ASIA PACIFIC OFFICE MARKET REVIEW

Transcription

1 Q2 28 ASIA PACIFIC OFFICE MARKET REVIEW Asia Pacific Office Rents & Occupancy Costs CBRE RESEARCH

2 TABLE OF CONTENTS MARKET SUMMARY P. 2 8 MARKET SNAPSHOTS P. 9 3 TERMINOLOGY & DEFINITIONS P. 31 LOCAL MARKET INFORMATION P ASIA PACIFIC MAP P. 34 ASIA PACIFIC OFFICES P. 35 ASIA PRC - BEIJING P. 8 PRC - SHANGHAI P. 9 PRC - GUANGZHOU P. 1 PRC - HONG KONG P. 11 TAIWAN - TAIPEI P. 12 JAPAN - TOKYO P. 13 SOUTH KOREA - SEOUL P. 14 INDIA - NEW DELHI P. 15 INDIA - MUMBAI P. 16 INDIA - BANGALORE P. 17 INDONESIA - JAKARTA P. 18 MALAYSIA - KUALA LUMPUR P. 19 PHILIPPINES - MANILA P. 2 SINGAPORE P. 21 THAILAND - BANGKOK P. 22 VIETNAM - HO CHI MINH CITY P. 23 HANOI P. 24 PACIFIC AUSTRALIA - SYDNEY P. 25 AUSTRALIA - MELBOURNE P. 26 AUSTRALIA - BRISBANE P. 27 AUSTRALIA - PERTH P. 28 NEW ZEALAND - AUCKLAND P. 29 NEW ZEALAND - WELLINGTON P. 3 MARKET SUMMARY ASIA PACIFIC GREATER CHINA Beijing Market demand for Beijing office space experienced brisk growth during the second quarter, with net take-up reaching 2.33 million sf and rents increasing by 2.3% q-o-q. Five new office buildings were completed during the period, providing 2.96 million sf of office space to the market. Projects such as Ping An International Finance Centre, Teda Times Square, Taikang International Building and Fortune Resource International Centre are all primarily located in the CBD, Finance Street and Lufthansa areas. Guangzhou The Guangzhou office leasing market was relatively resilient in the second quarter. Total net take-up amounted to 3.14 million sf, of which 73.5% was reported across Tianhe District driven mainly by increased demand from MNCs and large local corporations. Overall vacancy rates edged down 3.9 percentage points q-o-q to 15.5%. Rents for prime office space rose slightly by.5% q-o-q, as strong demand was well met with sufficient new office space from recently completed buildings. The performance of Grade A buildings in Tianhe surpassed the overall market. The completion of SINOPEC Plaza added 1.61 million sf of prime office space to the Tianhe Sports Centre area. Hong Kong Despite the global economic fallout sparked by the US subprime mortgage crisis, Hong Kong continued to experience some expansion in the financial and professional services sectors in the second quarter. Demand from both new and expanding hedge funds, law firms and select international financial institutions has bolstered the resilience of the office market, thus far. However, market take-up appeared mainly attributable to demand from occupiers seeking smaller spaces in premium buildings. Grade A office rents should continue rising for the remainder of 28, albeit more slowly than in the past six months. North Star Times Square Beijing GFA: 645,84 sf Shanghai The office market remained strong in Shanghai with sustained rental growth during the past quarter. Four new office buildings were erected, offering a total of 2.5 million sf of space to the market. With a relatively high level of supply for the second consecutive quarter, overall vacancies rose by 2 percentage points q-o-q to 6.3%. Both Puxi and Pudong have concluded a number of significant deals, including China Pacific Insurance taking multiple floors in One Lujiazui and CVRD leasing space in Bund Centre. Taipei The Taipei office market has remained active following a robust first quarter. Grade A office rents soared to NT$2,493 per ping (US$2.31 psf) and vacancy rates dropped to 6.6%. Contracting office availability is a driving factor behind rental escalation. As new supply will not emerge until early-29, vacancy for prime office space is expected to be compressed to 5% in the latter half of 28. NORTH ASIA Tokyo The second quarter of 28 saw average rents for new office 2 CBRE RESEARCH

3 MARKET SUMMARY ASIA PACIFIC leasings in prime Tokyo locations reached at JPY 56, per tsubo (US$14.85 psf) monthly (exclusive of common area management fees), a decline of 5.1% q-o-q. Despite continuing underlying demand for high quality office space, the gap between asking rents and tenants ability to absorb such costs has put downward pressure on rents, resulting in softening of asking rents in some locations. Seoul The office market in Seoul remained buoyant during the quarter, despite signs of an economic slowdown both in Korea and globally. Amid strong demand for office space, average vacancies dropped to a record low of.22%, running into a third consecutive quarter of being below 1%. Grade A office leasing activity has been dominated by financial institutions and most of the available Grade A and B office space has been leased by insurance companies. receiving no bids above the reserve price. Bangalore The continuing slowdown in global markets has impacted the Bangalore real estate market with many corporations now reevaluating their long-term plans. The relocation of large players in the IT/ITeS sectors has released some space in the CBD. However, in the peripheral market, supply has continued to outstrip demand. A significant CBD transaction was the leasing of 54, sf at Embassy Icon on Infantry Road by APC. In another significant transaction, Mott MacDonald leased 3, sf of office space on the same road. Jakarta The decision of the Indonesian government to hike fuel prices is expected to negatively impact the economy. Consequently, this dimmer economic outlook has begun to affect the performance of the Jakarta office market, though demand for office space remained resilient in the CBD area during the second quarter of 28, largely driven by the continued influx of foreign investment. Second quarter transactions were dominated by office expansion and relocation within the CBD or shifts from secondary locations to the CBD. SOUTH ASIA PCA Seoul GFA: 211,49 sf Developer: MAPS Investment Management New Delhi Office properties in the CBD of New Delhi continued to command premium rentals amidst conditions of limited space availability. A lack of new supply during the second quarter of 28 led to rents rising marginally. Given the less favourable economic climate, and the reluctance of many corporations to relocate, leases were frequently renewed at prevailing market rates. In the absence of any upcoming supply, CBD rentals are expected to remain at current levels over the short-term. Rents in peripheral markets like Gurgaon, Noida and the secondary market of Jasola may witness a minimal correction given that new stock will be added in the next two quarters. Mumbai Marked temperance, owing to a subdued economic climate, was observed in the demand for office space in Mumbai during the past quarter. Some tenants are slowing their expansion plans and reducing space requirements, with many even postponing real estate decisions. The weakening market sentiment was palpable at auctions of commercial plots in the Alternate Business District in the Bandra Kurla Complex of the Mumbai Metropolitan Region Development Authority this past quarter, with two out of three plots Kuala Lumpur The office leasing market remained active in first half of 28. With only one office building completed towards the end of the period, the market witnessed sustained demand for prime office space, dominated by the continued expansion and relocation of MNCs. Major movers included The Nomad Offices and Asia Media which took up 13,259 sf and 2, sf at the Menara Hap Seng and Menara Taipan, respectively. Manila The prime office market remained basically resilient but experienced a slowdown in leasing activity as companies have come to grips with the effects of rising commodity prices largely due to volatility in world oil prices. This was notable in the CBD where prime office vacancy increased to 3.24% during the period from 1.39% in the previous quarter. Rents in the CBD decreased by.16% during the period but had little effect in stemming increases in vacancy. Two new buildings in the UP North Science and Technology Park were turned over during the period with over 215,2 sf (2, sm) of office space between them. Singapore In Singapore, the combined impact of US subprime crunch, rising inflation and more modest economic growth has dampened office sector demand, although transactions driven by MNC relocations and expansions within prime areas were still evident. New completions in fringe CBD areas have provided some relief to hard-pressed occupiers. It is also clear that the volume of leasing transactions driven by business expansion was lower in the past two quarters. A couple of large occupiers have identified excess space which can be made available for sub-letting, but this has not yet become a notable trend. Asia Pacific Office Market Review Q2 28 3

4 MARKET SUMMARY ASIA PACIFIC Bangkok Office space demand in Bangkok slowed during the last quarter, with net absorption hitting its lowest level in five years as a result of both internal factors, including both political concerns and high inflation, and a slowing global economy. With no new supply coming online and rents remaining flat, both tenants and landlords have taken a cautious approach in anticipation of an easing of political and economic concerns. Ho Chi Minh City No major office developments were completed in Ho Chi Minh City during the second quarter, except for a few smaller projects located in fringe CBD areas. Surging construction material costs and a tightening credit environment have affected the operations of construction companies, leading to potential delays in some development projects. Large-scale Grade B office developments such as the Royal Centre, Fideco-VP Bank Tower, Gemadept Office Building and Sailing Tower are expected to come on stream in the second half of 28, following a brief interruption in construction. The anticipated wave of Grade B supply in the next two quarters may cause downward pressure on Grade B office rentals. Hanoi The Hanoi office market remains in a nascent stage of development. Demand experienced impressive growth in 26 and 27 and due to rapid economic growth of the time. Hence the expansion plans of many occupiers were frustrated amidst conditions of limited prime office supply prompting rent increases and full occupancy. In the second quarter of 28, however, business confidence was impaired by ongoing economic turmoil. Yet, Grade A demand remained resilient in the second quarter. Office rents are likely to be stable or rise slightly due to tight supply, until new buildings come online in 29 and 21. PACIFIC Sydney Despite a continuing slow NSW economy and a weakening global economy the Sydney CBD market remains well placed with low supply and positive demand expected to continue over 28. This is likely to have resulted in vacancy remaining at around 4% over the first half of the year. Driven by the lack of available space, rental growth has continued for most grades and locations in the CBD over the first half of 28. The Sydney CBD prime Core net face rent increased by 5.6% in the first half of 28, to reach A$755 psm per annum (US$5.59 psf per month). Incentives, on the other hand, increased over the past six months to 11.4%. Melbourne Office net absorption in the Melbourne CBD/Docklands prime office market in the first half of 28 is expected to be significantly lower than the 11,19 sm (1.1 million sf) recorded during the second half of last year, falling to around 5, sm (538,2 sf), which historically, remains a strong result for a six month period. Prime vacancy which reached 3.4% in December 27 is expected to remain fairly stable over the year to December 28 reaching around 3.3%. This is on the back of a slight decrease in supply. Premium net face rents increased by around 1.2% to A$435 psm per annum (US$3.22 psf per month) over the first half of 28. Brisbane The Brisbane CBD office market continued to perform reasonably well over the first half of 28 despite the level of supply increasing. This was due to reasonably strong net absorption. Prime office buildings are expected to perform stronger than secondary property over 28 with much of the positive net absorption likely in the newly completed stock leaving some backfill in secondary stock. Prime vacancy is expected to remain at less than 1.% over 28. Rental growth rates have eased significantly moving into 28, with only a 2% increase in face rents over the first half of the year and little change expected for the remainder of the year. Perth Perth CBD office market remained strong in the first six months of 28. The vacancy rate is likely to have remained below 2.%, despite net absorption continuing to be low over the period due to a lack of available space. Just below 12, sm (129,17 sf) of prime net absorption is expected over the six month period. The low prime vacancy rate has driven prime net face rental growth of around 11.% over the six months to June 28. Auckland Market conditions remained favourable in the first half of 28. The vacancy rate is still at long term lows with a general lack of leasing options across the Prime and better quality Secondary sectors. However, at the margins conditions and sentiment have eased with an increase in availability in the first half of the year and more caution evident regarding the future. Prime rents increased by 7.9% during the past 12 months to an indicative average rate of NZ$342 psm per annum. New supply in 28 is occurring through two buildings in the Quay Park precinct. Both of these are fully committed by tenants, although some sublease space is being made available. Wellington Fundamentals remain sound in the occupier market, although a more cautious attitude appears to be developing in relation to making commitments to expansions and new premises. At the end of 27 vacancy rates dropped to their lowest level in the last five years at 1.4% and have remained tight in the first half of 28. One new prime building was completed in the first half of the year and this is fully let. Prime office net rents appreciated by 17% since mid-27 for the indicative average net rent to reach NZ$345 psm per annum. Prime grade office buildings are likely to flourish over the next year. Pre-commitment to new stock being completed over this period is high and the current tightness of the occupier market is unlikely to change materially. 4 CBRE RESEARCH

5 MARKET SUMMARY ASIA PACIFIC TOTAL OCCUPANCY COST (Q2 28) * Mumbai - Nariman Point Mumbai - BKC Tokyo Singapore New Delhi - CBD Hong Kong Ho Chi Minh City Sydney Shanghai - Pudong Perth Seoul - Gangnam Seoul - CBD Brisbane Shanghai - Puxi Hanoi Beijing - CBD Seoul - Yeouido Beijing - Finance Street Melbourne Taipei Bangalore Beijing - Zhongguancun New Delhi - Gurgaon Manila Auckland Wellington Guangzhou Bangkok Kuala Lumpur Jakarta US$ psf per month * On net floor basis, including all occupation expenses VACANCY RATE (Q2 28) Beijing Guangzhou Jakarta Bangkok Kuala Lumpur Taipei Shanghai Auckland Melbourne Manila Mumbai Sydney New Delhi Hong Kong Bangalore Tokyo Perth Hanoi Wellington Singapore Brisbane Seoul Ho Chi Minh City % Asia Pacific Office Market Review Q2 28 5

6 MARKET SUMMARY ASIA PACIFIC GRADE A/PRIME OFFICE RENTS AND OCCUPANCY COSTS (Q2 28) City Market Rent Total Occupancy Cost* local currency/measure US$ psf/month q-o-q change y-o-y change US$ psf/month GREATER CHINA Beijing Jianguomen RMB 23.6 psm (1) % 1.7% 4.87 Zhongguancun % 6.6% 3.62 Finance Street % 8.5% 4.59 Shanghai Pudong RMB psm (1) % 16.8% 5.97 Puxi % 17.7% 5.42 Guangzhou RMB 19.5 psm (1) % 12.2% 2.59 Hong Kong HK$75.8 psf (3) % 35.4% 11.9 Taipei NT$2,493 pping (2) % 6.5% 3.92 NORTH ASIA Tokyo JPY 56, ptsubo (3) % 8.7% Seoul CBD KRW 26,512 psm (1) % 5.7% 5.75 Gangnam 23, % 9.2% 5.76 Yeouido 17, % 7.2% 4.86 SOUTH ASIA New Delhi Connaught Place INR 32 psf (1) 7.44.% 16.4% Gurgaon % -5.6% 3.23 Mumbai Nariman Point INR 475 psf (1) % 31.9% Bandra Kurla Complex % 3.8% Bangalore INR 95 psf (1) 2.21.% 5.6% 3.76 SOUTHEAST ASIA Jakarta IDR 79,6 psm (6).8 1.% 3.4% 1.35 Kuala Lumpur RM 6.15 psf (4) % 16.% 1.88 Manila PHP 1,248 psm (3) % 24.8% 2.98 Singapore S$16.1 psf (4) % 49.1% Bangkok THB 742 psm (4) %.4% 2.6 Ho Chi Minh City US$7. psm (5) 6.5.% 55.6% 7.15 Hanoi US$ 51.7 psm (5) % 45.2% 5.28 PACIFIC Sydney A$755 psm/annum (3) % 17.9% 6.75 Melbourne % 7.9% 4.8 Brisbane % 12.9% 5.64 Perth % 33.4% 5.88 Auckland NZ$342 psm/annum (3) % 7.8% 2.68 Wellington % 17.% 2.67 (1) Gross rent excluding service charges / management fees (2) Gross rent including property taxes but excluding service charges / management fees (3) Net rent excluding service charges / management fees and property taxes (4) Net rent including service charges / management fees and property taxes (5) Net rent including service charges / management fees but excluding VAT (6) Semi-gross rent excluding service charges / management fees and property taxes * On net floor basis, including all occupation expenses. 6 CBRE RESEARCH

7 MARKET SUMMARY ASIA PACIFIC GRADE A/PRIME OFFICE NEW SUPPLY, NET ABSORPTION AND VACANCY (1H 28) New Supply (, sf) Net Absorption (, sf) Vacancy Rate (as of Jun 8) Change in Vacancy (6-month) GREATER CHINA* Beijing 6,378 3,81 18.% 2.% pts Shanghai 5,966 3,64 6.3% 3.% pts Guangzhou 4,22 5, % -3.4% pts Hong Kong % -.6% pts Taipei % -3.% pts NORTH ASIA Tokyo 1, %.8% pts Seoul (1) 4,34 4,552.2% -.7% pts SOUTH ASIA New Delhi (2) %.8% pts Mumbai (3) % 2.7% pts Bangalore % -.1% pts SOUTHEAST ASIA Jakarta % -1.3% pts Kuala Lumpur % -.4% pts Manila % 2.2% pts Singapore %.4% pts Bangkok % -1.% pts Ho Chi Minh City.%.% pts Hanoi % 1.1% pts PACIFIC (4) Sydney %.3% pts Melbourne % -.1% pts Brisbane %.1% pts Perth % -.2% pts Auckland %.7% pts Wellington % -.1% pts (1) The figures refer to the three major office districts in Seoul, including CBD in Chung Gu, Gangnam and Yeouido. (2) The figures refer to the Connaught Place CBD area only. (3) The figures refer to the Nariman Point CBD area only. (4) Data for Australia and New Zealand may be revised historically from time to time. This is because the timing for submission of data to this publication is typically before the release or compilation of official data. Early estimates published may be replaced with official actuals in a later edition. * Mainland China figures refer to prime office EXCHANGE RATE TO US$ (AS OF JUNE 28) PRC Taiwan Japan 16.5 Hong Kong Malaysia South Korea Singapore Thailand Indonesia 9,22 Australia 1.42 Philippines Vietnam 16,842 New Zealand India Asia Pacific Office Market Review Q2 28 7

8 PEOPLE S REPUBLIC OF CHINA BEIJING With greater supply from new projects, vacancies have risen to 18%, up.1 percentage point q-o-q. Vacancy rates in the CBD and East Second Ring Road areas (where the largest concentration of new office supply is located) reached 28% and 35%, respectively. Average rents for newly launched, high-quality office buildings in prime locations remained stable as landlords are reluctant to lower rents further. On the other hand, because of limited new supply and the anticipated halting of construction projects during the Olympic Games, the Finance Street and Zhongguancun areas have reported modest vacancy rates as low as 7.5% and 3.4%, respectively. Last quarter, net take-up in the office market was 2.33 million sf, up 59% q-o-q, continuing the trend of high demand for prime office space that began in early-27. Demand last quarter was mainly driven by large MNCs in the manufacturing, finance and pharmaceutical sectors in traditional catchments such as the CBD, Finance Street and Lufthansa areas. Automobile companies Volvo and Volkswagen leased 53,82 sf and 26,91 sf, respectively, at the newly opened Nexus Centre. CICC leased 59,2 sf at Fortune Resource International Centre and DBS leased 37,67 sf at Winland International Finance Centre. In terms of regional distribution, improved overall planning in the Finance Street area, better utilisation of hotel and retail service facilities, and beneficial policies from local authorities have all contributed to making the area more attractive to finance and insurance companies. Accordingly, en bloc transactions along Finance Street have resulted in quick market take-up and tightened availability in some buildings in the precinct. Some large high-tech MNCs in manufacturing and logistics have moved their head offices from the CBD to science and technology parks on the outskirts of Beijing owing to high rents. Nokia China moved its head office from Tower B in Pacific Century Centre to the Yizhuang area in south Beijing; DHL also moved to Yizhuang, from the Lufthansa area. Motorola moved from the core CBD to its new building in the Wangjing High-tech Zone. Supply, Take-up and Vacancy of Prime Office sf Q2 28 q-o-q chg. y-o-y chg. New Supply ( sf) 2, % -18.7% Take-up ( sf) 2, % 13.3% Vacancy 18.%.1% pts 1.8% pts Index (Q = 1) 6, 5, 4, 3, 2, 1, Q2 1 Q4 1 Q2 2 Q4 2 Q2 3 Q4 3 Q2 4 Q4 4 Q2 5 Q4 5 Q2 6 Q4 6 Q2 7 Q4 7 Q2 8 Q2 97 Q4 97 Q2 98 Q4 98 Q2 99 Q4 99 Q2 Q4 Q2 1 Q4 1 Q2 2 Q4 2 Q2 3 Q4 3 Q2 4 Q4 4 Q2 5 Q4 5 Q2 6 Q4 6 Q2 7 Q4 7 Q2 8 Zhongguancun Jianguomen (CBD) Finance Street Rent (RMB psm/month) Q2 28 q-o-q chg. y-o-y chg. Jianguomen % 1.7% Zhongguancun % 6.6% Finance Street % 8.5% The supply of prime office space in Beijing is forecast to reach 1.66 million sf in the second half of 28, including prime office projects already anticipated by the market. Large, high-quality projects such as the third phase of China World Trade Centre, the World Financial Centre and the PICC Building, will all be completed by the end of the year. According to available pre-leasing data, these buildings are asking for higher rentals than current rates in view of their better design and quality. Many projects have postponed their completion date to the fourth quarter of 28 or even to 29, due to the anticipated impact of the Beijing Olympic Games on local business. The general market trend in the second half of 28 will witness an increase in both supply and demand, especially by large MNCs engaged in manufacturing, consultancy and high-tech businesses. However, due to huge quantum of supply slated for completion, overall vacancies are predicted to increase further. MAJOR LEASING TRANSACTIONS Q2 28 Nexus Centre Chaoyang 53,82 Volvo Fortune Resource International Centre Xicheng 59,2 CICC Winland International Finance Centre Xicheng 37,67 DBS 8 CBRE RESEARCH

9 PEOPLE S REPUBLIC OF CHINA SHANGHAI Supply, Take-up and Vacancy of Prime Office sf 3,5 3, 2,5 2, 1,5 1, 5 Q2 1 Q4 1 Q2 2 Q4 2 Q2 3 Q4 3 Q2 4 Q4 4 Q2 5 Q4 5 Q2 6 Q4 6 Q2 7 Q4 7 Q2 8 Q2 28 q-o-q chg. y-o-y chg. New Supply ( sf) 2, % 1,322.2% Take-up ( sf) % -9.5% Vacancy 6.3% 2.% pts 1.9% pts Shanghai office rents continued to grow significantly in the second quarter, with average rents in Puxi and Pudong rising q-o-q by 4.% and 2.7%, respectively. Grade A office rentals rose by 3.7% q-o-q, outpacing Grade B rental growth of 2.1%. Four new buildings were launched last quarter: One Lujiazui, Zhongrong Jasper Tower and China Fortune Tower in Pudong, and Sunyoung Centre in Puxi; amounting to about 2.5 million sf of new office space, bringing total supply in the past six months to 6 million sf. New supplies have lifted overall market vacancy by two percentage points during the quarter, with vacancy rising sharply by 6.5 percentage points in Pudong where about 58% of the newly launched space in the first half of 28 is located. However, pre-commitment activities have remained buoyant, especially within prime office locations such as the Lujiazui CBD. The two newly launched office buildings in Lujiazui, One Lujiazui and Zhongrong Jasper Tower, achieved an average pre-commitment rate of around 42%. Index (Q = 1) Q2 97 Q4 97 Q2 98 Q4 98 Q2 99 Q4 99 Q2 Q4 Q2 1 Q4 1 Q2 2 Pudong Q4 2 Q2 3 Q4 3 Q2 4 Q4 4 Puxi Q2 5 Q4 5 Q2 6 Q4 6 Q2 7 Q4 7 Q2 8 In traditional prime office locations, especially the Lujiazui CBD, major demand came from financial institutions and other professional services companies. Last quarter, China Pacific Insurance leased 43,2 sf in the newly completed One Lujiazui, while McDermott Will & Emery, an international law firm, took up 21,5 sf in Jin Mao Tower. In addition, Bank of Communications Schroder Fund Management Co Ltd leased 31,2 sf at the Standard Chartered Tower. However, in Puxi, deals were concluded by tenants from a wider range of businesses. Transnational law firm Clifford Chance and mining conglomerate CVRD both leased large spaces in the Bund Centre in Huangpu District. Danone leased approximately 43,1 sf in A Mansion in Xuhui District. Rent (RMB psm/month) Q2 28 q-o-q chg. y-o-y chg. Pudong % 16.8% Puxi % 17.7% A number of corporates in the manufacturing and technology sectors have chosen to take premises in decentralised locations, seeking lower rents. Agilent Technologies leased 53,8 sf in Zhangjiang Micro-electronics Port, while Unisiti and Sonic Solution leased 14, sf and 32,8 sf, respectively, at China Fortune Tower in Pudong. With 11 buildings adding approximately six million sf of new office space to the market in the first half of 28, increased activity is anticipated for the second half. An estimated 1 additional buildings are going to come online during the rest of the year, adding 7.5 million sf of more office space: Shanghai World Financial Centre, Mirae Asset Tower, Golden Landmark and Global Finance Tower in Lujiazui, and The Exchange along Nanjing West Road, just to name a few. Lujiazui. Despite current demand for office space, much demand has not yet been fulfilled by existing availability, with relocation decisions being deferred in anticipation of more choices coming on stream. Some Puxi tenants are reluctant to relocate to Pudong, which is sometimes perceived to be less accessible and as having less desirable amenities. It is also projected that in the next six months, rental growth in Pudong will slow and growth in Puxi will outperform. Nearly 6% of new supply is in Pudong and is concentrated in MAJOR LEASING TRANSACTIONS Q2 28 One Lujiazui Pudong 43,2 China Pacific Insurance China Fortune Tower Pudong 32,8 Sonic Solution A Mansion Xuhui 43,1 Danone Asia Pacific Office Market Review Q2 28 9

10 PEOPLE S REPUBLIC OF CHINA GUANGZHOU Rentals for prime offices in Guangzhou continued to climb upward during the second quarter of 28. Average rents rose by.5% q-o-q, growing more slowly than the 2.3% growth achieved in the first quarter, and stood at RMB 19.5 psm (US$1.48 psf) monthly. Prime premises in the Tianhe Sports Centre area reported steeper increases than the overall market being underpinned by strong demand from location-conscious MNCs. The Pearl River New City (PRNC) remained the most expensive micro-market in the city, quoting RMB psm (US$1.71 psf) for prime space. Supply, Take-up and Vacancy of Prime Office sf 6, 5, 4, 3, 2, 1, On the back of robust demand from both MNCs and financial institutions, net take-up totalled 3.14 million sf last quarter, up 67.5% from the first quarter. This has led to a 3.9 percentage point q-o-q drop in overall vacancies to 15.5%, despite the 1.61 million sf of new supply which come on stream. Over 8% of transacted space involved office buildings located in the Tianhe Sports Centre and PRNC areas. Benefitting from local government cash incentives and subsidies, the PRNC zone looks increasingly attractive to financial sector tenants. Four international and domestic financial institutions leased office space in the PRNC area during the past quarter. Mizuho Corporation and JPMorgan took 21,53 sf and 1,76 sf, respectively, at International Finance Place, while China Merchants Bank and Sun Life Everbright Life Insurance leased 34,98 sf and 6,46 sf, respectively, at the R&F Centre. The Tianhe Sports Centre area was a leasing hotspot last quarter with sizable undertakings by MNCs and large local companies. Notable transactions included the Samsung lease of 48,44 sf in Teem Tower and the Toyota lease of 21,53 sf on the China Shine Plaza. Honda, China Merchants Securities and China Life Insurance settled in Poly Fengxing Plaza, occupying 32,29 sf, 21,53 sf and 21,53 sf, respectively. Only one office building, SINOPEC Plaza, was completed during the second quarter. It is located in the Tianhe Sports Centre area and adds 1.61 million sf of space to the total amount of Grade A office stock. Domestic petroleum provider and building owner SINOPEC will occupy one of its two towers upon completion. Q2 28 q-o-q chg. y-o-y chg. New Supply ( sf) 1, % n.a. Take-up ( sf) 3, % 336.4% Vacancy 15.5% -3.9% pts -.4% pts Index (Q1 2 = 1) Q2 1 Q4 1 Q2 2 Q4 2 Q2 3 Q4 3 Q2 4 Q4 4 Q2 5 Q4 5 Q2 6 Q4 6 Q2 7 Q4 7 Q2 8 Q2 Q4 Q2 1 Q4 1 Q2 2 Q4 2 Q2 3 Q4 3 Q2 4 Q4 4 Q2 5 Q4 5 Q2 6 Q4 6 Q2 7 Q4 7 Q2 8 Rent (RMB psm/month) Q2 28 q-o-q chg. y-o-y chg. Guangzhou % 12.2% Average rents are expected to soften in the second half of 28, given upcoming stocks of some Grade B office properties with lower quoted rates. Approximately 3.4 million sf of prime office space is slated to come on stream in the second half of 28, consisting of one Grade A building (the office tower of the R&F Grand Hyatt) and four Grade B properties; three of those buildings are located in the Yuexiu district, a commercial area with relatively low office rents. Pressure on rental and vacancy levels is expected to mount in non-prime sub-markets as a result of increasing supply. In contrast to the situation in the Yuexiu district, no supply is scheduled to enter the Tianhe Sports Centre sub-market before the second quarter of 29. Since Tianhe is one of the most desirable locations for larger corporations in Guangzhou, prime office properties in this area can expect to continue commanding higher rents and register lower vacancies. At PRNC, the office towers of the R&F Grand Hyatt and Nanya Zhonghe Plaza will be ready for occupation in the second half of 28 and will offer 1.16 million sf of new office space. MAJOR LEASING TRANSACTIONS Q2 28 Teem Tower Tianhe 48,44 Samsung R&F Centre Tianhe 34,98 China Merchants Securities Poly Fengxing Plaza Tianhe 32,29 Honda 1 CBRE RESEARCH

11 PEOPLE S REPUBLIC OF CHINA HONG KONG Supply, Take-up and Vacancy of Grade A Office in Prime Areas sf 2, 1,5 1, Grade A office demand remained resilient throughout the first half of 28 owing to expansion of existing businesses and new demand from the financial and legal sectors. No new supply of Grade A office premises was available last quarter in more prominent commercial districts. Scarce supply in such locations stemmed from the encouraging take-up of some 936,9 sf of Grade A space from January through June, which kept overall vacancies relatively stable at 2.26% as of mid-28. Q2 28 q-o-q chg. y-o-y chg. New Supply n.a. n.a. Take-up % 66.% Vacancy 2.3%.1% pts -1.6% pts Index (Q = 1) Q2 1 Q4 1 Q2 2 Q4 2 Q2 3 Q4 3 Q2 4 Q4 4 Q2 5 Q4 5 Q2 6 Q4 6 Q2 7 Q4 7 Q2 8 Q2 97 Q4 97 Q2 98 Q4 98 Q2 99 Q4 99 Q2 Q4 Q2 1 Q4 1 Q2 2 Q4 2 Q2 3 Q4 3 Q2 4 Q4 4 Q2 5 Q4 5 Q2 6 Q4 6 Q2 7 Q4 7 Q2 8 Rent (HK$ psf/month) Q2 28 q-o-q chg. y-o-y chg. Prime areas % 35.4% With limited space and rock-bottom vacancy rates (.97% as of mid-28) in Central, rentals in this precinct are expected to grow firmly for the remainder of 28, albeit at a slower pace than during the first half. Average Central Grade A office rents increased by 6.5% q-o-q to HK$ psf (net effective rent) in June and record rents continued to be achieved across the district. Potential voids created by Morgan Stanley, Credit Suisse and Deutsche Bank, the three major financial institutions that have committed to relocate to the International Commerce Centre (ICC) in West Kowloon, are unlikely to undermine Central rents as they are giving up part of their leased spaces in Central in phases over the next three years. Nevertheless, the market continued to see take-up by small occupiers seeking spaces of between 1,5 sf and 6, sf in Grade A1 and A2 buildings. As such, many Grade A1 buildings in Central remained virtually full, while there were only pockets of vacancies at most office buildings in the district during the second quarter. The supply-demand imbalance in Central continues to benefit other office districts on Hong Kong Island. Rents increased between 2.4% and 12.4% q-o-q in other major office districts, with vacancy at or below 3.5% in such districts and under 1% in Admiralty. ICC has succeeded in changing perceptions of Kowloon among many Hong Kong Island-based tenants. Given the premium quality and competitive rents of the upcoming supply of 2.4 million sf (net) across decentralised Kowloon, this is expected to exert pressure on older buildings in more established office districts. Hence, a steady flow of less location conscious and/or more price sensitive occupiers are forecast to enter Kowloon, especially Kowloon East. A less favourable global economic environment and unsettled international capital markets in the first six months of 28 may impair market confidence. Grade A office rents in Hong Kong are forecast to peak as the slowdown in rental growth, which first manifested itself in the first quarter of 28, becomes even more entrenched. Also, as many larger tenants have already executed expansion plans over the past year, the market is likely to witness a drop in major transactions in the second half as office leasing activity is expected to become dominated by relatively smaller transactions. Such mixed market performance could lead to tenants being more cautious about committing to premium office spaces. Slowing MNC expansion could be a key contributor to decelerating rental growth in the latter half of 28. Nevertheless, strong mainland Chinese demand for professional services, low vacancy rates and tight supply in Central could prevent serious slippage. MAJOR LEASING TRANSACTIONS Q2 28 One IFC Central 7,5 Mount Kellett Capital Mgmt Lippo Centre Tower II Admiralty 9,455 Foster + Partners Times Square Tower 1 (RBS Tower) Causeway Bay 9,215 Google (Hong Kong) Ltd Asia Pacific Office Market Review Q

12 TAIWAN TAIPEI The Grade A office market in Taipei was strong last quarter, with rentals continuing to rise and vacancies dropping to a record low. The continued shortage of space in prime locations has favoured property owners; creating an upward pressure on rents. The Grade A office inventory remained unchanged for the eleventh consecutive quarter, reinforcing landlord-friendly market conditions. The probable launch of the next prime development in the first quarter of 29 also underpinned the ongoing uptrend for the Grade A office market over next six months. Supply, Take-up and Vacancy of Grade A Office sf 3, 2,5 2, 1,5 1, Average achievable rents for Grade A space climbed by nearly 4% q-o-q to NT$2,493 per ping (US$2.31 psf), posting the largest quarterly increase over the past several years. The Xinyi-Jilong Area (XJA) continued to dominate the Taipei office market, with rents surging 7.1% q-o-q to a historic high of NT$2,773 per ping (US$2.57 psf). However, rentals in the Nanjing-Songjiang Area and the Dunhua-Renai Area grew slowly in recent quarters, as vacancy rates for both areas have been sustained at low levels of naught and 1.4%, respectively; such levels are conducive to limited new leasing activity and constrained rental growth across the market. The Taipei office space leasing market was active last quarter, with net take-up of Grade A buildings reaching 6,112 ping (217, sf), prime office vacancy sunk by 1.4 percentage points q-o-q to 6.6%. Three notable tenant movements were Hewlett Packard occupying 55,7 sf in Shin Kong Minsheng Building, AEGON subleasing 43,55 sf at the AEGON Life Insurance Headquarters to its affiliates, and ABN AMRO Bank taking 22,45 sf of space in the Fubon Zhongshan Building (vacated by AEGON earlier). XJA s prime office vacancy slipped 1.5% q-o-q to 11.9%, as reflected in the decision of two landlords at the President International Building to reserve a total GFA of 118,3 sf for their own use, and the signing of leases by three prominent organisations for top-grade space in Taipei 11. Vacancy in XJA would likely drop even further to the single-digits in the short-term as such occupiers move into the premises. Overall vacancies are expected to fall to 5% or lower later this year. Q2 28 q-o-q chg. y-o-y chg. New Supply ( sf) n.a. n.a. Take-up ( sf) % 214.1% Vacancy 6.6% -1.4% pts -4.6% pts Index (Q = 1) Q2 1 Q4 1 Q2 2 Q4 2 Q2 3 Q4 3 Q2 4 Q4 4 Q2 5 Q4 5 Q2 6 Q4 6 Q2 7 Q4 7 Q2 8 Q2 98 Q4 98 Q2 99 Q4 99 Q2 Q4 Q2 1 Q4 1 Q2 2 Q4 2 Q2 3 Q4 3 Q2 4 Q4 4 Q2 5 Q4 5 Q2 6 Q4 6 Q2 7 Q4 7 Q2 8 Rent (NT$ pping/month) Q2 28 q-o-q chg. y-o-y chg. Taipei 2,493 4.% 6.5% The Grade A market saw 6% rental growth in the first half of 28, with asking rents jumping by 1% since the presidential election in March. Rental escalation is expected to continue, thanks to expansion by banks, financial institutions and professional services firms. With Taiwan now opening direct flights to the PRC, it is largely expected that more firms will consider Taipei as an office destination or expand their operations here. The Mainland s higher corporate tax and increased labour costs have also spurred Taiwanese corporations to move back to Taiwan. Furthermore, companies in the high technology sector are moving to expand their R&D operations on back of a large pool of highly educated manpower. Supply shortages at prime locations have lifted rents and reduced vacancies. Emerging supply in early-29 will likely have mild impact on Grade A space absorption as one half of Grade A buildings slated for first-quarter release have already been precommitted or reserved for self-use. MAJOR LEASING TRANSACTIONS Q2 28 Shin Kong Minsheng Building MDA 55,7 Hewlett Packard Fubon Zhongshan Building ZNR 22,45 ABN AMRO Bank CEC Dunnan Building DRA 14,23 BlackRock 12 CBRE RESEARCH

13 JAPAN TOKYO Supply, Take-up and Vacancy of Grade A Office Properties in Central Five Wards sf 5,5 4,5 3,5 2,5 1,5 5-5 Q2 1 Q4 1 Q2 2 Q4 2 Q2 3 New Supply Q4 3 Q2 4 Q4 4 Take-up Q2 5 Q4 5 Q2 6 Q4 6 Vacancy Rate Q2 7 Q4 7 Q In contrast to the past few quarters, when multiple Grade A buildings were released on to the market, the second quarter of 28 saw no new Grade A buildings come on stream. Last quarter was the first in the past three years no new completion of Grade A office buildings was recorded. Due to a lack of quality supply, the prime office leasing market remained tight during the second quarter. However, some Grade A buildings experienced difficulty in filling vacancies as occupiers have become increasingly reluctant to absorb high rents. As a result, Grade A vacancies increased for the third consecutive quarter, edging up 5 basis points to reach 2.%. The average vacancy rate for office buildings of all grades in Tokyo s 23 Wards also increased by 4 basis points to reach 2.4%. Q2 28 q-o-q chg. y-o-y chg. New Supply ( sf) n.a. n.a. Take-up ( sf) % -14.3% Vacancy 2.%.5% pts 1.1% pts Grade A Office Rental Index Nevertheless, overall demand for office space remained strong and the vacancy rate for office buildings of all grades in the sub-markets of Marunouchi/Otemachi/Yuracho, Uchisaiwaicho/Kasumigaseki/ Nagatacho and Shinagawa Station East Exit maintained a sub- 1% level, with the second quarter registering a negligible.4% vacancy rate in the Marunouchi/Otemachi/Yurakucho sub-market. The peripheral areas such as the Tsukishima/Kachidoki/Harumi sub-market continued to absorb the expansionary demand of cost-conscious occupiers, including OpensourceCRM Inc which relocated to Harumi Island Triton Square and Kyodo Paper Holdings which relocated to the KDX Harumi Building. Index (Q = 1) Q2 98 Q4 98 Q2 99 Q4 99 Q2 Q4 Q2 1 Q4 1 Q2 2 Q4 2 Q2 3 Q4 3 Q2 4 Q4 4 Q2 5 Q4 5 Q2 6 Q4 6 Q2 7 Q4 7 Q2 8 Rent (JPY ptsubo/month) Q2 28 q-o-q chg. y-o-y chg. Tokyo 56, -5.1% 8.7% The average prime rent decreased during the second quarter of 28 by 5.1% q-o-q to reach JPY 56, per tsubo (US$14.85 psf) per month exclusive of common area management fees (CAM). Average Grade A rents in the Roppongi/Akasaka and Shiodome sub-markets dropped 3.8% q-o-q to JPY 44, per tsubo (US$11.67 psf) per month (exclusive of CAM) and 1.1% q-o-q to JPY 44, per tsubo (US$11.67 psf) per month (exclusive of CAM), respectively. Two additional Grade A buildings with total net leasable area (NLA) of 68, sf are scheduled for completion this year. Slated for completion in April 29, Marunouchi Park Building will add about 1 million sf NLA to the market and is expected to be fully leased at opening. In 29 and 21 combined, 5.3 million sf NLA are expected to come on stream. By 211, new Grade A supply is expected to reach 6.5 million sf NLA and at least four functional prime sites are expected in Chiyoda-ku, including the 38-storey JP Tower which will provide over 1.5 million sf NLA. Grade A rents are expected to fall 7.% to 8.% by late-28. Employment remained stagnant during the first half of 28 but no major layoffs have been reported. In June, the unemployment rate increased to 4.1% (up.1% and.3% from May and March, respectively) and the average ratio of job offers to job seekers dropped to.91:1 (marking 13 consecutive months of decline). MAJOR LEASING TRANSACTIONS Q2 28 Atago Green Hills Minato-ku 124,53 Mitsui Knowledge Industry Nihombashi Front Chuo-ku 53,8 Tokai Tokyo Securities Co., Ltd. Granpark Tower Minato-ku 42,7 Itochu Enex Co., Ltd. Asia Pacific Office Market Review Q

14 SOUTH KOREA SEOUL Overall Grade A rents in the major office sub-markets continued to edge upward in the second quarter with average rents rising 1.1% q-o-q to KRW 22,386 psm (US$1.99 psf). While CBD and GBD rents increased by merely.8% and.3%, respectively, average YBD (the top financial district) rents reached KRW 17,43 psm (US$1.55 psf), posting the highest q-o-q growth of 2.5% among the three major districts amidst conditions of close to full occupancy and tight supply. Meanwhile, prominent leasing transactions remained relatively few in YBD due to a lack of available office space. Supply, Take-up and Vacancy of Prime Office Properties sf 3,5 6 3, 5 2,5 4 2, 3 1,5 2 1, 1 5 GBD continued to witness high levels of leasing activity during the quarter, as two new Grade A office properties and one Grade B property came online, with an additional 2.8 million sf of prime space. Samsung Electronics and its affiliates continued their relocation into the Seocho Samsung Town following the recent completion of Seocho Project C. The new headquarters building of NCSoft marked another addition to the supply line-up, providing a total GFA of 332,4 sf in GBD. Since all three projects were entirely reserved for self-use, they had minimal impact on vacancy, which dropped.8 of a percentage point q-o-q despite the latest build-up in office supply. Along with the recent spate of headquarter relocations, growing insurance company demand for office space helped boost leasing activity in the GBD, leading to a high absorption of Grade B space by insurers given stiff competition for limited Grade A space. For example, Samsung Life Insurance and Kyobo Life Insurance have, respectively, filled 3,7 sf and 15,35 sf of Grade B office space in Pacific Tower, a space formerly occupied by NCSoft and its affiliates. Given the limited leasing options for large premium space in major districts, New York Life Insurance has signed a pre-lease contract for six floors totalling 44,117 sf of space in the Urban Hybrid Building, new Grade B property expected to come online in the third quarter. Index (1993 = 1) Q Q4 2 Q2 2 Q2 3 Q4 2 CBD Q4 3 New Supply Q2 3 Q2 4 Q4 3 Q4 4 Q2 4 Q2 5 Take-up Q4 4 Gangnam Q4 5 Q2 5 Q2 6 Q4 5 Q4 6 Q2 6 Q2 7 Vacancy Rate Q2 28 q-o-q chg. y-o-y chg. New Supply ( sf) 2, % 69.9% Take-up ( sf) 3,59 15.% 46.8% Vacancy.2% -.3% pts -.9% pts Q4 6 Yeouido Rent (KRW psm/month) Q2 28 q-o-q chg. y-o-y chg. CBD 26,512.8% 5.7% Gangnam (GBD) 23,216.3% 9.2% Yeouido (YBD) 17,43 2.5% 7.2% Q2 7 Q4 7 Q4 7 Q2 8 Q2 8 Even though the recent lower than expected pace of job creation could lessen demand for Grade A office space, tight market conditions are unlikely to be reversed or resolved in the short-term due to a continued lack of space which is forecast to persist until 21. Low vacancy and buoyant rents are therefore likely to persist in the major office sub-markets of Seoul for at least the next 12 months. remains robust on the back of continued growth in the financial sector. It is noteworthy that eight institutions, including IBK, SC First Bank and LIG Insurance, have recently gained preliminary approval to offer full-scale brokerage services following the enactment of the Capital Market Consolidation Act. The strong demand for office space, underpinned by new brokerage houses, has put upward pressure on rents in the YBD area. Demand for Grade A office space, especially in the YBD precinct, MAJOR LEASING TRANSACTIONS Q2 28 Gangnam Finance Center GBD 16,4 Kumho Life Insurance Pacific Tower GBD 3,7 Samsung Life Insurance Prudential Tower GBD 27,87 POSCO E&C 14 CBRE RESEARCH

15 INDIA NEW DELHI Supply, Take-up and Vacancy of Prime Office in the CBD sf The second quarter was marked by the absence of any large transactions taking place either in the CBD or in the secondary market of New Delhi. Average rentals in the CBD remained firm at INR 32 psf per month, while a marginal decline was witnessed in rents at Nehru Place, a secondary business district in the Indian capital. Current rental rates in the secondary market average INR 18 psf per month. Q2 28 q-o-q chg. y-o-y chg. New Supply ( sf) n.a. n.a. Take-up ( sf) -24 n.a. -14.% Vacancy (%) 2.8%.8% pts -.2% pts Index (Q1 2 = 1) Q2 1 Q4 1 Q2 2 Q4 2 Q2 3 Q4 3 Q2 4 Q4 4 Q2 5 Q4 5 Q2 6 Q4 6 Q2 7 Q4 7 Q2 8 Q2 Q4 Q2 1 Q4 1 Q2 2 Q4 2 Q2 3 Q4 3 Q2 4 Q4 4 Q2 5 Q4 5 Q2 6 Q4 6 Q2 7 Q4 7 Q2 8 5 Increased supply and softening demand have led to a 5%-8% correction for office and IT rentals in the suburb of Gurgaon during the second quarter. Rentals in the micro-market ranged between INR 8-INR 85 psf per month and vacancies increased three percentage points from the previous quarter, standing at 6% by the end of the quarter. However, key factors such as proximity to National Highway 8, accessibility to Indira Gandhi International Airport and increased future connectivity due to the proposed Delhi Metro Route have rendered MG Road, Golf Course Road and DLF Cyber City the preferred locations for office leasing. Notwithstanding newly constructed properties and additional office space availability, rents are expected to remain stable in the current quarter. The peripheral market of Noida continues to be a viable option for cost conscious IT/IT enabled service (ITeS) companies due to the increased availability of office space at competitive prices and the proximity of such markets to East and South Delhi. In recent quarters, the micro-market has witnessed strong tenant demand and increased leasing activity. Such market trends are also evident from the March auction by the Noida authority of a commercial plot measuring 95 acres for a record price of INR 5.6 billion to BPTP Limited. Connaught Place (CBD) Gurgaon Rent (INR psf/month) Q2 28 q-o-q chg. y-o-y chg. Connaught Place 32.% 16.4% Gurgaon % -5.6% The National Capital Region (NCR; including Delhi, Gurgaon and Noida) is expected to witness flattening trend in rentals over the short- to medium-term. However, some micro-markets with forthcoming supply will likely experience a marginal value correction in the next six months. There will be significant additional supply in Gurgaon (1 million sf) and Noida (2 million sf). In South Delhi, Jasola will continue to witness a steady stream of new completions, last tranche of which will come on stream by early-29. In preparation for hasting the Commonwealth Games in 21, rigorous efforts have been made to improve infrastructure all across the NCR. Eastwards, the expressway between Noida and Greater Noida will remain an active hub as a number of Special Economic Zone developments are coming up alongside it. In order to accommodate the longer term demand flowing from more offices, several hotel and serviced apartment projects are already planned for Gurgaon. MAJOR LEASING TRANSACTIONS Q2 28 Unitech Marriot Towers Gurgaon 14, HSBC DLF Building 1 Gurgaon 13, Reliance Communication Unitech Infospace NOIDA 25, MetLife Insurance Asia Pacific Office Market Review Q

16 INDIA MUMBAI In the second quarter, the CBD of Nariman Point experienced heightened demand and a lack of fresh supply. Some available secondary supply (on account of lease expiration and tenants shifting to alternative locations) has resulted in vacancy rates in this micro-market inching towards 3%. Average rental values registered an increase and are currently recorded INR 475 psf per month for Grade-A office space. Currently, the extended business district (EBD) comprising Lower Parel and Worli offers limited ready space options. However, things will change dramatically in the third quarter of 28 when One Indiabulls Centre (with a GFA 1.4 million sf) in Lower Parel will be ready for occupation. The strong demand for space in this micromarket is reflected by the fact that almost two-thirds of the Indiabulls project has already been pre-committed. The Bandra Kurla Complex (BKC) remains the preferred location for banking and financial institutions. With the completion of projects like Maker Maxity and Platina, this micro-market currently has about one million sf of space available for lease comprising projects in BKC and a few other nearby projects. The preference of locating in the BKC over the CBD and the EBD areas is reflected in the changes observed in demand, supply and commercial values for the micromarket over time. Having gone through a period of relatively slow absorption in 27 when there was substantial extra stock on the market and a deferral of leasing decisions by tenants concerned about the global economic outlook, the vacancy rate at BKC has decreased by 1.6 percentage points to 25.9% this past quarter, with average rentals remaining constant at INR 425 psf monthly. Supply, Take-up and Vacancy of Prime Office in the CBD sf Q2 28 q-o-q chg. y-o-y chg. New Supply ( sf) n.a. n.a. Take-up ( sf) % % Vacancy (%) 2.9%.6% pts 2.2% pts Index (Q1 2 = 1) Q2 1 Q4 1 Q2 2 Q4 2 Q2 3 Q4 3 Q2 4 Q4 4 Q2 5 Q4 5 Q2 6 Q4 6 Q2 7 Q4 7 Q Supply constraints in the Western Suburbs have resulted in office leasing activity shifting to the Central Suburbs, Thane and Navi Mumbai. Over the last few years, these locations have emerged as key spots for IT and back-office operations, and are favoured by cost-conscious corporations unwilling to pay for high rentals such as those charged in the CBD, EBD and BKC areas. Q2 Q4 Q2 1 Q4 1 Q2 2 Q4 2 Q2 3 Q4 3 Q2 4 Q4 4 Q2 5 Q4 5 Q2 6 Q4 6 Q2 7 Q4 7 Q2 8 Nariman Point (CBD) Bandra Kurla Complex Rent (INR psf/month) Q2 28 q-o-q chg. y-o-y chg. Nariman Point % 31.9% Bandra Kurla Complex 425.% 3.8% With over one million sf of corporate office supply currently available and another nine million sf of ordinary office space expected to come online in the next two quarters, rental values are likely to remain stagnant. Added to this are the approximately three million sf of new office space targetted at IT and ITeS being developed in Special Economic Zones, expected to be delivered in the next two to three quarters, mainly in the Eastern Suburbs extending up to Thane and Navi Mumbai. This quantum of supply, coupled with weakening IT/ITeS sector demand, is likely to result in higher vacancy levels. However, in the immediate future, any downward correction in rents is unlikely. MAJOR LEASING TRANSACTIONS Q2 28 Maker Maxity Bandra Kurla Complex 2, Nomura Oberoi Commerz Goregaon (E) 12,5 GlaxoSmithKline Ceejay House Worli 16, Barclays Bank 16 CBRE RESEARCH