017, completions are year-end annual. Future supply
is for 2018.
• Condominium prices have now remained largely flat for a number of quarters. Source: JLL
However, as the market begins to improve we may begin to see some small
increments as we move into the new year. The lower to mid-end market
segments may see the most significant growth.
Note: Jakarta Residential refers to Jakarta’s luxury condominium and serviced apartment markets.
Manila
“Vacancy rate slightly
decreases due to healthy
condominium demand.”
Sharon Saclolo, Associate Director - sqm per month, Stage in Cycle
Rental Growth Y-O-Y
Research, Philippines net effective on NLA Growth
5.0% PHP 829 Slowing
Financial Indices
Stable residential condominium demand persists
160 • The continued rise of cumulative cash remittances from Overseas Filipino (OF)
workers, totaling USD 23.1 billion as at YTD October 2017, supported demand
150
for residential units in 4Q17. Key demand drivers were expatriate employees,
140 foreigners married to Filipinos, and high-income Filipinos, among others.
130 • The 3Q17 Residential Real Estate Price Index of Bangko Sentral ng Pilipinas
Index
120
recorded growth of 0.4% q-o-q and 2.4% y-o-y for residential condominium
units in Metro Manila, the result of stable demand.
110
Continued lack of skilled labourers delays project completions
100
• Delays in building completions persist due to the continued lack of skilled
90 labourers in the construction industry, as real estate projects by government
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
56 – Residential
and private firms compete workers. Approximately 2,900 residential

condominium units were added to total existing stock from the completion of
five developments.
Index base: 4Q13 = 100 • The vacancy rate of residential condominium units in Makati and BGC
Source: JLL
decreased around 70 bps q-o-q to 1.8% in 4Q17, backed by healthy demand.
Physical Indicators
Local developers expand outside Makati CBD and BGC
• No new developments were launched in 4Q17 within BGC and Makati City.
9,000 However, ALI is set to develop Park Cascades, located in Arca South, Taguig
8,000 City, on the fringe of the BGC.
7,000
• Rents rose 1.9% q-o-q in 4Q17, underpinned by stable leasing demand from
6,000 expatriate employees and foreigners married to Filipinos. Meanwhile, capital
5,000 values continued to outpace the growth of rents, rising 3.2% q-o-q in 4Q17.
Units
4,000
3,000 Outlook: Foreseen PHP depreciation to support residential demand
2,000 • An estimated 4,000 residential condominium units from eight developments are
1,000 scheduled to complete in 1H18. The high volume of incoming supply is likely to
0 push the vacancy rate upwards.
13 14 15 16 17 18F
Take-Up (net) Completions • The expected depreciation of the PHP against the USD is likely to increase
Future Supply Vacancy Rate the purchasing power of OF families for residential condominium buying.
Likewise, the budget allocation of MNCs and O&O firms for expatriate
is for 2018. employees’ housing may rise, supporting demand for residential condominium
Source: JLL units in the luxury segment.
Note: Manila Residential refers to Makati CBD and Fringe, and BGC residential condominium markets.
Sydney
“Sydney’s apartment market
is slowing in the face of new
supply and slower investor
demand. However, we still
Rental Growth Y-O-Y
per week, Stage in Cycle expect a moderate downturn.”
2 bedrooms Rents
1.9% AUD 530 Leigh Warner, Head of Residential
Rising Research, Australia
Financial Indices
Demand slows as market passes mature stage in cycle
• Sales volumes declined marginally by 0.3% over the year ending 3Q17. This fall 15%
was less than in other markets (Melbourne 14%, Brisbane 19.4%), which reflects
that Sydney is still catching up after a decade of undersupply. 10%
• The effects of a tighter macro-prudential setting continued to weigh on investor
y-o-y (%)
demand, while owner-occupier demand remained resilient.
5%
Inner Sydney vacancy remains tight
• Vacancy rates remained tight at 1.9% in October 2017. Despite a high volume 0%
of recent completions, historic undersupply means the market remains below
historic average vacancy levels.
-5%
• There are 13,000 apartments under construction in Inner Sydney that are 3Q12 3Q13 3Q14 3Q15 3Q16 3Q17
57 – Residential
Price Growth
expected to complete between 2018 and 2020. Beyond this, the majority of
projects in the pipeline are still awaiting development approval and we expect a Source: JLL, Corelogic
substantial number of projects to be deferred into the next cycle or abandoned.
Price growth remains resilient

• Apartment prices increased by 4.3% in the year ending 3Q17, despite a rise in
new completions that has tested the depth of demand. Physical Indicators
• In the last five years, capital growth was the driver of investor returns in Sydney.
16,000
However, the total returns mix is becoming more balanced with yields at 3.8%.
14,000
Outlook: Further moderate slowing in 2018 12,000
• Tight macro-prudential measures, particularly for investors, together with softer 10,000
offshore demand, should continue to dampen demand in 2018.
Units
8,000
• A tight vacancy rate suggests there is still capacity to absorb much of the 6,000
pending supply. However, we feel the market should pass balance in 2018 and
4,000
we will likely see price growth go moderately negative. Sydney’s long-term
prospects remain strong and we expect price growth after the initial supply 2,000
bump is absorbed. 0
17 18 19 20 21 22
Completed Under Construction
Currently Marketing Plans Approved
Plans Submitted
Projects with 50 units or more.

Source: JLL
Note: Sydney Residential refers to Inner Sydney apartments

Price, rents and yield data sourced from CoreLogic. Vacancy data from the Real Estate Institute of New South
Wales.
Brisbane
“The Brisbane apartment
market remains soft as
it absorbs considerable
supply.”
per week, Stage in Cycle
Rental Growth Y-O-Y
Leigh Warner, Head of Residential 2 bedrooms Decline
Research, Australia -1.0% AUD 480 Slowing
Financial Indices
Negative sentiment, tight lending drag on investor demand
10% • Investor demand remains weak. Poor market conditions and negative sentiment
surrounding the Inner Brisbane apartment market, plus Australian Prudential
Regulation Authority’s continued macro-prudential measures - tightening lending
5% parameters for investors - have dampened demand significantly.
y-o-y (%)
• Given capital values have not decreased dramatically, mass settlement failure
appears unlikely throughout Inner Brisbane. Although there have been some
0% examples of higher than normal settlement issues in lower quality projects, this is
not widespread throughout the market.
-5%
Supply peaks; limited starts in a difficult financing environment
3Q12 3Q13 3Q14 3Q15 3Q16 3Q17 • Approximately 8,900 apartments are under construction across 44 projects
58 – Residential
Price Growth within Inner Brisbane. An additional 3,000 apartments are currently being
marketed. Given supply levels remain elevated within Inner Brisbane, a number
Source: JLL, Corelogic of projects have stayed in the plans approved or plans submitted stage.
• The vacancy rate for all dwellings within Inner Brisbane increased 20 bps q-o-q
in 3Q17. Vacancy is likely to continue to remain elevated in the short to medium
term as heightened supply levels remain an issue.
Physical Indicators
Negative price growth appears to be stabilising
12,000 • Greater Brisbane median apartment values declined 2.6% over the 12 months
to September 2017. By comparison, Sydney and Melbourne’s median values
10,000 increased by 4.3% and 4.1% respectively, over the same period. Capital growth
8,000
prospects for Brisbane apartments continue to be hindered by the recent
increases in supply levels.
6,000
Units
• Transaction volumes remain low for inner-city apartment development sites.

4,000 Although some capital sources are searching for counter-cyclical purchases, there
remains limited quality and appropriately priced opportunities in the market.
2,000
Outlook: Rough ride in 2018 but conditions should stabilise
0
• Following the large increase in supply over 2016 and 2017, apartment
17 18 19 20 21 22
completions are expected to decline significantly from 2018 and onwards. It
Completed Under Construction
Currently Marketing Plans Approved is anticipated that the more normalised apartment completion levels will be
Plans Submitted supported by population growth in Queensland.
Projects with 50 units or more. • Capital sources will likely continue to seek counter-cyclical investment
Source: JLL opportunities. However, vendor expectations will likely need to be lowered or
forced sales may be required in order to increase transaction volumes.
Note: Brisbane Residential refers to Inner Brisbane apartments. Inner Brisbane refers to within 5 km of the Brisbane
CBD. Pricing data from CoreLogic, rental data from The Queensland Rental Tenancy Authority and vacancy data
from REIQ.
Industrial
Hong Kong
“Review of revitalisation
policy draws investors back
to the market.”
Denis Ma, Head of Research, sq ft per month, Stage in Cycle
Rental Growth Y-O-Y
Hong Kong net effective on GFA Rents
-0.5 HKD 12.3 Stable
Financial Indices
Landlords remain accommodative
160 • Supported by strong demand from China and the broader Asia Pacific region,
150 exports and imports grew by 7.3% y-o-y and 8.2% y-o-y, respectively, in the
October-November period. Airfreight cargo rose by 4.7% y-o-y while container
140
throughput edged down by 2.5% y-o-y over the same two-month period.
130
• Taking advantage of longer rent-free periods being offered by landlords, Helu-
Index
120
Trans expanded 26,200 sq ft in-house at ATL Logistics Centre in Kwai Chung
110 while OM Logistics expanded 53,000 sq ft in-house at Western Plaza in Tuen
100 Mun.
90 Vacancy edges higher amid tenant relocation and consolidation
80 • No new supply was completed in 4Q17. The sale of Winner Godown may further
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
reduce the supply of warehousing space in the future given that the site has
been rezoned for redevelopment.
Arrows indicate 12-month outlook • Relocation and consolidation activity in peripheral areas such as Shatin put
Source: JLL upward pressure on the vacancy rate.
Revitalisation policy review lifts investor sentiment

Physical Indicators • Longer rent-free periods contributed to ramp-access facilities rentals sliding
0.9% q-o-q and overall warehouse rentals down 0.1% q-o-q in 4Q17.
160
• Bolstered by an up tick in investor interest following the government’s
140 announcement to review the industrial building revitalisation policy, capital
120 values of warehouses moved higher in tandem with the broader industrial
market, up 0.5% q-o-q.
Thousand sqm
100
60 – Industrial
80 Outlook: Rentals to return to growth amid tightening vacancy

60 • Against a supply constrained market—no completions are expected over the
next three years—vacancy should continue to gradually tighten, providing
40
support for the rental market. Against this backdrop, rentals are expected to
20 grow in the range of 0-5% in 2018.
0
13 14 15 16 17 18F • Investor interest is expected to remain strong, riding on the government’s plan
Completions Future Supply to review the industrial building revitalisation policy as well as the potential
uplift in leasing demand brought about by the completion of the Hong Kong-
For 2013 to 2017, completions are year-end annual. Future supply Zhuhai-Macao Bridge. As such, capital values are forecasted to grow in the
is for 2018.
Source: JLL range of 0-5% in 2018.
Note: Hong Kong Industrial refers to Hong Kong’s industrial warehouse market.
Beijing
“Limited available
space is unable to satisfy
strong leasing interest in
Stage in Cycle
mature areas.”
sqm per day,
Rental Growth Y-O-Y
net effective on GFA Growth Joe Zhou, Head of Research, China
3.2% RMB 1.17 Slowing
Financial Indices
Demand stable, but tight market leads to a quiet quarter
• E-commerce firms and supporting 3PLs continued to be active. However, the 120
limited availability of large space in mature submarkets held back demand. A
115
notable deal was a domestic e-commerce company leasing half a storage unit
of around 2,000 sqm in Beijing Airport Logistics Park. 110
• Tenants of low-end facilities were active in seeking space as the government
Index
105
accelerated the demolition of illegal structures across the city. Beijing was
unable to accommodate this demand given low vacancy rates and tight land 100
supply, resulting in many transactions being transacted in surrounding areas
such as Tianjin’s Wuqing and Beichen. 95
Vacancy flat after three consecutive quarters of no new supply 90

4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
• As a result of restrictions on winter commercial construction, two projects Rental Value Index Capital Value Index
originally scheduled for completion in 4Q17 were delayed to 1H18. With no new
projects entering the market, the vacancy rate remained unchanged at 1.7%, Arrows indicate 12-month outlook
leaving very limited space available for leasing. Index base: 4Q13 = 100
Source: JLL
• Total logistics stock was stable at 2 million sqm. No primary land plots for
warehouse use were transacted in 4Q17.
Physical Indicators
Rents record steady growth of 1.2% q-o-q
• Landlords of buildings in mature submarkets retained their pricing power to 400
increase rents due to the low vacancy rate; Beijing Airport Logistics Park saw the
350
largest rental increase of 2.2% q-o-q to RMB 1.35 per sqm per day. Overall rents
rose to RMB 1.17 per sqm per day, up 1.2% on a like-for-like basis. 300
Thousand sqm
250
61 – Industrial
• While no en bloc sale transactions were recorded in the quarter, experienced
developers remained interested in expanding their presence in the market 200
through the purchase of industrial facilities from small, local landlords. 150
Outlook: Pent-up demand to fill up the new projects 100
• Six projects totalling 370,000 sqm are scheduled for completion in 2018, 50
amounting to the highest annual new supply level in the past decade. Despite 0
13 14 15 16 17 18F
the large pipeline, the pent-up demand from e-commerce giants and 3PLs, as
well as tenants in low-end buildings looking to upgrade, is expected to limit
vacancies throughout the year. For 2013 to 2017, completions are year-end annual. Future supply
is for 2018.
• With vacancy expected to remain low, rents should still see room for growth. On Source: JLL
average, we expect rents to grow around 3.0% in 2018 and 2019.
Note: Beijing Industrial refers to Beijing’s prime non-bonded logistics market.

Shanghai
“Vacancy reaches a
seven-year low thanks to
strong demand and
limited supply.”
Stage in Cycle
Stuart Ross, Head of Industrial, Rental Growth Y-O-Y
sqm per day,
China net on GFA Rents
2.4% RMB 1.33 Rising
Financial Indices
Net absorption reaches 164,000 sqm in 4Q17
140 • Despite a lack of new supply, demand from 3PLs and e-commerce firms
enabled take-up to reach 164,000 sqm, which was helped in part by leasing
130
in advance of the annual “Double Eleven” shopping festival. Much of the
120 activity took place in buildings completed in 1Q17’s supply wave, two of which
contributed more than 60,000 sqm of the quarter’s absorption.
Index
110
• Leasing activity was concentrated outside of the traditionally popular West
100 Shanghai area throughout 2017, where supply has been limited and vacancy
near zero. Tenants have turned instead to submarkets like Baoshan, Fengxian,
90 and Jinshan, where supply has been more plentiful and connections to
downtown are still good.
80
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
Vacancy declines to near-frictional level
• No new supply was completed in 4Q17, leaving total non-bonded stock flat at
Arrows indicate 12-month outlook 5.1 million sqm. Overall supply for 2017 was about 250,000 sqm, half the level of
Financial Indicators are for the Non-bonded market.
2016. Strong leasing demand led non-bonded vacancy to decline 3.2 percentage
Source: JLL points to 4.4% in 4Q17. Baoshan saw the greatest decline, as leasing at GLP’s
Baoshan project pushed the vacancy rate down by 15 percentage points.
Physical Indicators • Shanghai’s remaining vacancy is concentrated in the Lingang and Pudong
Airport (PVG) submarkets, which serve specialised demand focused on
600 Shanghai’s port and airport. Lingang’s remote location causes buildings to
lease out at a relatively slow rate.
500
Rental growth accelerates
Thousand sqm
400
• Non-bonded rents rose 1.0% q-o-q to RMB 1.33 per sqm per day in 4Q17. The
62 – Industrial
300 pace of rental growth accelerated 0.4 percentage points from 3Q17 as landlords
were more confident to raise rents, given strengthening leasing momentum
200
and falling vacancy.
100 • Both foreign and domestic developers have shown great interest in logistics
0
properties in the Greater Shanghai area. As a result, yield compression had
13 14 15 16 17 18F accelerated.
Outlook: Positive outlook for 2018
For 2013 to 2017, completions are year-end annual. Future supply • We expect 2018’s new supply to be 414,000 sqm. Most planned 2018 projects
is for 2018
Source: JLL
are located in the Fengxian and Jinshan submarkets, where we expect leasing
to proceed at levels similar to those observed in 2017. Overall vacancy may
increase slightly but should remain comfortably in single digits.
• We expect rental growth to accelerate over 2018. Near-zero vacancy will give
landlords in popular areas of West Shanghai pricing power, while rising tenant
interest should give landlords in other submarkets confidence to raise rents as well.
Note: Shanghai Industrial refers to Shanghai’s modern warehouse market.
Tokyo
“Occupier demand remains
robust; while investors’
appetite is strong but
available product limited.”
Stage in Cycle
Rental Growth Y-O-Y
tsubo per month, Takeshi Akagi, Head of Research,
gross on NLA Growth Japan
1.6% JPY 4,202 Slowing
Financial Indices
Continued robust demand absorbs major new supply
• Externally-oriented sectors strengthened in the first two months of 4Q17, 150
with industrial production rising 0.5% m-o-m in October and 0.6% in November. 140
Exports maintained an uptrend for the 12th consecutive month in November
rising 16.2% y-o-y, while imports improved 17.2% y-o-y and marked the 130
11th straight month of growth. 120
Index
• Net absorption totalled a healthy 154,000 sqm in 4Q17, with strong demand 110
sustaining from manufacturers, 3PLs and online retailers. For full-year 2017,
net absorption reached 788,000 sqm and slightly outpaced annual supply. 100
90
Overall vacancy decreases, with Bay area reaching 1.0%
80
• New supply totalled 148,000 sqm in 4Q17, increasing total stock by 2% q-o-q. 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
Prologis Park Ichikawa 3 (GFA 19,000 sqm) in the Bay area and Chiba Newtown Rental Value Index Capital Value Index
Logistics Center (GFA 83,000 sqm) in the Inland area completed in 4Q17. For
full-year 2017, new supply totalled 726,000 sqm, increasing stock by 10%. Arrows indicate 12-month outlook
• The vacancy rate in Greater Tokyo stood at 4.1% at end-4Q17, decreasing Source: JLL
10 bps q-o-q and 120 bps y-o-y. The vacancy rate in the Bay area decreased
60 bps q-o-q and 200 bps y-o-y to 1.0%. Tokyo Inland vacancy rose to 6.1%,
up 20 bps q-o-q but down 70 bps y-o-y. Physical Indicators
Rents and capital values grow moderately 3,000
• Rents in Greater Tokyo averaged JPY 4,202 per tsubo per month in 4Q17,
increasing 0.1% q-o-q and 1.6% y-o-y. Growth was driven by the Bay area, where 2,500
high-quality new completions recorded rents in excess of the market average.
Thousand sqm
Rents in the Inland area remained stable. 2,000
63 – Industrial
• Capital values in Greater Tokyo grew 0.1% q-o-q and 5.9% y-o-y in 4Q17. 1,500
Although capital values grew for the fourth consecutive quarter, the rate of
1,000
growth continued to slow. A notable sales transaction in the quarter involved
Nomura Real Estate Master Fund disposing of Funabashi Logistics Centre for 500
JPY 5.48 billion (NOI cap rate of 5.3%).
0
Outlook: Rents to fall slightly given major new supply 13 14 15 16 17 18F
• According to Oxford Economics, trade-oriented indicators are expected to
continue to recover in 2018. Industrial production is expected to grow 2.3%, For 2013 to 2017, take-up, completions and vacancy rates are
exports 5.0% and imports 3.7%. However, geopolitical tensions across the globe year-end annual. Future supply is for 2018.
Source: JLL
pose a risk to the outlook.
• In spite of sustained strong demand, rents are likely to be under downward
pressure in some submarkets given the record volume of supply due to complete
in the coming two years. On the investment front, continued investor interest for
prime core assets may see cap rates compress further.
Note: Tokyo Industrial refers to the Greater Tokyo’s prime logistics market.
Singapore
“Rental growth gathers
momentum on brighter
prospects.”
Doreen Goh, Associate Director - Stage in Cycle
sq ft per month,
Research, Singapore Rental Growth Y-O-Y
gross effective on NLA Rents
1.7% SGD 3.76 Rising
Financial Indices
Steady demand as market sentiment improves
110 • Leasing market activity continued to see y-o-y growth in 4Q17, culminating in
some 256 rental records from the Urban Redevelopment Authority’s Real Estate
105
Information System (URA REALIS) for the whole of 2017. This surpassed the total
for 2015 and 2016.
100
• Take-up of business park space remained focused on existing buildings in
Index
95
4Q17, given the lack of new completions during the quarter. Demand continued
90 to stem from qualifying tenants from the science, technology and media
industries.
85
Sixth consecutive quarterly fall in vacancy
80
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 • There were no known completions or major withdrawals which kept the stock
Rental Value Index Capital Value Index of business park space steady in 4Q17.
• Amid stable stock and as tenants physically moved into their new premises, the
Arrows indicate 12-month outlook business park vacancy rate declined for the sixth consecutive quarter in 4Q17.
Source: JLL For example, French plant-based ingredients maker Roquette opened its new
innovation centre of about 11,840 sq ft at Biopolis in one-north in October 2017.
Rents and capital values strengthen

Physical Indicators
• Business park rents rose in 4Q17, after staying relatively stable in the first
300 25 three quarters of 2017, underpinned by the continued lack of new supply and
filter-through effect from the rise in office rents. This lifted overall rents in 2017,
250 20 reversing two consecutive years of decline.
200
Thousand sqm
15 • Moving in tandem with rents, business park capital values (en bloc) rose in 4Q17
Percent
64 – Industrial
150 after staying flat in 3Q17. This contributed to the rise in capital values in 2017,
10 ending two straight years of decline. With capital value growth outpacing rental
100 growth, yields for business park assets compressed slightly in 4Q17.
50 5
Outlook: Rental growth to accelerate in 2018
0 0 • We continue to hold the view that the vacancy rate will fall further in 2018,
13 14 15 16 17 18F
given limited new supply and expected space absorption on the back of better
Future Supply Vacancy Rate economic prospects.
• Against this backdrop, we expect the growth of business park rents to gain
year-end annual. Future supply is for 2018. traction in 2018. Capital values are foreseen to follow the rental uptrend, with
Source: JLL yields continuing to compress slightly.
Note: Singapore Industrial refers to Singapore’s island-wide Business Park market.

Sydney
“Another year of strong
occupier activity coupled
with limited development
opportunities underscores
Rental Growth Y-O-Y
high levels of rental growth.”
net on GFA Rents
4.2% AUD 117 Andrew Ballantyne, Head of Research,
Rising Australia
Financial Indices
Three straight years with gross take-up above long-term average
• Approximately 230,000 sqm of leases were recorded in 4Q17. This was the 150
largest volume of quarterly activity in 2017. Sydney recorded three consecutive 140
years with gross take-up above 1 million sqm - well above the 10-year annual
average of 698,000 sqm. 130
• The majority of activity occurred in existing assets, which accounted for 113,700 120
Index
sqm (50%) of the leasing activity in the quarter. Pre-lease activity also remained 110
high with 110,400 sqm (48%) of take-up volumes in the quarter.
100
Supply completions rise in 4Q17
90
• Supply completions were below forecasts in 2017 despite the elevated levels
of demand. Approximately 543,000 sqm completed during the year. The 80
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
largest level of completions occurred in 4Q17. Approximately 198,000 sqm of
developments were completed in the quarter. This was across eight assets.
• The positive conditions have encouraged a lift in speculative development Arrows indicate 12-month outlook
activity. Three speculative developments completed in the quarter, totalling to Financial Indicators are for Outer Central West.
approximately 39,000 sqm. Source: JLL
Average prime rents grow 0.7% q-o-q and secondary 1.2%

Physical Indicators
• Prime quarterly rental growth was recorded across the majority of precincts:
Sydney South (1.8%), Outer North West (1.0%), Sydney North (1.0%), Sydney 1,200
Outer Central West (0.7%) and Outer South West (0.7%).
1,000
• Transaction volumes decreased in 4Q17. Approximately AUD 171 million
transacted over 14 sales. This figure is understated given the likely presence of 800
Thousand sqm
65 – Industrial
Sydney assets in three large portfolios understood to have sold in the quarter. 600
Prime yields were largely unchanged in the quarter with the exception of a 13
bps midpoint compression in the Outer Central West and Outer South West. 400
Outlook: Yields appear to be approaching a cyclical peak 200
• We believe a sustained period of occupier demand and an increasing difficulty 0

13 14 15 16 17 18F
in expanding development pipelines should place upward pressure on market
Take-up (gross) Completions
rents in the medium term.
Future Supply
• Construction activity is expected to increase in 2018. There is currently 562,000
For 2013 to 2017, take-up and completions are year-end annual.
sqm of supply under construction with a further 183,000 sqm of developments Future supply is for 2018.
approved. Source: JLL
Note: Sydney Industrial refers to Sydney’s industrial market (all grades).

Melbourne
“The strong supply cycle
accelerates in 4Q17.”
Annabel McFarlane, Director – Stage in Cycle
sqm per annum,
Research, Australia Rental Growth Y-O-Y
net on GFA Rents
2.7% AUD 88 Rising
Financial Indices
A third consecutive year of strong industrial take-up
140 • Demand was focused on the West in 4Q17 with five lease transactions totalling
135 64,000 sqm. Industrial demand for the West was at the highest annual level
130 since 2002 and accounted for 62% of all take-up in 2017. Declining serviced land
125 availability is reducing options for occupiers in the South East.
120
• The transport and logistics sector dominated take-up again with six out
Index
115
of 14 transactions. However, manufacturing remained relevant with food
110
manufacturer Simplot Australia committing to a pre-lease at DEXUS’ estate at
105
41 Foundation Road, Truganina (20,725 sqm).
100
95 Industrial supply at the highest level since 2008
90 • Supply accelerated in 4Q17. Fifteen projects completed adding 309,300 sqm
4Q13 4Q14 4Q15 4Q16 4Q17 4Q18
to the market bringing the 2017 total to 646,400 sqm. There are 15 projects
totalling 316,600 sqm in the West (49%) and East (45%) under construction with
completion expected by end-2018.
Financial Indicators are for South East. • Speculative supply is rare in Melbourne’s industrial market. Fifteen projects
Source: JLL completed in the quarter were 90% pre-committed (GBA). The largest was
the completion of the chilled and freezer facilities for Newcold at 489-555
Physical Indicators Robinsons Road in the West.
1,000
Land values increase sharply in many precincts in 4Q17
900 • Melbourne’s industrial average rents responded to strong occupier demand
800 over the year and increased. Service land values also increased sharply,
700 particularly in the South East, where value increases ranged between 11% and
Thousand sqm
600 21% in 4Q17, depending on the precinct.

66 – Industrial
500
400 • Investment volumes moderated in 4Q17, with AUD 221.5 million of transactions
300 recorded. The quarterly result included the sale of the Allied Pinnacle Portfolio
200 (10 properties across Australia) which sold to Qualitas. The portfolio includes
100 four Victorian assets with an estimated total sales price of AUD 62.3 million.
0
13 14 15 16 17 18F Outlook: Limited availability of serviced land in some precincts
Take-up (gross) Completions
• There is currently 317,000 sqm of space under construction and 261,000 with
Future Supply
plans approved with completion expected in 2018. If supply is to complete as
For 2013 to 2017, take-up and completions are year-end annual. projected, 2018 will be close to 2017’s level - the second largest annual addition
Future supply is for 2018. to stock since 2008.
Source: JLL
• We believe the yield compression cycle is approaching the end and pricing is
broadly expected to be at its peak.
Note: Melbourne Industrial refers Melbourne’s industrial market (all grades).

Hotel
Hong Kong
“Continued growth in tourist
arrivals spurs improved hotel
trading performance.”
David Marriott, Senior Vice President – Stage in RevPAR Cycle
RevPAR Growth Y-O-Y YTD November 2017
Hotels & Hospitality Group, Asia Pacific RevPAR
5.4% HKD 2,636
Rising
Luxury Hotel Trading Performance
Persistent growth in visitor arrivals in 2017
4,500 100 • Overnight visitation from China improved significantly by 10.0% y-o-y during the
4,000 90 month of October 2017. Short-haul markets such as Taiwan (excluding China)
80 recorded an increase of 8.2% y-o-y for the same period. Hong Kong’s tourism
ADR / RevPAR (HKD)
3,500
Occupancy (%)
70
3,000 market is now well into recovery mode.
60
2,500
2,000
50 • The upward market trend observed in 2016 has persisted throughout 2017.
40
1,500
30 Significant new supply is anticipated in 2018
1,000 20
500
• In 2017, 15 hotels with a total of 3,498 rooms entered the market, which is more
10
0 0
than triple the new room inventory added in 2016. This is due to multiple large
hotel openings including the Disney Explorers’ Lodge (750 rooms) and Kerry
May-12
Nov-12
May-13
Nov-13
May-14
Nov-14
May-15
Nov-15
May-16
Nov-16
May-17
Nov-17
Aug-12
Feb-13
Aug-13
Feb-14
Aug-14
Feb-15
Aug-15
Feb-16
Aug-16
Feb-17
Aug-17
Hotel by Shangri-La (546 rooms).

ADR RevPAR Occupancy
• Hong Kong will embrace a new wave of luxury hotels in 2018 when The Murray,
Source: STR Global, JLL
Hong Kong, a Niccolo Hotel opens with 336 rooms, followed by the 398-room
Note: MAA - Moving Annual Average Rosewood Hong Kong, the 129-room St Regis Hong Kong in 2019, and the
460-room Fullerton Hong Kong Hotel Ocean Park in 2020.
Trading performance continues to improve

Major Additions to Hotel Supply • Revenue Per Available Room (RevPAR) growth was recorded across all
monitored segments as at YTD November 2017, led by the midscale and
7,000 economy hotel segment (RevPAR up 6.3% y-o-y). Luxury hotels also recorded
6,000
stronger RevPAR compared to the same period in 2016 (up 5.4% y-o-y).
5,000 • RevPAR growth was largely driven by improved occupancy, with occupancy in
the luxury segment up by 5.0% y-o-y to 82.2%. On the other hand, Average Daily
No. of rooms
4,000
Rate (ADR) only marginally increased by 0.3% y-o-y.
3,000
Outlook: Continued improvement in trading performance
2,000
• Further growth in arrivals from China is expected to spur additional occupancy
1,000 growth; however, ADR growth is expected to remain subdued.
0
13 14 15 16 17 18F • As a significant amount of new luxury supply is anticipated to enter the market
Additions to Supply in 2018, this may potentially result in an increase in ADR for the first time
Future Supply since 2014.
Source: Industry sources, JLL
68 – Hotels
Note: Hong Kong Hotels refers to Hong Kong’s luxury hotel market.
Beijing
“Recovery in the Beijing
hotel market.”
David Marriott, Senior Vice President –
Stage in RevPAR Cycle Hotels & Hospitality Group, Asia Pacific
RevPAR
4.0% RMB 767
Rising
Upscale Hotel Trading Performance
International visitor arrivals continue to decline
• As at YTD November 2017, international visitor arrivals declined 5.9% y-o-y 1,400 100
90
to 3.1 million. Political tensions between China and South Korea continued 1,200
ADR / RevPAR (RMB)

80
to impact the tourism sector, which resulted in a 40.2% y-o-y decline in Korean
Occupancy (%)
1,000 70
visitor arrivals. 800 60
50
• Key national meetings and exhibitions significantly benefited hotel trading 600 40
performance, boosting domestic demand and helping to make up for the 400 30
shortfall in international visitor arrivals. 20
200
10
0 0
Future projects largely in emerging and suburban districts
May-12
Nov-12
May-13
Nov-13
May-14
Nov-14
May-15
Nov-15
May-16
Nov-16
May-17
Nov-17
Aug-12
Feb-13
Aug-13
Feb-14
Aug-14
Feb-15
Aug-15
Feb-16
Aug-16
Feb-17
Aug-17
• Four international branded hotels opened in Beijing in 2017, including the
450-room Hotel Jen, 119-room Bvlgari Hotel, 220-room Pan Pacific Hotel and ADR RevPAR Occupancy
191-room Ascott Riverside Garden Beijing. Newly opened hotels in the year
were mainly based in core areas, including Chaoyang and Dongcheng districts.
• If all projects materialise, 13 hotels with 2,840 rooms are expected to open Note: MAA - Moving Annual Average
in 2018. Most of the projects are based in emerging and suburban areas like
Shunyi and Changping districts.
RevPAR continues to grow

Major Additions to Hotel Supply
• As at YTD November 2017, occupancy improved 2.0 percentage points y-o-y to
74.4%. Meanwhile, Average Daily Rate (ADR) remained largely stable, increasing 4,000
slightly by 1.2% y-o-y to RMB 1,031. Improvements in both occupancy and ADR 3,500
resulted in a 4.0% y-o-y growth in Revenue Per Available Room (RevPAR) to
3,000
RMB 767.
2,500
No. of rooms
• On a moving annual average basis, trading performance improved significantly 2,000

in November 2017. Compared with the same period last year, occupancy and
1,500
ADR climbed 3.4 percentage points and 1.5% y-o-y respectively, which led to
1,000
RevPAR growing 6.3% y-o-y to RMB 759.
500
Outlook: Upcoming luxury hotels to drive ADR growth in 0
13 14 15 16 17 18F
• Notable upcoming luxury hotel projects in 2018 are expected to drive ADR
Additions to Supply
growth in select submarkets including Dongcheng and Chaoyang districts. Future Supply
Meanwhile, the dispersed location of upcoming hotels means that new supply
is unlikely to significantly impact occupancy levels. Source: Yearbook of China Tourism Statistics,Industry sources, JLL
• A shortage of Grade A office buildings remains a big concern in Beijing,

particularly in CBD areas. For this reason, some developers are converting hotel
properties into shared offices to achieve a higher return on investment and
release the supply pressure.
69 – Hotels
Note: Beijing Hotels refers to Beijing’s upscale hotel market.

Shanghai
“Significant supply continues
to challenge hotel trading
performance in key
submarkets. ” Stage in RevPAR Cycle
David Marriott, Senior Vice President – RevPAR
Hotels & Hospitality Group, Asia Pacific 4.2% RMB 805.4
Rising
Upscale Hotel Trading Performance
International visitation sees little increase in growth
1,400 100 • As at YTD October 2017, Shanghai received 7.2 million international visitor
1,200
90 arrivals, a mere 1.7% improvement y-o-y.
ADR / RevPAR (RMB)
80
Occupancy (%)
1,000 70 • The ongoing political tension between China and South Korea resulted in a
800
60 20.2% y-o-y decline in Korean visitor arrivals. During the same period, visitor
50 arrivals from Japan and the USA increased 12.1% and 4.1% y-o-y respectively,
600 40
which alleviated the shortfall of Korean tourists.
400 30
20
200
10
Large hotel supply addition to Hongqiao District
0 0 • In 2017, over 20 hotels with nearly 5,000 rooms were added to the market.
May-12
Nov-12
May-13
Nov-13
May-14
Nov-14
May-15
Nov-15
May-16
Nov-16
May-17
Nov-17
Aug-12
Feb-13
Aug-13
Feb-14
Aug-14
Feb-15
Aug-15
Feb-16
Aug-16
Feb-17
Aug-17
One-fifth of this supply was in the Hongqiao district, which could challenge the
hotel trading performance in this specific submarket in the short to medium
ADR RevPAR Occupancy term.
• In 2018, there will be several notable openings which were delayed from 2017,
Note: MAA - Moving Annual Average including the 82-room Bvlgari Hotel Shanghai, 111-room Middle House and 201-
room The Sukhothai Hotel Shanghai.
Occupancy drives RevPAR growth

Major Additions to Hotel Supply • As at YTD November 2017, Average Daily Rate (ADR) increased slightly by
1.2% y-o-y to RMB 1,071, while occupancy climbed 2.2 percentage points
8,000 y-o-y to 75.2%. Improvements in both occupancy and ADR drove Revenue
7,000 Per Available Room (RevPAR) growth of 4.2% y-o-y to RMB 805.
6,000 • On a moving annual average basis, RevPAR increased 4.4% y-o-y to RMB 794 as
5,000 at November 2017. RevPAR growth was mainly attributed to the 2.4 percentage
No. of rooms
4,000 points y-o-y growth in occupancy to 74.6%, while ADR grew by a mere 1.1%.
3,000
Outlook: Supply to be a challenge for trading performance
2,000
• A continual increase in international visitor arrivals is expected to benefit overall
1,000 hotel trading performance.
0
13 14 15 16 17 18F • Over 30 upcoming hotel projects with 7,061 keys are anticipated to open in
Additions to Supply 2018, with nearly half of them located in Pudong and Minhang districts. This
Future Supply significant supply is expected to challenge the hotel trading performance in
these key submarkets in the short term.
70 – Hotels
Note: Shanghai Hotels refers to Shanghai’s upscale hotel market.

Tokyo
“Further improvement
in trading performance
supported by continuously
growing inbound demand.”
Stage in RevPAR Cycle
RevPAR Growth Y-O-Y YTD November 2017 Tom Sawayanagi, Head of Hotels &
RevPAR Hospitality Group, Japan
5.8% JPY 47,756
Rising
Inbound visitation supports lodging demand increase
• A total of 40.3 million visitor nights were spent in Tokyo as at YTD September 65,000 100
2017, representing 12.7% of all visitor nights across Japan. International 60,000 90
55,000 80
accommodation guests, which account for 34.5% of the total accommodation
ADR / RevPAR (JPY)

50,000
Occupancy (%)
70
guests in Tokyo, increased by 15.2% y-o-y to 13.9 million. Domestic guests also 45,000
40,000 60
increased by 2.4% y-o-y to 26.4 million. 35,000 50
30,000
• Inbound visitation to Japan grew by 18.3% y-o-y to 23.8 million as at YTD 25,000 40
October 2017; however, demand for hotels in Tokyo did not grow at the same 20,000 30
15,000 20
pace. This may be due to a hike in room rates driven by high occupancy, which 10,000
10
caused demand shifting to satellite cities for lower rates, and increased usage of 5,000
0 0
Airbnb type of accommodations. May-12
Nov-12
May-13
Nov-13
May-14
Nov-14
May-15
Nov-15
May-16
Nov-16
May-17
Nov-17
Aug-12
Feb-13
Aug-13
Feb-14
Aug-14
Feb-15
Aug-15
Feb-16
Aug-16
Feb-17
Aug-17
No major openings of four or five-star hotels in 4Q17
• There were no luxury hotel openings in 4Q17. Moxy Tokyo Kinshicho was
introduced to the mid-scale hotel market in November. Source: STR Global, JLL
Note: MAA - Moving Annual Average
• There are a number of luxury hotel openings in the pipeline planned for 2020
when the Tokyo Olympic Games will be held. Major new supply includes the
redevelopment of Hotel Okura Tokyo, scheduled for completion in 2019, and
the Four Seasons Otemachi, which is scheduled to open in 2020. Major Additions to Hotel Supply
Increases in ADR and occupancy lead to further RevPAR gains 1,000
• Tokyo’s hotel trading performance witnessed further growth, with Revenue
Per Available Room (RevPAR) increasing 5.8% y-o-y as at YTD November 2017. 800
This was attributed to both Average Daily Rate (ADR) and occupancy growth
of 2.8% and 2.9% y-o-y, respectively. 600
No. of rooms
• The only announced sales transaction in the upscale hotel sector in the greater 400
Tokyo area during 4Q17 was the Sheraton Grande Tokyo Bay Hotel bought by
GIC and Invincible REIT. While investors’ appetite for hotel assets is strong, a 200
luxury hotel offering is rare, especially in Tokyo.
0
Outlook: Healthy performance expected to continue 13 14 15 16 17 18F
Additions to Supply
• The new home-sharing act which regulates Airbnb type of businesses will be Future Supply
in effect as of June 2018. Tokyo’s luxury hotel market is not expected to see a
large impact from this, and RevPAR is expected to grow steadily supported by Source: Industry sources, JLL
ADR growth.
• It is expected that the number of hotel investment transactions should increase
over the next 12 months due to a narrower price expectation gap between
sellers and buyers.
71 – Hotels
Note: Tokyo Hotels refers to Tokyo’s luxury hotel market.

Singapore
“Trading performance
decline eases as occupancy
improves amid strong
tourism growth.” Stage in RevPAR Cycle
Scott Hetherington, CEO – Hotels & Decline
Hospitality Group, Asia -2.1% SGD 312
Slowing
Strong performance in visitor arrivals fuels hotel demand
500 100 • Singapore tourism’s industry finished on a strong note in 2017, buoyed by
450 90 strong arrivals from China and India. As at YTD September 2017, arrivals totalled
400
ADR / RevPAR (SGD)
80 13.0 million, a 5.1% y-o-y increase. If arrivals continue at this pace throughout
Occupancy (%)
350 70
4Q17, Singapore is expected to have received 17 million visitors, outpacing the
300 60
tourism ministry’s forecasted arrivals of 16.4-16.7 million for 2017.
250 50
200 40 • As of YTD September 2017, key source markets continued to drive visitor
150 30 growth, with all registering increases except for Japan (-0.8% y-o-y). Top growth
100 20
markets were India (+16.3% y-o-y), Vietnam (+13.2%) and USA (+9.8%). China
50 10
outpaced Indonesia to become Singapore’s top source market, comprising
0 0
19.0% of total visitor arrivals.
May-12
Nov-12
May-13
Nov-13
May-14
Nov-14
May-15
Nov-15
May-16
Nov-16
May-17
Nov-17
Aug-12
Feb-13
Aug-13
Feb-14
Aug-14
Feb-15
Aug-15
Feb-16
Aug-16
Feb-17
Aug-17

Large hotel supply in 4Q17 to slow down significantly in 2018
• There was a significant influx of supply in 4Q17, with seven hotel openings
Source: STR Global, JLL providing a total of 2,420 rooms. All new openings were internationally-branded
Note: MAA - Moving Annual Average hotels, and most are in the upscale and luxury segments.
• Incoming hotel supply is expected to slow significantly in 2018, with a mere
512 rooms entering the market. Expected openings to include The Duxton Club,
Major Additions to Hotel Supply Dusit Thani Laguna Singapore and The Patina, Capitol Singapore.
5,000
Performance decline slows amid stabilising ADR and occupancy
4,500 • As at YTD November 2017, occupancy for luxury hotels fell 2.0% y-o-y to 77.3%.
4,000 Average Daily Rate (ADR) decreased to SGD 403, a marginal fall of 0.1% y-o-y.
3,500 As a result, Revenue Per Available Room (RevPAR) declined by 2.1% y-o-y to
No. of rooms
3,000 SGD 312.

2,500
2,000 • On a moving annual average basis, RevPAR declined from SGD 317 in November
1,500 2016 to SGD 310 in November 2017.
1,000
500 Outlook: Performance to stabilise due to balanced conditions
0
13 14 15 16 17 18F • Hotel demand is expected to continue rising in the near term, on the back of
Additions to Supply strong visitor arrivals growth. Limited hotel supply in 2018 should provide some
Future Supply respite for the market to absorb the recent influx of supply. This should reduce
pressure on ADR and occupancy rates.
Source: Industry sources, JLL
• Under the Hotel Industry Transformation Map (ITM), initiatives in 2018 are
centred on future-proofing the industry, equipping the workforce with
necessary skills and promoting ‘Smart’ hotels with the latest technologies.
These government-led initiatives should lend greater support to the hotel
industry’s continued drive for innovation and transformation, enhancing its
72 – Hotels
overall competitiveness.
Note: Singapore Hotels refers to Singapore’s luxury hotel market.

Bangkok
“Tourist arrivals continue to
drive trading performance
through strong occupancy.”
RevPAR Growth Y-O-Y YTD November 2017 Mike Batchelor, Managing Director –
RevPAR
6.0% THB 4,608 Hotels & Hospitality Group, Singapore
Rising
International arrivals trend up
• International arrivals to Bangkok reached 21.1 million as at YTD November 9,000 100
2017, representing 20.6% y-o-y growth. While arrivals from China to Bangkok 8,000 90
were weak early in the year, the inflow of Chinese visitors to the city and country 7,000 80
ADR / RevPAR (THB)
Occupancy (%)
picked up and growth surpassed 9.0% y-o-y. 6,000 70
5,000 60
• Arrivals to Bangkok saw further uplift supported by growth from South Korea, 4,000
50
India and Malaysia, which recorded y-o-y growth of 24.3%, 18.6% and 3,000
40
13.6%, respectively. 30
2,000 20
Close to 700 room additions in 4Q17 1,000 10
0 0
• There were nearly 700 rooms completed in 4Q17 and this added to the almost
May-12
Nov-12
May-13
Nov-13
May-14
Nov-14
May-15
Nov-15
May-16
Nov-16
May-17
Nov-17
Aug-12
Feb-13
Aug-13
Feb-14
Aug-14
Feb-15
Aug-15
Feb-16
Aug-16
Feb-17
Aug-17
1,200 rooms opened in 1H17. Of these, notable hotel openings included the
highly anticipated Park Hyatt Bangkok and Travelodge’s second opening in ADR RevPAR Occupancy
Thailand with Travelodge Sukhumvit 11.
• Should all projects materialise, 2018 will see an influx of supply with over Note: MAA - Moving Annual Average
4,000 keys, including projects that were originally slated for completion in 2017.
The majority of this supply will be concentrated in the upscale segment, with
openings dispersed among upcoming tourist areas such as Phayathai and
Ratchadapisek beyond the traditional Sukhumvit area. Major Additions to Hotel Supply
Occupancy gains bolster hotel trading performance 5,000
• As at YTD November 2017, the Bangkok luxury market continued to register 4,500
strong growth in Revenue Per Available Room (RevPAR), rising 6.0% y-o-y to 4,000
THB 4,608. The growth was driven by simultaneous improvements in occupancy 3,500
and Average Daily Rate (ADR). 3,000
No. of rooms
2,500
• All other segments of the hotel market tracked also saw strong y-o-y growth, 2,000
particularly the midscale and economy segment, which registered RevPAR growth 1,500
of 7.8% y-o-y on the back of a 6.2% improvement in occupancy. 1,000
500
Outlook: Large incoming supply may challenge occupancy growth 0
• Bangkok is expecting a large supply influx that may impact occupancy growth 13 14 15 16 17 18F
levels in 2018. In addition, the recovery of mainland Chinese arrivals has been Additions to Supply
Future Supply
slower than expected. Nevertheless, Bangkok should continue to see strong
growth from higher spending niche markets as the city remains a top tourist
Source: Industry Sources, JLL
destination, as well as a hub for travel to other regional destinations.
• With ongoing expansions to the city’s mass rapid transit system, and Don
Mueang and Suvarnabhumi International Airports, Bangkok should continue to
attract a growing number of visitors with its improved accessibility.
73 – Hotels
Note: Bangkok Hotels refers to Bangkok’s luxury hotel market.

Kuala Lumpur
“Strong trading performance
underpinned by rise
in demand due to the
improving Malaysian
economy and weak Ringgit. ” RevPAR Growth Y-O-Y YTD November 2017
RevPAR
Scott Hetherington, CEO – Hotels & 9.9% MYR 370
Hospitality Group, Asia Stable
Luxury and Upscale Hotel Trading Performance
Mixed performance for top visitor source markets
700 100 • International visitor arrivals to Malaysia declined marginally by 1.5% y-o-y to
600 90 17.3 million as at YTD August 2017. This was primarily due to the fall in arrivals
ADR / RevPAR (MYR)
80 from the top two source markets, Singapore and Indonesia.

500
Occupancy (%)
70
400 60 • Weakness in the top two sources markets was partially offset by growth in other
50 top source markets. In particular, China, Thailand and Brunei which recorded
300
40 increases of 8.3%, 5.9% and 34.1% y-o-y, respectively. The rise in Chinese
200 30
tourists is a trend reflected across Southeast Asia.
20
100
10
Supply puts pressure on trading performance
0 0
• As at YTD November 2017, over 1,000 new rooms from five hotels opened.
May-12
Nov-12
May-13
Nov-13
May-14
Nov-14
May-15
Nov-15
May-16
Nov-16
May-17
Nov-17
Aug-12
Feb-13
Aug-13
Feb-14
Aug-14
Feb-15
Aug-15
Feb-16
Aug-16
Feb-17
Aug-17
Recent openings included the 312-room Sofitel Kuala Lumpur Damansara and
ADR RevPAR Occupancy the 253-room Sheraton Petaling Jaya. The majority of new hotels were in the
upscale and luxury segment.
Source: STR Globals, JLL
Note: MAA - Moving Annual Average • In December 2017, approximately half of the 531 rooms at the Hilton Garden
Inn began operations; the remaining room inventory is scheduled to open in
July 2018. Incoming supply for 2018 is expected to be significant, with a total of
approximately 3,863 rooms expected to enter the market.
Major Additions to Hotel Supply
Strong occupancy and ADR growth
4,500 • As at YTD November 2017, Revenue Per Available Room (RevPAR) rose by
4,000 9.9% y-o-y to MYR 370. This was bolstered by growth in select top source
3,500 markets as a lower valued Malaysian Ringgit during this period likely increased
3,000
the country’s appeal.
No. of rooms
2,500 • Occupancy rose by 4.5% y-o-y to 68.5% as at YTD November 2017, while
2,000 Average Daily Rate (ADR) increased by 5.2% y-o-y to MYR 540. On a moving
1,500 annual average basis, RevPAR increased from MYR 336 in November 2016
1,000 to MYR 367 in November 2017.
500
0
Outlook: Significant supply pipeline remains key concern
13 14 15 16 17 18F
• A significant hotel pipeline over the next few years may result in a supply
Additions to Supply
Future Supply
glut, adding to downward pressure on occupancy rates and ADR amid an
increasingly competitive market. This is particularly so in light of moderating
Source: Industry sources, JLL growth in international visitor arrivals, as well as the recent appreciation of the
Malaysian Ringgit.
• Under the master plan by Kuala Lumpur’s Tourism Bureau, the aim is to double
the city’s international visitor arrivals to 16 million by 2025. Total tourism
receipts for Kuala Lumpur are expected to reach MYR 79 billion by 2025, and will
74 – Hotels
account for 35% of overall tourism receipts for Malaysia.
Note: Kuala Lumpur Hotels refers to Kuala Lumpur’s luxury and upscale hotel market.
Sydney
“Sydney’s trading metrics
continue to thrive with
limited new supply and
rising demand.”
RevPAR Growth Y-O-Y YTD November 2017 Troy Craig, Managing Director – Hotels
RevPAR & Hospitality Group, Australia
9.3% AUD 232
Rising
Marketwide Hotel Trading Performance
Strong corporate demand and inbound tourism growth
• Sydney experienced market-wide occupancy of 89.4% on a moving average 270
100
annual basis for the 12 months ending November 2017, due to inbound tourism 260 90
growth and a busy events calendar. 240 80
ADR / RevPAR (AUD)
Occupancy (%)
70
• The opening of the International Convention Centre Sydney as well as the 220
60
implementation of annual events by the New South Wales government, such 200 50
as Vivid Sydney, increased demand in traditionally weaker months. 180 40
30
160
Two major hotel openings in Sydney throughout 2017 20
140 10
• Hotel openings comprised the 590-room Sofitel Sydney Darling Harbour, which
120 0
opened in October 2017 and the 188-room West Hotel Sydney, Curio Collection
May- 12
Nov-17
Nov- 12
May- 13
Nov- 13
May- 14
Nov- 14
May- 15
Nov- 15
May- 16
Nov- 16
May-17
by Hilton, which opened in December 2017.
• Room stock growth is anticipated to average 3.4% per annum between 2018 ADR (MAA) RevPAR (MAA) Occupancy (MAA)
and 2023, with notable additions including, but not limited to, the Crown Hotel
at Barangaroo (352 rooms), W Hotel Darling Harbour (590 rooms) and the Four Note: MAA- Moving Annual Average
Points by Sheraton Sydney, Central Park (297 rooms).
Strong fundamentals support positive hotel performance

• As at YTD November 2017, occupancy increased 1.5% y-o-y to 89.5%, and Major Additions to Hotel Supply
coupled with Average Daily Room (ADR) growth of 7.6%, this resulted in
considerable Revenue Per Available Room (RevPAR) growth of 9.3% to AUD 232. 900
• As a result of the higher occupancy and ADR, RevPAR for the 12 months ending 800
November 2017 was AUD 235, a record high. 700

600
Outlook: Market to strengthen throughout 2018
No. of rooms
500
• Stable occupancy and an anticipated increase in ADR are expected to continue 400
to push RevPAR upwards. 300
200
• While a relatively large number of rooms are anticipated to enter the Sydney
market over the next 3 years, it is expected that continued strong demand will 100
offset this supply increase. 0
13 14 15 16 17 18F
Additions to Supply
Future Supply
Source: Australian Bureau of Statistics, JLL

75 – Hotels
Note: Sydney Hotels refers to all grades of accommodation and includes both hotels and serviced apartments
JLL Research - Asia Pacific
ASIA PACIFIC SOUTH EAST ASIA WEST ASIA

Dr Megan Walters Regina Lim India
Head of Research - Asia Pacific Head of Capital Markets Research - Ashutosh Limaye
+65 6494 3649 Southeast Asia Head of Research - India
megan.walters@ap.jll.com +65 6494 7068 +91 22 6620 7575
regina.lim@ap.jll.com ashutosh.limaye@ap.jll.com
GREATER CHINA
Hong Kong Singapore AUSTRALASIA
Denis Ma Tay Huey Ying Australia
Head of Research – Hong Kong Head of Research - Singapore Andrew Ballantyne
+852 2846 5135 +65 6494 3761 Head of Research – Australia
denis.ma@ap.jll.com hueyying.tay@ap.jll.com +61 2 9220 8412
Indonesia andrew.ballantyne@ap.jll.com
China
Joe Zhou James Taylor New Zealand
Head of Research – China Head of Research - Indonesia Tom Barclay
+86 21 6133 5451 +62 21 2992 3888 Head of Research - New Zealand
joe.zhou@ap.jll.com james.taylor@ap.jll.com +64 9 363 0226
Philippines tom.barclay@ap.jll.com
Taiwan
Jamie Chang Sharon Saclolo
Head of Research - Taiwan Associate Director - Research
+886 2 8758 9886 +63 2 902 0888
jamie.chang@ap.jll.com sharon.saclolo@ap.jll.com
Macau Thailand
Mark Wong Andrew Gulbrandson
Senior Manager Head of Research – Thailand
+853 2871 8822 +66 2 624 6420
mark.wong@ap.jll.com andrew.gulbrandson@ap.jll.com
NORTH ASIA Vietnam
Japan Trang Le
Takeshi Akagi Head of Research - Vietnam
Head of Research – Japan +84 8 3910 3968
+81 3 5501 9235 trang.le@ap.jll.com
takeshi.akagi@ap.jll.com
Malaysia
South Korea Veena Loh
Sungmin Park Head of Research - Malaysia
Head of Research - Korea +603 226 0764
+82 2 3704 8855 veena.loh@ap.jll.com
sungmin.park@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.
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Asia Pacific Property Digest

Sustained momentum leads

Articles 25 Kuala Lumpur

You can view this report online at http://www.jllapsites.com/research/appd-online/.

ASIA PACIFIC ECONOMY

Real GDP Growth

Externally focused industries to be supportive of growth. Recovery in residential investment and

Source: Oxford Economics, February 2018

ASIA PACIFIC PROPERTY MARKET

Investors drawn to the region’s positive outlook

E-commerce and 3PLs continued to 5

largely characterised by relocation and

downsizing, while some retailers were

Rental Values Capital Values

e-commerce and 3PLs, while Singapore

impacted sales activity in Shanghai. 40

Grade A Office Prime Retail

Growth Rents Growth Rents

Prime Residential Prime Industrial

Growth Rents Growth Rents

Singapore* Singapore (Business Park)

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

Source: JLL (Real Estate Intelligence Service), 4Q17

2017 in review: Top real estate trends

About the author

About the author

Redrawing Hong Kong’s CBD2 boundaries

About the author

About the author

More than 160 researchers

© 2018 All rights reserved. All information

sq ft per month, Stage in Cycle

110 Huarong Financial Services Asset Management leased 24,200 sq ft at Bank of

submarket to record negative growth in 2017.

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

Daniel Yao, Head of Research, sqm per day, Stage in Cycle

Rents in the fringe CBDs continue to rise despite large supply

6 • After a quiet 3Q17, investment transactions picked up towards year-end as

subsidiary secured three floors in Baoland Plaza. 130

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

Jamie Chang, Head of Research, ping per month, Stage in Cycle

100 Some projects delay completion until 2018

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

Rental and capital value growth accelerates slightly Physical Indicators

Note: Tokyo Office refers to Tokyo’s 5-Kus Grade A office market.

Yuto Ohigashi, Associate Director - tsubo per month, Stage in Cycle

including manufacturing, wholesale and retail trade, as well as information and

Note: Osaka Office refers to Osaka’s 2-Kus Grade A office market.

Note: Seoul Office refers to Seoul’s Grade A office market.

rents and capital values.”

100 be over as consolidation efforts tapered off.

90 Vacancy embarks on the declining path

8 interest and liquidity, as exemplified by the sale of Chevron House.

Vacancy declines to near historical low 90

market in 2H18. Pre-leasing is reportedly very strong. 0 0

Note: Bangkok Office refers to Bangkok’s CBA Grade A office market.

James Taylor, Head of Research,

Grade B and C buildings in favour of recently completed Grade A premises.

Arrows indicate 12-month outlook

and instead, rents in KLC are expected to decline. 12

For 2013 to 2017, take-up, completions and vacancy rates are

Sharon Saclolo, Associate Director - sqm per month, Stage in Cycle

Physical Indicators • Completion schedules of three developments expected to complete in 4Q17

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