JLL Asia Pacific Property Digest 4q 2015

Bright finish for office
leasing in 2015
Asia Pacific Property Digest | Q4 2015
Dear Reader,
It was an active year for Asia Pacifics real estate markets in 2015 and the pick-up in office leasing was
a major highlight. We expect to see ongoing momentum in leasing and investment activity during 2016.
You can view this report online at http://www.jllapsites.com/research/appd-online/.
As always, the Research team welcomes your feedback.
Best regards,
4
8
9
10
11
Asia Pacific Economy and

Property Market
2015: Close to a record year for

Indias office leasing
The changing profile of the

Sydney CBD
How can Chinas tier 3 and

4 residential markets turn
around?
The year ahead in Jakarta
Office
Feature Articles
Dr Jane Murray
Head of Research Asia Pacific
13
Hong Kong
14
Beijing 15
Shanghai 16
Guangzhou 17
Taipei 18
Tokyo 19
Osaka 20
Seoul 21
Singapore 22
Bangkok 23
Jakarta 24
Kuala Lumpur
25
Manila 26
Ho Chi Minh City 27
Delhi 28
Mumbai 29
Bangalore 30
Sydney 31
Melbourne 32
Perth 33
Auckland 34
Hong Kong
58
Beijing 59
Shanghai 60
Tokyo 61
Singapore 62
Sydney 63
Melbourne 64
Industrial
Retail
Hong Kong
36
Beijing 37
Shanghai 38
Guangzhou 39
Tokyo 40
Singapore 41
Bangkok 42
Jakarta 43
Delhi 44
Mumbai 45
Sydney 46
Melbourne 47
35
57
49
Hong Kong
66
Beijing 67
Shanghai 68
Tokyo 69
Singapore 70
Bangkok 71
Kuala Lumpur
72
Sydney 73
Hotels
Residential
Hong Kong
50
Beijing 51
Shanghai 52
Singapore 53
Bangkok 54
Jakarta 55
65
4 FEATURES
ASIA PACIFIC ECONOMY
A rocky start to the year

Its been a rocky start to 2016, triggered by renewed stock market volatility and currency depreciation in
China. This set a gloomy tone for regional and global stock markets in the first few weeks of the new year.
Japans new policy of negative interest rates announced in early February sent further tremors through
the worlds financial markets.
On a more positive note, the real economies in Asia Pacific remain in decent shape, with growth
continuing to outpace the rest of the world by a significant margin. Chinas government has been
proactive in attempting to stabilise conditions and concerns about Renminbi depreciation have
diminished, at least for the time being. AP markets took the first US rate hike in December in their stride,
with most governments maintaining loose monetary policy in a bid to support growth. While the rout in
commodity prices has impacted exporters such as Australia and Indonesia, the steep fall in oil prices
should be a net benefit to most economies in the region.
Varied performance for retail sales
Consistent with the Chinese governments reform agenda, retail
sales are a bright spot in the countrys economy, with growth of
11% in 2015 and e-commerce sales jumping by nearly a third over
the same period. Japans retail sales performance continues to be
patchy, reflecting the cautious approach of households to spending,
while in Hong Kong a slump in tourism has put pressure on sales. In
2015, Chinese tourists to the city fell by 3%, while retail sales were
almost 4% lower than the year before. The retail environment in
Singapore is being impacted by weak consumer sentiment, while
consumption in Australia is being supported by ongoing strength of
the labour market.
Sluggish global demand weighing on exports

A soft global trade environment is impacting regional exports.
Chinas trade performance remains weak with exports declining
for a seventh straight month in January. At the same time, Chinas
economic slowdown is impacting trade performance throughout the
rest of the region, with exports falling in most markets. Japan, the
regions second biggest economy, saw declines for three straight

months through December.
More rate cuts while inflation remains moderate in most

markets
Various governments in AP continue to lower interest rates to shore
up growth in their economies. Over the last four months, China,
Indonesia and New Zealand have cut rates by 25 bps while Japans
central bank introduced negative interest rates in an attempt to
rejuvenate its economy. Hong Kong bucked the regional trend with
benchmark interest rates rising by 25 bps in line with the US rate
hike. Low commodity prices and weak global demand continue
to keep inflationary pressures at bay across most markets in the
region, a notable exception being India.
Steady growth expected but downside risks to the outlook

Regional growth is expected to remain steady in 2016 with Oxford
Economics forecasting growth of 5.3%, similar to 2015. However, the
performance will not be uniform across AP with China continuing
regional and global economies. Other notable risks to the outlook

include the impact of Chinas further slowdown and the extent of
further US interest rate hikes.
Figure 1: Outlook for Major Economies

Country
Real GDP Growth (%)
2016 Outlook
2015E
2016F
China
6.9
6.3
Continued policy support to aid domestic demand while the service sector remains a positive driver,
now accounting for 50% of the economy.
Japan
0.4
0.8
Slow recovery supported by monetary policy and more fiscal stimulus. Recent Yen appreciation is a
risk to exports.
India
7.4
7.4
India is expected to have overtaken China as APs fastest growing economy in 2015. Consumption
and investment to support growth in 2016.
South Korea
2.5
3.0
Slight pick-up in growth underpinned by consumption amid loose fiscal and monetary policy.
Australia
2.4
2.7
Improved export competitiveness while mining investment remains a drag. The residential market is
expected to slow this year.
Indonesia
4.8
5.1
Public investment and consumer spending should be catalysts for growth. Implementation of
reforms will be crucial to improved performance.
Singapore
2.1
2.3
Subdued growth amid weak external and residential sectors. Stronger government spending to
provide support.
Hong Kong
2.5
2.5
Domestic demand to underpin steady growth. A tourism slump, weak exports and housing market
correction are downside risks.
Asia Pacific
5.3
5.3
Stable growth amid accommodative policy support and a slow pick-up in global demand.
Note: India revised its GDP methodology (including historical growth rates) in January 2015.
Source: Oxford Economics, February 2016
ASIA PACIFIC PROPERTY MARKET
Active year for the region in 2015

The improvement in office leasing activity was a major highlight for the AP real estate market during 2015.
Several cities had a standout performance, including Bangalore and Shanghai which both saw
exceptionally strong occupier demand. Hong Kong and Sydney saw double-digit growth in office rents on
the back of solid leasing activity. On the investment front, investor interest remained strong, particularly
for the major markets of Japan, China and Australia. Office capital values continued to outpace rents in
most markets, with Japanese markets seeing the biggest uplifts.
Office leasing activity continues to recover
Pre-leases help ease impact of new completions
Asia Pacific leasing activity continued to strengthen in 4Q15 with

gross leasing volumes up 23% year-on-year. For the full year,
volumes increased by a solid 19%. The Tier 1 cities of India and
China were very buoyant and across the region the most active
sectors were technology, domestic financial firms and BPO. In
Australia, Sydney and Melbourne continued to see a good recovery
in occupier demand. Leasing activity was weaker in the Southeast
Asian markets, apart from Manila, impacted by slow economic
activity and weak resources sectors.
Across the region, Grade A stock additions were up by a solid 65%

to 5.6 million sqm in 2015. In the final quarter, most Tier 1 markets
saw new completions, with India and China accounting for almost
two-thirds of the total. Strong pre-commitment rates mitigated the
impact of new supply on vacancy in markets such as Tokyo and
Manila. Vacancy rates are low in many of the major markets, with
Hong Kong Centrals rate of 1.2% the lowest since the GFC. At the
other extreme, Delhis current vacancy rate is 25%, followed by
Perth at 23%.
5 FEATURES
to slow as its economic transformation persists while growth is

expected to pick up in some Southeast Asian markets including
Indonesia. The financial market turmoil that arose at the beginning
of the year highlights just one of the lingering uncertainties facing
Net effective rents increased in two-thirds of all markets in 4Q15

and average quarterly rental growth accelerated to 1.3% as rental
increases in larger markets such as Tokyo (+2.8%) gathered pace.
Sydney registered the strongest quarterly rental growth of 5.4%,
followed by Bangalore and Osaka.
Seven markets recorded rental declines in 4Q15, with Perth and
Jakarta rents falling the furthest due to high vacancy rates and
supply pressure. Beset by weak economic conditions and a large
supply pipeline, Singapore rents continued to fall.
In aggregate, rents increased 3.7% over the 12 months to end2015. Hong Kong and Sydney were the regional outperformers with
growth of 13%. Bangalore, Shanghai and Tokyo also recorded strong
growth. Annual declines were seen in a few markets including
Kuala Lumpur (4.2%), Singapore (10.5%) and Perth (19.4%).
Mixed retailer demand

In 4Q15, retailer demand in China continued to be supported by fast
fashion retailers and F&B while demand from luxury retailers
remained weak, despite a cut in import duties for luxury goods.
Market conditions in Hong Kong remained challenging amid
declining tourist arrivals from China, while a difficult operating
environment persisted in Singapore. Expansion of major
international brands remained a major theme in Australia with
leasing activity led by developments. Over the short term, we see
limited scope for much rental growth in most markets, and
Hong Kong is likely to see the biggest decline in rents for high street
space.
3PLs and e-commerce firms support demand for logistics

space
Generally healthy leasing activity was observed in 4Q15, driven
mainly by third party logistics and e-commerce companies,
especially in China and Tokyo. Leasing demand in Hong Kong was
lacklustre, with activity largely driven by cost saving relocations by
3PLs. In Singapore, relocation and renewal demand for business
park space stemmed from research and IT firms, while demand
from the finance sector remained muted. Rents were generally flat
across the region, with the highest quarterly rental growth of 1.1%
in Beijing.
Figure 2: Office Rental & Capital Value Changes

Yearly % Changes, 4Q15
Rate cut supports residential sales in China; most other

markets less active
Policy restrictions remained in place in various markets across Asia.
An accommodative credit policy stance provided support for
high-end sales volumes in Chinas Tier 1 markets. Home sales in
Hong Kong fell to an all-time quarterly low in 4Q15. Subdued sales
activity was also evident in Singapore with fewer new launches.
Most markets across the region continued to see stable or small
increases in rents and prices, a trend that is expected to continue
over the short term, with the notable exceptions of Hong Kong and
Singapore.
Another solid year for commercial real estate investment

activity
For full-year 2015, investment volumes were slightly lower than the
record 2014 level but in part due to the stronger USD, the reporting
currency. Japan, Greater China and Australia accounted for around
80% of total volumes. Cross-border investors were active during the
year, accounting for 40% of total investment volumes.
In 4Q15, commercial investment volumes declined 19% y-o-y to
USD 35.6 billion with the overall performance dragged down by
Japan (61% y-o-y) and Australia (22%). However, strong volumes
were recorded by China (+49%), Hong Kong (+106%) and Singapore
(+55%). The pick-up in activity in China saw it overtake Japan as
the largest market by volume, with sales totalling USD 10.5 billion in
4Q15. In emerging Asian markets, volumes were impacted by global
economic uncertainty and financial market volatility.
Office capital value growth accelerates

Asia Pacific quarterly capital value growth ticked up to 2.6% in 4Q15.
Capital values rose q-o-q in all but four markets with three achieving
growth in excess of 6%: Canberra (+6.3%), Tokyo (+6.2%) and
Sydney (+6.1%). Singapore capital values slid the furthest, by 3.1%.
Office leasing to strengthen. Rent and capital value growth to

moderate
During 2016, we expect office leasing activity to improve further and
volumes should get close to the previous peak back in 2011.
Investment should also remain strong on the back of plenty of
liquidity and low borrowing rates. We expect core markets to see
the lions share of activity. In general, it should be another good
Figure 3: Direct Commercial Real Estate Investment

20072015
20
150
15
10
100
USD Billion
y-o-y %
2015
$123.6 bill
6% y-o-y
125
75
50
Capital Values
Figures relate to the major submarket in each city

Soruce: JLL (Real Estate Intelligence Service), 4Q15
ap
or
ba
2008
2009
2010
2011
2012
2013
2014
2015
ng
2007
Si
um
M
ne
ou
ur
Se
ila
bo
M
el
rta
an
M
ka
Ja
ko
k
ijin
ng
Be
Ba
ky
gh
To
an
Sh
dn
Ko
g
Sy
Rental Values
ai
15
ey
25
ng
10
Ho
n
6 FEATURES
Rents gather pace in Asia Pacific
Japan
China
Australia
Hong Kong
South Korea
Other
Singapore
Figures refer to transactions over USD 5 million in office, retail, hotels and industrial
Soruce: JLL (Real Estate Intelligence Service), 4Q15
Grade A Office
Prime Retail
Guangzhou
Jakarta
Singapore
Guangzhou
Kuala Lumpur
Kuala Lumpur, Jakarta

Hong Kong^
Shanghai, Beijing
Singapore
Taipei
Bangkok
Beijing
Hong Kong
Manila, Tokyo
Growth
Slowing
Rents
Falling
Rents
Rising
Decline
Slowing
Auckland,
Bangalore
Delhi
Shanghai, Sydney
Chennai
Wellington
Melbourne
Osaka
Canberra, Adelaide
Tokyo^
Bangkok
Manila
Perth
Seoul
Growth
Slowing
Rents
Falling
Rents
Rising
Decline
Slowing
Mumbai
Auckland
Delhi
Bangalore
Chennai
Brisbane
Hanoi
Sydney, Melbourne, SE Queensland*
Wellington
Ho Chi Minh City, Mumbai

*Regional
^High Street Shops/Multi-level High Street
Prime Residential
Industrial
Guangzhou
Jakarta
Hong Kong
Shanghai
Kuala Lumpur
Singapore (Logistics)
Singapore (Business Park)
Beijing
Bangkok
Growth
Slowing
Rents
Falling
Rents
Rising
Decline
Slowing
Hong Kong
Growth
Slowing
Rents
Falling
Rents
Rising
Decline
Slowing
Beijing
Manila
Shanghai
Tokyo
Singapore*
Auckland, Manila
Wellington
Sydney
Melbourne
*For Luxurious Residential Properties
Brisbane
*Logistics space (Hong Kong, Shanghai, Beijing, Greater Tokyo)
Source: JLL (Real Estate Intelligence Service), 4Q15

Note: Clock positions for the office sector relate to the main submarket in each city.
year for the office sector, while conditions in the residential sector
may be more arduous. The year will not be without its challenges
as Chinas economy continues to slow and some of its property
markets face ongoing oversupply issues. Nonetheless, we think that
Chinas Tier 1 markets will fare well and that Shanghai in particular
will continue to be a magnet for corporates and investors.
ABOUT THE AUTHOR

Dr Jane Murray joined JLL in 1998 and in 2005
was appointed as Head of Research Asia
Pacific. In this role, Jane leads a team of
150 professional researchers in the region,
which forms part of a network of over 400
researchers in 65 countries around the globe.
7 FEATURES
Figure 4: Rental Property Clocks, 4Q15
8 FEATURES
2015: Close to a record year for Indias

office leasing
With industry type and share levels in absorption changing and the
emergence of new categories, occupier choice over cities has also
altered (Figure 2). Bangalore outperformed in absorption in 2015,
taking the position Mumbai held during 2011. Suitable space at
competitive rents and a young, creative talent pool make the city a
major business destination. Hyderabad is another city showing good
momentum in leasing after settlement of political issues in the state.
The performance of 2015 may be followed by relatively lower
absorption in 2016, when the country is forecast to witness
40.0
35.0
30.0
25.0
20.0
15.0
IT & ITES
Telecom,
Healthcare
& Others
2011
BFSI
4.4
8.4
6.0
0.3
13.4
25.4
13.7
10.7
28.6
18.5
0.0
34.1
5.0
36.8
10.0
Manufacturing/ E-Commerce Consultancy

Industrial
Business
2015
Source: JLL (Real Estate Intelligence Service)
Bangalore
2011
Mumbai
NCR
Pune
Hyderabad
2015
ABOUT THE AUTHOR

Subash Bhola is an Associate Director of
Research based in Mumbai. He is responsible
for managing the operations of JLLs Real
Estate Intelligence Service (REIS) in India.
Other key responsibilities include commercial
real estate analysis and forecasting.
Chennai
1.3
1.0
3.9
4.9
4.6
2.5
4.7
4.4
5.1
6.4
5.8
9.6
11.0
10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
8.3
Figure 2: 2015 and 2011: Changes in citys share of office absorption
10.8
A few emerging categories, such as e-commerce, telecom and

health care, are witnessing strong growth in office space leasing in
major cities. The contribution of e-commerce to total absorption
increased from just 0.3% in 2011 to 6.0% in 2015 (Figure 1). Some
headline e-commerce transactions in 2015 included Snapdeal
leasing about 450,000 sq ft in Gurgaon and Flipkart committing to
about 2 million sq ft in an under-construction project in Bangalore.
The telecom and healthcare industries had a good year. UHG, a
global healthcare major, absorbed 200,000 sq ft in Hyderabad, while
leading telecom company Vodafone has taken up 133,000 sq ft in
Pune. The IT/ITeS sector the major industry driving demand for
office space retained its top ranking among categories. Banking,
Financial Services & Insurance (BFSI) companies are seen
gradually expanding their footprint in IT dominated cities such as
Bangalore and Chennai.
Figure 1: 2015 and 2011: Changes in industrys share of office absorption

Office occupier industry share (%)
While the absorption of 2015 is similar to 2011, it is distributed

across new and old buildings, whereas previously it was largely in
newly completed buildings. The demand for office space during 2011
was from occupiers taking advantage of low rents after the global
financial crisis; this time, it is largely because of implementation of
growth plans by corporates. Cities such as Pune, Bangalore,
Hyderabad and Chennai have a vacancy rate of just 510%,
prompting the need to build fresh supply to meet growing demand.
absorption of about 33 million sq ft. However, we do not foresee

much of a drop-off in 2016 due to the present strong economic
fundamentals and the optimistic forecast for Indias GDP.
Office Absorption (mil sq ft)
Indias office space absorption during 2015 was 36.2 million sq ft

the second highest figure in the countrys history, after 2011. This
was possible because of the performance of markets such as
Bangalore, Hyderabad, Pune and Chennai. Bangalore alone
contributed 10.8 million sq ft close to one-third of the total.
Chennai absorbed 3.9 million sq ft in 2015 nearly double the
amount seen in 2014. Despite being two tier II cities, Pune and
Hyderabad have jointly contributed about 85% of the total
absorption of Mumbai and Delhi put together. This indicates the
growing attractiveness of tier II cities which offer similar quality of
office space at competitive rentals as compared to tier I cities.
Kolkata
9 FEATURES
The changing profile of the Sydney CBD
Recent announcements by the State Government for further

investment into the citys infrastructure will see a metro station
located at Barangaroo directly linking the Western Corridor to sub
markets such as North Sydney and Chatswood along the Northern
rail corridor. It will also see the Western side of the City connect
directly to the Core precinct at Martin Place and the South precinct
through to Central station, before continuing South-West towards
800
700
600
400
500
400
300
200
100
Core
WC
Midtown
South
ABOUT THE AUTHOR

Joanne Henderson is a Director in the
research team in Australia, located in the
Sydney office. Joanne heads up the Market
Research division of the Australian research
team whose primary responsibility is
producing the Real Estate Intelligence Service
(REIS) across the office, industrial and retail
sectors.
4Q15
4Q14
4Q13
4Q12
4Q11
4Q10
4Q09
4Q08
4Q07
4Q06
4Q05
4Q04
4Q03
4Q02
4Q01
4Q00
4Q99
4Q98
0
4Q97
The new ranking of the precincts is reflected also on the demand

side, with only 38,800 sqm of net absorption recorded in the Core
precinct since 1Q05. This is overshadowed by the Western Corridor
and Midtown precincts, both of which recorded net absorption in
excess of 240,000 sqm over the same period. What has this meant
for rental growth across the precincts? Over the last 10-years,
average annual prime gross effective rental growth has been led
by the Midtown precinct (6.0%), followed by the Western Corridor
(5.3%), the South (4.9%) and the Core (3.5%). The Core still
commands the highest average rents, explained by the high
concentration of premium grade stock. However, the gap between
rents achieved in the Core and those achieved in Midtown and
Western Corridor has narrowed over time. With vacancy levels of
below 10% since 1Q14 across both the Midtown and Western
Corridor, further rental growth within these precincts may see the
gap narrow further.
Sydney CBD Prime Gross Effective Rents by Precinct
4Q96
The Sydney CBD office market comprises four precincts. The Core
precinct has been the traditional commercial hub, contributing
around 50% of total Sydney CBD office stock when JLL started
monitoring Sydney stock by precinct in 1994. However, since 2004
the proportion of stock located in the Core has declined to 43% as
stock across the Midtown and Western Corridor precincts
expanded by 33% and 49% respectively over the past decade. With
the majority of the Barangaroo development still to complete, the
Western Corridor will become Sydneys second largest precinct,
comprising 27% of stock by the end of 2019.
the emerging hubs of Bankstown and Liverpool. New transport

infrastructure, taken together with the sharp rise in the Sydney CBD
residential population all add to the changing ranking of Sydneys
precincts. Investors, tenants and landlords with a long term
perspective in mind need to take a strategic look at the changing
face of the Sydney CBD.
AUD psm pa
JLLs head office on George Street in the Midtown precinct of the

Sydney CBD offers a prime vantage point to view the transformation
that is taking place along the Western side of the city. The new
towers at the Barangaroo development (International Towers
Sydney) are changing the Western city skyline with 4Q15 marking
the full completion of the first tower adding 87,580 sqm to stock. The
traditional epicentre of the City has shifted from the North towards
the Midtown precinct and is now continuing to spread west of the
CBD Core.
10 FEATURES
How can Chinas tier 3 and 4 residential markets

turn around?
Chinas housing market started 2015 with subdued sales, but ended
on a strong note, thanks to the governments accommodative policy
stance. Looking back, the easing measures were primarily focused
on the demand side, aiming to improve buyers affordability through
reduced down payment requirements and lower mortgage rates,
etc. As shown in the chart below, overall sales volume for 20 major
cities surged 28% y-o-y in 2015. However, price trends diverged
across different city tiers due to their inventory levels. In Tier 1
cities like Shenzhen and Shanghai, price growth has accelerated
as inventories fall sharply, and prices in Tier 1.5 and 2 cities also are
gaining momentum. In contrast, Tier 3 and 4 cities still face mounting
inventories, which weigh on Chinas broader economy.
Although details remain unclear, it is known that the government is
making reducing property inventories in Tier 3 and 4 cities a policy
priority for 2016. We may see officials roll out additional demandside measures such as further reductions in down payment
requirements which would help alleviate short-term concerns
caused by high inventories. Nonetheless, over the medium and
long term, we believe that the health of housing markets in Chinas
lower-tier cities will depend instead on supply-side reform, which
is becoming the latest buzzword among Chinas leaders and
economists.
Chinas macro policy tended to focus on demand-fuelled reforms
for much of the past three years, but the effectiveness of such
measures has been diminishing. In a turning point for macro policy,
the central government vowed instead to roll out and deepen
supply-side reform. Such reforms will entail changes in regulations
on labour, land, capital markets, tax regime, regulatory barriers,
administration, and more in order to generate new growth engines
to boost Chinas long-term growth prospects. Shanghai has been
on the frontier of this reform with initiatives like the Free Trade Pilot
Zone (FTPZ). As the government extends supply-side reforms to
other parts of the country, we would do well to ask: which Tier 3 and
4 cities are best positioned to benefit and achieve a turnaround in
the coming years?
As detailed in our China60 report, benefiting from infrastructure
development and strong clusters in some industries, certain Tier
3 and 4 cities like Guiyang and Huzhou have done well, and we
believe they have the potential to digest their property inventories
over time. Going forward, China will continue to invest heavily

in infrastructure to create modern, well connected cities. But to
succeed over the longer term in the market-based economy, Tier
3 and 4 cities will need to look beyond measures aimed purely at
stoking GDP growth and consider other factors such as the quality
of talent, the presence of robust, symbiotic industrial clusters,
environmental conditions, and quality of life that will make them
more attractive locations in which to live, work and do business.
Whatever the combination of factors, it will be the attractiveness
of a location that determines where businesses locate and people
move and consequently the ability to absorb the inventories in
Chinas lower tier cities.
Residential sales volume for 20 cities in China
250
Sales Volume (million Sqm)
In December 2015, Chinas central leadership held a closed-door

Economic Work Conference in Beijing, which was followed by
an announcement acknowledging challenges in Chinas housing
market and pledging to tackle the property inventory issue in 2016.
200
150
100
50
0
2011
4Q
2012
3Q
2013
2Q
2014
2015
1Q
Note: The 20 cities are Beijing, Shanghai, Guangzhou, Shenzhen, Changsha, Chengdu,
Chongqing, Dalian, Hangzhou, Nanjing, Ningbo, Qingdao, Shenyang, Suzhou, Tianjin,
Wuhan, Wuxi, Xiamen, Xian and Zhengzhou.
Source: CREIS, JLL (Real Estate Intelligence Service)
ABOUT THE AUTHOR

Joe Zhou joined JLL in 2005 and is the Head of
Research for China. He is a key contributor to
various research publications and is
responsible for coordinating consultancy
projects. His area of focus is on tracking and
analysing government policies and economic
data and updating clients on the implications.
Joe is one of JLLs media spokespersons and
an active property market commentator.
11 FEATURES
The year ahead in Jakarta

In many ways 2015 was a challenging year in the Jakarta property
market. The economy expanded by less than 5%, the rupiah
depreciated by around 13% against the US dollar, commodity prices
remained low and global economic headwinds persisted. Relatively
weak demand for grade A office space ensued, rental growth
turned negative and several new completions caused vacancy rates
to rise, while in the residential market, luxury condominium demand
dropped off mid-year and sales remained low until year-end.
Extremely limited supply meant that prime retail occupancy levels
remained healthy despite a challenging macro environment and
rents grew steadily.
Nevertheless, we expect improvements in the year ahead. A cabinet
reshuffle in 2H15 indicated a shift towards a more business-friendly
environment, infrastructure spending began to gain traction and
most forecasts now point to GDP growth picking up to above 5% in
2016. The long-awaited raise of US interest rates came to pass in
December and fears that this would cause the rupiah to slide further
were unfounded at least in the short term.
Demand for luxury condominiums is likely to remain thin in the early

part of 2016 until buyer confidence returns. Vital to boosting demand
is a stable rupiah which affects market sentiment more than
affordability. Should the rupiah hold its level throughout the year,
buyers are likely to return. Meanwhile, demand remains steady in
the middle and middle-low segments where affordability is greater
and the tax burden lower.
The Jakarta governor has been very selective on signing off on new
stand-alone retail developments since 2011 and there are no
indications that this will change in the short term. Limited supply,
high occupancy levels and slow, steady rental growth are likely to
continue and we expect the prime retail market in core-Jakarta to
remain healthy.
Anecdotally, in January, the Jakarta research department received
more enquiries for market studies than in any month in 2H15
indicating that market sentiment is improving and we are cautiously
optimistic on the year ahead.
In the office market, we expect an improved economic environment

to boost demand from 2016 onwards. However, in the short to
medium term, a packed supply schedule is such that occupancy
levels are likely to fall further and we expect continued rental
compression over the next couple of years. Towards the back-end
of the five-year forecast horizon, however, we expect continued
growth from firms which feed off Jakartas massive population
base and occupancy is likely to improve and rental growth return to
positive territory.
ABOUT THE AUTHOR

James Taylor is Head of Research for JLL in
Indonesia. His team conducts quarterly
research on the office, retail and residential
sectors in Jakarta while also covering the
property markets in Bali, Surabaya and other
cities throughout Indonesia.
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Jones Lang LaSalle
2016 Jones Lang LaSalle IP, Inc. All rights reserved.
13 OFFICE
Office
Tight vacancy environment bolsters landlords

rental expectations.
Denis Ma, Head of Research, Hong Kong
120
Index
105
100
HKD 102.4
Growth
Slowing
Kowloon East was the only submarket to record positive net take-up, partly
due to new leases signed at unsold units in Billion Developments recently
completed strata-titled office buildings. In Central, demand was supported by
smaller requirements with PRC firms remaining as a source of growth,
accounting for 40% of all new lettings in 4Q15.
95
90
85
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index
Arrows indicate 12-month outlook

Index base: 4Q11 =100
Source: JLL
Financial Indicators are for Central.
TENANT OPTIONS REMAIN LIMITED ACROSS THE MARKET

The completion of two decentralised projects brought total new supply in 2015
to nearly 2.1 million sq ft, about 10% more than the 10-year historical annual
average.
With vacancy rates at or below frictional levels across most submarkets,

tenants continued to face difficulties in finding space as most developments
completed in 2015 were either built for the sales market or already secured for
self-use. The vacancy rate in Central remained at 1.2%its lowest level since
1Q08.
Physical Indicators
6
250
200
150
100
50
50
RENTS IN CENTRAL POST THEIR STRONGEST GAINS IN A YEAR SINCE 2010

Percent
300
Rental increases at the top-end of the market helped lift rents in Central by
2.3% q-o-q in 4Q15, bringing full-year growth to 13.3%the best performing
year since 2010. Rental growth was recorded across the market against a
tight vacancy environment.
Investors remained upbeat on the office market as PRC corporates snapped

up two Grade A office buildings in 4Q15 for a combined total of
HKD 18.35 billion. Investment appetite for office properties in Central remained
strong, with the submarkets share of deal volumes accounting for slightly less
than half of all transactions (excluding en bloc transactions).
1
12
13.3%
STAGE IN CYCLE
New lettings dropped by 30% q-o-q in 4Q15 owing to reduced market activity
over the holiday season and low vacancy rates. Coupled with several whole
floor lease expiries, net withdrawals were recorded in most of the citys key
office submarkets.
110
11
SQ FT PER MONTH,
NET EFFECTIVE ON NLA
115
80
4Q11
RENTAL
GROWTH Y-O-Y
WEAK LEASING DEMAND AGAINST A HIGH OCCUPANCY ENVIRONMENT
Financial Indices
Thousand sqm
14 OFFICE
HONG KONG
13
14
15
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
For 2011 to 2015, take-up, completions and
vacancy rates are year-end annual. Future supply
is for 2016.
Physical Indicators are for the Overall market.
OUTLOOK: STILL ROOM FOR GROWTH IN 2016

Leasing activity is expected to moderate in 2016, with modest economic

growth forecasted for the city. PRC demand is likely to again be a key driver
behind growth on the back of strong policy support from China, including
launch of the Shenzhen-Hong Kong Stock Connect. Central rents are
forecasted to edge higher against a tight vacancy environment.
Positive investment appetite for office properties should be sustained into

2016 as rents steadily rise, supporting prices across the market. PRC
corporates and insurers seeking long-term investments are likely to remain on
the lookout for office assets.
Note: Hong Kong Office refers to Hong Kongs Overall Grade A office market.
Due to strong demand and tight vacancy,

chain-linked rents grow 3.7% in 2015, in line with
our projections.
BEIJING
Steven McCord, Head of Research, North China
SQM PER MONTH,

NET EFFECTIVE ON GFA
3.7%
RMB 386
STAGE IN CYCLE
Growth
Slowing
ROBUST DOMESTIC DEMAND BOLSTERS TAKE-UP
Financial Indices
Net take-up was 77,200 sqm in 4Q15, the highest 4Q figure since 2010, pushing
the total 2015 figure to over 180,000 sqm, up 13.8% y-o-y. Wangjing,
Zhongguancun and Finance Street were the biggest contributors as buildings
completed earlier in the year filled up. Limited large space in high-occupancy
submarkets continued to restrict absorption.
Domestic IT and finance industries dominated the leasing market. Net take-up
from IT firms shot up in Wangjing, which has benefited greatly from the same
kind of policy support enjoyed by Zhongguancun.
140
130
120
Index
15 OFFICE
RENTAL
GROWTH Y-O-Y
110
100
90
VACANCY DROPS TO 2.7% DUE TO LEASING PROGRESS AT NEW BUILDINGS

There were no new project openings in the second half of 2015. Two Finance
Street projects scheduled for completion in 4Q15 were delayed to 2016. No
new supply helped keep vacancy rates low.
All three projects completed in 1H15 have leased well, reaching a minimum of
70% commitment by 4Q15. For example, Dreamsfount 35th in Finance Street
achieved more than 90% commitment at the end of the quarter due to strong
demand from domestic finance companies as well as developer-related
parties.
80
4Q11
Physical Indicators
The investment market was quiet in 4Q15 with no en bloc transaction

recorded. However, several foreign institutional investors continued to seek
opportunities in Beijing. An on-going mismatch between buyer and seller
price expectations was a major impediment to acquisition activity.
OUTLOOK: NEW SUPPLY IS EXPECTED TO CAUSE OVERALL VACANCY TO CLIMB

Net take-up is expected to triple as a new wave of Grade A office supply

comes online. Though half of the space is set aside for self-use, it is still
recorded as absorption. Vacancy is projected to rise as the market takes time
to absorb the incoming supply. Given steady demand and the limited space at
existing projects, rents are likely to continue a modest ascent.
Beijing is likely to remain a popular target for investors. However, good

opportunities are still rare due to different expectations on pricing and lack of
tradable stock. Off-market sales opportunities in emerging areas such as
Tongzhou are possible and may be facilitated by favourable government
policies.
Note: Beijing Office refers to Beijings Overall Grade A office market.
10
1,000
Thousand sqm
900
800
700
600
500
400
300
200
100
Percent
Landlords in mature submarkets like the CBD were increasingly cautious

about peer-to-peer (P2P) lending firms after the failure of a large P2P player
freed up thousands of sqm in the market. However, the Grade A market has
limited exposure to this sector. Wangjing led with the fastest rental growth
among submarkets as projects completed earlier in the year steadily filled up.
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Financial Indicators are for the CBD.
RENTS INCREASE SLIGHTLY BY 0.7% Q-O-Q

4Q12
4Q13
Rental Value Index
0
11
12
13
14
15
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
is for 2016.
Office investment market active as rents

rise strongly.
Daniel Yao, Director - Research, Shanghai
130
SQM PER DAY,

9.3%
RMB 10.3
STAGE IN CYCLE
Rents
Rising
Domestic as well as multinational companies in technology, retail and

professional services sectors actively sought office expansion opportunities
in both Pudong and Puxi CBDs. For example, Ping An Financial Leasing
expanded by 5,000 sqm in HSBC Building.
Overall net absorption in 2015 reached approximately 1.45 million sqm, almost
doubling from the amount in 2014, setting a historical high.
120
Index
110
100
NEW SUPPLY IN ZHUYUAN TAPS PENT-UP DEMAND IN PUDONG
90
80
4Q11
RENTAL
GROWTH Y-O-Y
OVERALL NET ABSORPTION HITS RECORD HIGH IN 2015
Financial Indices
4Q12
4Q13
Rental Value Index
12
750
10
600
450
300
150
Percent
900
0
12
13
In the Pudong CBD, Century Metropolis (132,003 sqm) in Zhuyuan reached

completion and by the end of the quarter achieved good leasing progress. No
new supply was delivered in the Puxi CBD.
In the decentralised market, four Grade A projects with a total GFA of 171,340
sqm were completed, including SCG Parkside (39,000 sqm), Century 333
(39,000 sqm), Lilacs International Commercial Center (52,782 sqm) in Pudong,
as well as International Shipping Centre B02 & B05 (40,566 sqm) in Puxi.
INVESTMENT VOLUMES HIT RECORD HIGH IN 2015
Physical Indicators
11

4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Thousand sqm
16 OFFICE
SHANGHAI
14
15
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
is for 2016.
Physical Indicators are for the CBD.
Strong leasing momentum continued to boost rental growth in both the

Pudong and Puxi CBDs. Pudong Grade A rents increased by 2.9% q-o-q to
RMB 11.1 per sqm per day, while Puxi Grade A rents rose by 2.5% q-o-q to
RMB 9.7 per sqm per day.
Both domestic and foreign investors held a positive outlook on rental growth
prospects, and thus remained active in the en bloc investment market.
Notable investment deals closed in the quarter included 3 Corporate Avenue
(RMB 5.7 Billion), BEA Finance Tower (RMB 2.8 Billion) and One Prime
(RMB 2.0 Billion).
OUTLOOK: STRONG DEMAND TO DRIVE STEADY RENTAL GROWTH IN 2016

In 2016, demand from domestic enterprises is expected to take a larger share

of take-up in the CBD market. Meanwhile, although some MNC manufacturers
should continue to look for decentralisation opportunities, MNC retailers and
professional services firms are expected to expand their business and seek
office upgrade and expansion in the CBD.
New supply in 2016 is expected to more than double that of 2015. While the
large volume of new supply will put some pressure on rental growth, we
expect CBD rents to grow at a steady pace as leasing momentum remains
strong.
Note: Shanghai Office refers to Shanghais Overall Grade A office market, consisting of Pudong, Puxi and
the decentralised areas.
Domestic IT companies preparing to occupy

Grade A office space.
Silvia Zeng, Head of Research, South China
SQM PER MONTH,

NET ON GFA
6.1%
RMB 172
STAGE IN CYCLE
Rents
Stable
DEMAND STRENGTHENS AS DOMESTIC TENANTS SEEK HIGH-QUALITY SPACE
Financial Indices
Domestic finance and professional services companies led the charge in the
quarter, with many paying above-market rents to secure spaces in premium
buildings. The largest deal of the quarter involved a domestic IT company
leasing over 25,000 sqm of Grade A space.
While new supply afforded options to those companies seeking large space, a
number opted for pre-leasing in future projects, leveraging incentives on offer
from landlords in order to maximise their value for money; the 5 largest leases
by GFA in 4Q15 were in future projects.
120
115
110
Index
17 OFFICE
RENTAL
GROWTH Y-O-Y
GUANGZHOU
105
100
95
SIGNIFICANT NEW COMPLETIONS AND WITH GOOD PRE-COMMITMENT

Four new projects were completed in the quarter, bringing a total of 330,000
sqm of new supply to the market, and increasing total stock to 4,300,000 sqm.
A combination of increased demand and the completion of buildings with

good pre-commitments pushed net absorption to almost 225,000 sqm in 4Q15,
the highest level in a quarter on record. Guangzhous overall vacancy rate
increased 2 percentage points q-o-q to 9.2%, a relatively low increase given
the quantity of new supply which entered the market.
90
4Q11
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Financial Indicators are for Zhujiang New Town.
Physical Indicators
18
800
16
700
14
600
12
500
10
400
Demand for the limited amount of available space in Zhujiang New Town and
Tianhe Norths premium and lower-tier projects allowed landlords of those
buildings to slightly increase their asking rents, driving overall rents up 1.6%
q-o-q to RMB 163 per sqm per month.
Office investment activity was muted somewhat in both the strata-titled and
en bloc markets as a lack of options and high asking prices weighed on
investor sentiment. Buyers were forced to expand their search outside of core
submarkets. Capital values recorded modest growth of 1.1% q-o-q.
OUTLOOK: NEW SUPPLY TO RESTRICT RENT GROWTH AND INCREASE VACANCY

Significant new supply in core submarkets and subsequent vacancy

pressures are likely to result in vacancy rates climbing higher. However,
several of these new projects continue to be the subject of good precommitment, and will contribute to net absorption in the region of 550,000
600,000 sqm in the next 12 months.
Overall rents are predicted to remain relatively unchanged over the next
12 months due to favourable rental terms from future projects in order to
encourage tenants to pre-commit, and the increasing tenant outflow from
aging properties.
Note: Guangzhou Office refers to Guangzhous Overall Grade A office market.
Thousand sqm
900
300
200
100
Percent
RENTS TREND UP AMID TIGHTENING VACANCY IN MOST MATURE BUILDINGS
0
11
12
13
14
15
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
is for 2016.
Corporates cautious amid economic slowdown.

Jamie Chang, Head of Research, Taiwan
150
130
Index
PING PER MONTH,

NET ON GFA
1.3%
NTD 3,043
STAGE IN CYCLE
Growth
Slowing
Demand moderated in 4Q15 with high asking rents at recently completed

buildings and lacklustre economic prospects impacting occupier sentiment.
Annual net take-up reached 25,600 ping in 2015 and with limited contribution
from large owner occupancies. New supply continued to attract tenants, with
about 60% of annual net absorption concentrated in the Xinyi district. The
largest occupier segments were financial services, high-tech/IT and retail
industries.
140
120
110
100
VACANCY EDGES UP AS OWNERS RELEASE SELF-USE SPACE
90
80
4Q11
RENTAL
GROWTH Y-O-Y
DEMAND SLOWS; ACTIVITY MOSTLY RELATED TO SMALL UNITS
Financial Indices
4Q12
4Q13
Rental Value Index
Physical Indicators
140
14
120
12
100
10
80
60
40
20
Percent
16
0
12
13
A new building that was expected to enter the market in 4Q15 was postponed
due to some outstanding finishing works and the owner investigating financial
irregularities. Several owners of buildings with high occupancy released selfuse space and this pushed vacancy up slightly by 0.1 percentage point q-o-q
to 10.6%.
New supply in 2015 totalled 45,000 ping. However, strong pre-leasing and
consolidation activity limited the rise in overall vacancy.
LANDLORDS CAUTIOUS ABOUT RAISING RENTS AS SENTIMENT SUBDUED
160
11

4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Financial Indicators are for Xinyi.
Thousand sqm
18 OFFICE
TAIPEI
14
15
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
is for 2016.
Overall rentals averaged NTD 2,587 per ping per month in 4Q15, an increase of
0.2% q-o-q or 0.8% y-o-y. Landlords have exercised caution in raising rents
amid growing competition from new supply, in particular in the city fringe, and
cost conscious tenants.
Investment volumes for all real estate asset classes reached NTD 68.2 billion
in 4Q15 and pushed the annual total to NTD 99.3 billion. Full-year 2015 volumes
were the highest level since the government implemented investment controls
on insurers in 2012. However, yields remained flat at 3.3%.
OUTLOOK: MODERATE LEVELS OF DEMAND AND RENTAL GROWTH EXPECTED

Given weak economic conditions and business sentiment, most tenants are
expected to seek renewals at their existing premises rather than looking for
space in new buildings, which typically have higher asking rents.
An economic slowdown, tax reforms and presidential election are likely to

keep investors on the side-lines in 1H16 and with some investors continuing to
pursue offshore investment opportunities.
Note: Taipei Office refers to Taipeis Overall Grade A office market.
Quarterly rental growth in 4Q15 accelerates to its

highest level of the year.
TOKYO
Takeshi Akagi, Head of Research, Japan
6.0%
JPY 35,399
STAGE IN CYCLE
Growth
Slowing
BROAD-BASED DEMAND FOR OFFICE SPACE

Labour market conditions continued to improve in 4Q15, with the

unemployment rate declining to 3.1% in October and the job offer to applicant
ratio rising to 1.25 in November, levels last reached in 1995 and 1992,
respectively.
Expansion demand continued to come from sectors including information
and communication (IC), manufacturing, and real estate and goods leasing
services. This, combined with healthy commitments to new supply, pushed up
net absorption to 165,000 sqm in 4Q15. For the full year of 2015, net absorption
totalled 341,000 sqm, exceeding the past 10-year annual average by 22%.
Financial Indices
160
150
140
130
120
110
100
90
4Q11
VACANCY FALLS TO 2% FOR THE FIRST TIME IN ALMOST EIGHT YEARS

In 4Q15, market stock increased by 1.0% q-o-q as the Shin-Tekko Building

(51,000 sqm, NLA) and Otemon Tower JX Building (19,000 sqm, NLA) reached
completion. For the full year, stock increased by 4.0%.
The vacancy rate stood at 2.0% at end-4Q15, falling 130 bps q-o-q and 100 bps
y-o-y. The decline reflected strong expansion demand. Most submarkets
registered decreases, with Akasaka/Roppongi and Shibuya having extremely
limited amounts of vacant space.
Physical Indicators
Capital values increased 6.2% q-o-q and 18.4% y-o-y in 4Q15, with growth
accelerating from the previous quarter. Cap rates declined to the lowest level
in our records. A notable sales transaction in the quarter was Activia
Properties acquisition of Shiodome Building (10% stake) for JPY 20.4 billion or
an NOI cap rate of 3.9%.
OUTLOOK: RENTAL GROWTH TO OUTPACE CAPITAL VALUE GROWTH IN 2016

According to Oxford Economics, real GDP is expected to grow modestly at

1.1% in 2016 with exports and fixed investment to rise. However, there are
downside risks related to weak demand from key regional trading partners
and the pace of recovery in the EU and US.
In 2016, the vacancy rate is likely to y rise but remain below 4% as solid
demand should absorb much of the new supply, which will be equivalent to
170% of the past ten-year annual average. Reflecting this, rents should grow
mostly in line with 2015 and outpace capital value growth.
Note: Tokyo Office refers to Tokyos 5 Kus Grade A office market.
Thousand sqm
600
500
400
300
200
100
Percent
Rents averaged JPY 35,399 per tsubo per month at end-4Q15, an increase of
2.1% q-o-q and 6.0% y-o-y. Growth accelerated compared with the previous
quarter and marked the largest quarterly increase in 2015. Shinjuku
outperformed other CBD submarkets.
4Q12
4Q13
4Q14
4Q15
4Q16
Rental Value Index
Capital Value Index

Source: JLL
RENT GROWTH AND CAP RATE COMPRESSION SPURS RISE IN CAPITAL VALUES

19 OFFICE
TSUBO PER MONTH,

GROSS ON NLA
Index
RENTAL
GROWTH Y-O-Y
0
11
12
13
14
15
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
is for 2016.
Rental growth accelerates as a low vacancy

environment improves landlords confidence to
raise rents.
OSAKA
150
JPY 16,362
Rents
Rising
Despite occupier demand from sectors such as finance and insurance, net
absorption moved into negative territory due to some consolidation activity
and a large relocation of a company to its new headquarters building. For the
full year of 2015, net absorption registered 93,000 sqm, the second largest
amount on record.
Index
120
110
100
90
4Q12
4Q13
4Q14
4Q15
4Q16
Rental Value Index
Capital Value Index

Source: JLL
VACANCY EDGES UP BUT REMAINS NEAR A MULTI-YEAR LOW

No new supply entered the market in 4Q15. For the full year, only one 56,000
sqm-building (NLA) entered the market and it increased stock by 3.4%.
Vacancy rose 10 bps q-o-q (250 bps y-o-y) to 5.6% at end-4Q15. This was the
first increase in six quarters and due to consolidation/relocation activity. By
submarket, Nakanoshima saw a major increase, while Umeda and Midosuji
decreased.
Physical Indicators
12
150
10
120
90
60
30
0
13
14
15
CAPITAL VALUES RISE AS CAP RATES COMPRESS AND RENT GROWTH PICKS UP
Percent
180
12
4.4%
STAGE IN CYCLE
According to Decembers Greater Osaka Tankan survey, business conditions

for manufacturers and non-manufacturers remained healthy. The labour
environment continued to improve in October with the job offer to applicant
ratio rising to 1.15 and the unemployment rate falling to 3.6%; the number of
employed persons was higher (2.6% y-o-y) than the previous year.
130
11
TSUBO PER MONTH,

GROSS ON NLA
140
80
4Q11
RENTAL
GROWTH Y-O-Y
HEALTHY CORPORATE SENTIMENT UNDERPINS DEMAND
Financial Indices
Thousand sqm
20 OFFICE
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
is for 2016.
Rents at end-4Q15 averaged JPY 16,362 per tsubo per month, increasing 1.5%
q-o-q and 4.4% y-o-y. Rental growth continued to pick up and the strongest
growth was registered in the Umeda submarket.
Capital values increased 5.6% q-o-q and 29.2% y-o-y in 4Q15, with cap rates
compressing to levels last seen in 2007.
OUTLOOK: RENTS AND CAPITAL VALUES TO TREND HIGHER IN 2016

According to Oxford Economics, real GDP in Greater Osaka is expected to

grow moderately in 2016 (0.9%). However, weaker regional demand, in
particular from China, poses a downside risk to exports.
In 2016, the vacancy rate is expected to decrease further, reflecting steady

demand and no new supply. This environment should support rent growth,
albeit at a slightly slower pace than 2015. Capital values are also expected to
grow, largely reflecting rent growth and further cap rate compression.
Note: Osaka Office refers to Osakas 2 Kus Grade A office market.
Vacancy rises as two divisions of Samsung

depart Gangnam.
SEOUL
Yongmin Lee, Head of Research, Korea
PYUNG PER MONTH,

1.0%
KRW 95,624
STAGE IN CYCLE
Rents
Stable
MODEST PICK-UP IN LEASING ACTIVITY
Financial Indices
In 4Q15, net absorption was strongest in Yeouido where logistics company

Pantos (3,200 pyung) and Hyundai Capital (750 pyung) both entered FKI Tower,
and IFC benefited from the arrival of ten new tenants which occupied a total
of 2,600 pyung.
Business expansion activity was a strong theme during the quarter. CJ Korea
Express relocated to Pacific Tower and doubled their occupied area to 1,400
pyung, ING relocated and expanded to 700 pyung at SFC, Hana Bank took up
an additional 750 pyung at Seoul Square and in Gangnam, Descente leased
another 550 pyung at Capital Tower.
140
130
120
Index
110
100
90
4Q11
SAMSUNG ELECTRONICS UMYEONDONG R&D CENTER COMPLETES

The CBD and Yeouido benefited from positive absorption of 4,400 pyung and
6,500 pyung, respectively. CBD vacancy declined 50 bps to 12.5% while
Yeouido declined 160 bps to 12.6%. For the first time since 3Q12 when IFC
completed - the vacancy rates in these two districts are at similar levels.
The departure of the design and software divisions of Samsung Electronics

(total 13,000 pyung) from Samsung Seocho Town and Prudential Tower in
Gangnam saw absorption in that district decline by 12,600 pyung and this
pushed the overall vacancy rate up 10 bps q-o-q to 11.0%.
A widening gap between purchaser and vendor pricing expectations resulted

in a number of deals failing to close in 4Q15. Successful deal activity was led
by Hana Daetoo Securities Building (GFA 21,123 pyung) which traded from
Hana AMC to Koramco for KRW 400 billion, reflecting a record capital value
rate for the district at KRW 19 million per pyung.
OUTLOOK: PACE OF CAPITAL VALUE GROWTH LIKELY TO SLOW

Office net absorption is forecast to recover modestly; however, the

completion of Parnasse Tower (GFA 44,460 pyung) in Gangnam scheduled for
3Q16 and Myeongdong District 4 (GFA 16,011 pyung) in the CBD by 4Q16 may
push up the overall vacancy rate.
The yield outlook is clouded by uncertainty over future interest rate

movements and as a result, we do not anticipate a significant change in yield
levels. Liquidity is forecast to remain strong with investors likely to maintain
their focus on low-risk, core properties.
Note: Seoul Office refers to Seouls Grade A office market.
4Q14
4Q15
4Q16
Capital Value Index
Physical Indicators
Thousand sqm
600
18
500
15
400
12
300
200
100
Percent
Fluctuations in rents during the quarter resulted from adjustments to

incentives. Yeouido rents were negatively impacted by the increased
incentives at FKI Tower, Gangnam rents rose on stable occupancy at large
buildings in the district and CBD rents increased due to incentives being
trimmed back at buildings with higher than market occupancy.
4Q12
4Q13
Rental Value Index

Source: JLL
SALES VOLUME DECLINES AS SEVERAL TRANSACTIONS FAIL TO CLOSE

21 OFFICE
RENTAL
GROWTH Y-O-Y
0
11
12
13
14
15
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
is for 2016.
Confluence of weak global demand and

impending large supply shifts market in
tenants favour.
Dr Chua Yang Liang, Head of Research, Singapore and
Southeast Asia
130
SQ FT PER MONTH,
GROSS EFFECTIVE ON NLA
9.4%
SGD 9.47
STAGE IN CYCLE
Rents
Falling
The contraction in occupied space in the CBD persisted in 4Q15 but at a

slower pace than 3Q. Demand continued to be impacted by a combination of
weak business sentiment, lacklustre economic growth and seasonal factors.
Buildings that offered smaller leasable units and lower rents continued to
attract interest from potential tenants. Landlords also offered more indirect
incentives such as longer fit-out periods in a bid to attract new tenants.
120
Index
110
100
NO NEW COMPLETIONS BUT A LARGE SUPPLY PIPELINE LOOMING
90
80
4Q11
RENTAL
GROWTH Y-O-Y
SMALLER OFFICE UNITS BECOME MORE ATTRACTIVE TO TENANTS
Financial Indices
4Q12
4Q13
Rental Value Index
There were no new buildings completed in 4Q15 but 2.78 million sq ft of space
is scheduled to be delivered to the market in 2016. Marina One and Guoco
Tower are expected to come on stream in 2H16 while 5 Shenton Way (285,000
sq ft), which was originally expected to complete in 2016, will be delayed until
1H17.
Vacancy is set to increase gradually in the next few quarters as new supply
enters the market. Furthermore, economic headwinds are likely to see
occupiers (in particular from the financial sector) gradually surrender more
space.
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Physical Indicators
300
12
RENTS DECLINE FOR THE THIRD CONSECUTIVE QUARTER
250
10
200
150
In 4Q15, overall CBD rents declined 1.3% q-o-q to SGD 9.47 per sq ft per
month, a slightly slower pace of decline than the previous quarter. The tenant
favourable leasing market is especially attractive for existing occupiers with
one to two years left on their current leases, as options should be abundant
due to the large volume of supply due to come on-stream.
100
50
Overall CBD capital values declined by 3.1% q-o-q, extending the decline
from the previous quarter. Rising interest rates and declining rents put further
pressure on capital values. However, this was partially offset by the strong
weight of capital looking for assets.
Percent
Thousand sqm
22 OFFICE
SINGAPORE
0
11
12
13
14
15
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
is for 2016.
Physical Indicators are for the CBD.
OUTLOOK: RENTAL DISCOUNTS LIKELY TO REMAIN PREVALENT

In the short term, rental discounts are likely to remain prevalent and may
increase as the market seeks a new equilibrium between the impending 2016
supply and lacklustre demand.
Capital values are likely to decline further but at a slower pace than the rental
decline, with support from a deep capital market. Market yields are expected
to compress marginally; however, there is a risk of yield expansion should the
cost of borrowing rise unexpectedly.
Note: Singapore Office refers to Singapores CBD Grade A office market in Marina Bay, Raffles Place,
Shenton Way and Marina Centre.
Recent deals in newly completed and upcoming

Grade A projects should drive net absorption for
the next several quarters.
BANGKOK
Andrew Gulbrandson, Head of Research, Thailand
SQM PER MONTH,

GROSS ON NLA
5.2%
THB 802
STAGE IN CYCLE
Growth
Slowing
DEMAND REBOUNDS AS TENANTS CONTINUE TO MOVE INTO NEW BUILDINGS
Financial Indices
Net absorption in 4Q15 totalled 12,800 sqm, a sharp turnaround from the
negative figure posted in 3Q15 as a number of new tenants moved into the
recently completed (1Q15) Bhiraj Tower @ EmQuartier.
A large number of relocation deals were inked in 4Q15 that will see significant
tenant movements from Grade B buildings into new or upcoming Grade A
projects including Bhiraj Tower @ EmQuartier, AIA Sathorn and FYI Center
(1Q16).
180
160
140
120
Index
80
40
20
Grade A office stock in the CBA increased to 1,838,000 sqm upon completion
of Metropolis (13,425 sqm) in the Central East submarket.
FYI Center (48,095 sqm), a mixed-use project comprising the 239-room
Modena by Fraser Hospitality and Magnolia Ratchadamri Boulevard (6,000
sqm), an owner-occupied office building, are scheduled to complete in 1Q16.
100
60
METROPOLIS REACHES COMPLETION

23 OFFICE
RENTAL
GROWTH Y-O-Y
0
4Q11
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
RENTS AND CAPITAL VALUES RISE, WHILE YIELDS COMPRESS MARGINALLY
Gross rents rose 2.4% q-o-q to THB 802 per sqm per month, due mainly to the
sharp increase in rents in some well-performing buildings.
Capital values rose 4.1% q-o-q to THB 110,883 per sqm and as a result, market
yields declined marginally to 6.7% in 4Q15.
Annual net absorption is forecast to reach 60,000 sqm in 2016 as upcoming

projects have promising pre-commitment rates. However, vacancy rates are
expected to increase in the short term as new buildings complete but decline
gradually as tenants start moving in to both recently completed and upcoming
projects.
Given the limited supply in prime areas, rents are likely to increase in 2016.
However, a large supply of Grade A space outside the CBA is scheduled to
complete in 2016 and rental growth in the CBA could slow due to the
increased competition.
Note: Bangkok Office refers to Bangkoks CBA Grade A office market.
180
18
150
15
120
12
90
60
30
Percent
OUTLOOK: STRONGER DEMAND EXPECTED IN 2016

Physical Indicators
Thousand sqm
0
11
12
13
14
15
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
is for 2016.
Thin demand, rising vacancy and a challenging

macro environment put downward pressure
on rents
JAKARTA
300
3.1%
IDR 4,286,141
STAGE IN CYCLE
Rents
Falling
Relatively sluggish economic growth, low commodity prices and rupiah

depreciation all impacted demand in 2015. A number of smaller oil & gas and
mining firms either downsized or closed down while the performance of other
sectors was mixed. Law firms remained active in 4Q15 and two international
banks look set to enter Jakarta in the coming months.
E-commerce remains relatively underdeveloped in Jakarta due to challenges

relating to, amongst other things, payment methods and infrastructure.
However, recent quarters have seen some activity from international
e-commerce players and we expect this sector to continue to grow.
200
Index
SQM PER ANNUM,

250
150
100
50
0
4Q11
RENTAL
GROWTH Y-O-Y
OIL & GAS SECTOR CONTINUES TO STRUGGLE; E-COMMERCE EXPANDING
Financial Indices
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
MENARA BTPN THE THIRD NEW COMPLETION IN AS MANY QUARTERS

Menara BTPN (53,500 sqm), located in the Mega Kuningan area, was
completed in 4Q15. This project, developed by PT Bahanasemesta
Citranusantara, has already attracted BTPN bank and is the third new
completion in successive quarters.
Vacancy rates broke into double digits in 2Q15 on the back of the completion
of Sahid Sudirman Centre and two more completions in the two subsequent
quarters pushed vacancy rates higher. A packed supply schedule is likely to
put further vacancy pressure on landlords.
Physical Indicators
300
18
250
15
RENTS FALL FOR THE SECOND QUARTER IN SUCCESSION
200
12
150
100
50
In the face of relatively weak demand, new supply and rising vacancy rates,
many landlords remained focussed on maintaining or improving on current
occupancy levels in 4Q15. As such, some were willing to offer concessions
and rents decreased in IDR terms for the second consecutive quarter (1.9%
q-o-q).
A lack of investment market supply is such that en bloc transactions are rare
in Jakarta. Nevertheless, 4Q15 saw sustained interest from investors and the
most likely entry point for international players remained joint ventures with
local partners and development projects.
Percent
Thousand sqm
24 OFFICE
James Taylor, Head of Research, Indonesia
0
11
12
13
14
15
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
is for 2016.
OUTLOOK: NEW SUPPLY TO PUSH VACANCY UP; RENTS TOFALL FURTHER

With commodity prices widely expected to remain low, demand from the
oil & gas and mining sectors is likely to remain subdued. Nevertheless, we
expect overall demand to pick up in 2016 on the back of macro-economic
improvements; e-commerce firms are likely to continue to grow while the
performance of other sectors is likely to be mixed.
A pick-up in GDP growth and currency stabilisation would go a long way

towards boosting sentiment in Jakarta. However, the supply situation is such
that some landlords are likely to face vacancy pressure and we expect many
to continue to be flexible on rents in order boost occupancy.
Note: Jakarta Office refers to Jakartas CBD Grade A office market.
Continued political and economic uncertainty

dampens office leasing activity.
Dr Chua Yang Liang, Head of Research, Southeast Asia
SQ FT PER MONTH,
GROSS ON NLA
0.9%
MYR 6.24
STAGE IN CYCLE
Rents
Falling
CONTINUED DOWNWARD TREND IN OIL PRICES IMPACTS DEMAND
Financial Indices
Leasing enquiries declined on the back of recent political issues and a

difficult economic environment in part caused by low commodity prices and a
weakened Malaysian ringgit. Oil and gas companies and large financial
institutions continued to downsize in terms of headcount and occupied space.
Services firms continued to show preference for the Decentralised submarket
as it offers good infrastructure and access to public transport. The newly
completed Damansara City Tower 2 had a good pre-commitment rate of close
to 70% upon completion.
130
120
110
Index
100
90
TWO NEW BUILDINGS COMPLETE IN THE DECENTRALISED SUBMARKET

Damansara City Towers 1 and 2 entered the market in 4Q15, adding 74,044 sqm
to stock.
New supply in Kuala Lumpur City Centre is expected to remain at modest

levels through 2018. However, there are concerns over the large incoming
supply beginning in 2019 from major government-led projects such as KL 118,
Tun Razak Exchange and Bukit Bintang Commercial Centre.
RENTS DECLINE ON THE BACK OF A SUBDUED LEASING MARKET
OUTLOOK: MARKET CONDITIONS TO REMAIN TENANT FAVOURABLE IN 2016

Landlords are expected to offer more incentives and/or reduce rents further
to improve occupancy. The leasing market should continue to favour tenants
with vacancy rates rising. The Decentralised submarket is expected to fare
better than the City Centre due to its quality infrastructure and relatively
congestion-free roads.
Yields should remain flat amid a quiet investment market and generally stable
interest rate environment.
Note: Kuala Lumpur Office refers to Kuala Lumpurs Grade A office market consisting of the Kuala Lumpur
City Centre and Decentralised submarkets.
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Financial Indicators are for the Kuala Lumpur City
Centre.
Physical Indicators
Rents continued to move downward as some landlords competed for tenants

in a bid to maintain occupancy. Select landlords of older buildings within the
CBD submarket offered rental incentives including longer rent-free periods.
Investment yields held generally stable as rents and capital values moved
relatively in tandem.
4Q12
4Q13
Rental Value Index
350
20
280
16
210
12
140
70
Percent
80
4Q11
Thousand sqm
25 OFFICE
RENTAL
GROWTH Y-O-Y
KUALA LUMPUR
0
11
12
13
14
15
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
is for 2016.
Physical Indicators are for Kuala Lumpur City
Centre.
Strong pre-commitments to new completions

keeps net absorption relatively high and vacancy
rates low.
MANILA
150
SQM PER MONTH,

2.9%
PHP 903
STAGE IN CYCLE
Growth
Slowing
Net absorption in Makati CBD and Bonifacio Global City (BGC) remained high
at 67,700 sqm in 4Q15, albeit lower than the previous quarters 114,400 sqm, on
the back of an increase in occupancy at established buildings and high precommitment levels in recently completed developments.
Notable leases in 4Q15 included a consultancy firm taking up 5,600 sqm and
an IT solutions firm taking up 700 sqm of space in Tower 6789 in Makati CBD;
a transport services firm taking up 2,100 sqm in Wilcon IT Hub in Makati CBD
and an online retailer taking up 300 sqm in Panorama Tower in BGC.
140
130
Index
RENTAL
GROWTH Y-O-Y
EXPANDING O&O INDUSTRY CONTRIBUTES TO DEMAND GROWTH
Financial Indices
120
110
100
90
4Q11
VACANCY FALLS DUE TO STRONG PRE-COMMITMENTS IN NEW COMPLETIONS

4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index
Three office developments, Uptown Place Tower 1, BGC Corporate Center and
AO United Life Building completed in 4Q15, adding 69,400 sqm of space. Two
office developments scheduled to complete during the quarter faced
construction delays.
The vacancy rate dipped slightly to 4.6% in 4Q15 from 4.7% in 3Q15 on the
back of high pre-commitment to developments completed in 4Q15, as well an
improvement in occupancy at established buildings.

Source: JLL
Physical Indicators
600
450
300
150
MODERATE RISE IN RENTAL AND CAPITAL VALUE GROWTH
Percent
Thousand sqm
26 OFFICE
Claro dG. Cordero, Jr., Head of Research, Philippines
0
11
12
13
14
15
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
is for 2016.
Rents inched up by 0.9% q-o-q to PHP 903 per sqm per month in 4Q15. This
was due to the continuous expansion of O&O firms contributing to healthy
occupancy levels, while capital values grew modestly by 0.7% q-o-q to
PHP 117,360 per sqm.
The investment market remained quiet amid uncertainty regarding an

anticipated US Federal Reserve interest rate hike and its potential impact on
emerging economies. However, investor interest remained firm.
OUTLOOK: LARGE INCOMING SUPPLY LIKELY TO CAUSE VACANCY TO RISE

A total of 278,000 sqm of office space is scheduled to complete in the first two
quarters of 2016 from eight office developments. The large incoming supply is
likely to push vacancy rates upwards.
Growth in demand for office space is expected to continue, significantly

driven by the O&O industry, as shared services operations continue to expand
in the country. This should support an upward trajectory in rents for the next
few quarters, albeit moderate growth.
Note: Manila Office refers to the Makati CBD and BGC Grade A office market.
Rents rise slightly amid declining vacancy and a

strong performance at a recently
completed building.
HO CHI MINH CITY
Tram Nguyen, Manager - Research, Vietnam
SQM PER MONTH,

0.6%
USD 38.0
STAGE IN CYCLE
Rents
Rising
BANKING AND INSURANCE SECTORS LEAD OFFICE DEMAND
Financial Indices
Notable leasing deals in 4Q15 included PVI Sunlife Insurance, Idemitsu and
Bank Pay taking up space totalling 3,000 sqm at Vietcombank Tower. Two
notable lease renewals recorded in the quarter were GSK (2,500 sqm) at The
Metropolitan Tower and Boehringer (1,000 sqm) at Kumho Asiana Plaza.
The oil and gas sector was relative inactive in the quarter. In 4Q15, Cuu Long
Oil and Gas JSC relocated from Diamond Plaza to a suburban submarket. This
move resulted in the buildings occupancy rate dropping below 90% for the
first time in ten years.
110
105
100
Index
27 OFFICE
RENTAL
GROWTH Y-O-Y
95
90
85
VACANCY DECLINES DUE TO NO NEW COMPLETIONS AND IMPROVING DEMAND

With no new completions in 4Q15, total Grade A office stock remained

unchanged at 192,000 sqm. Positive take-up in the quarter and no new supply
pushed the vacancy rate down by 1.3 percentage points q-o-q to 9.3%.
Construction works at Saigon Centre phase II and German House saw further
progress and are expected to launch in the second half of 2017.
RENTS EDGE UP AFTER A DECLINE IN 3Q15

80
4Q11
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16

Source: JLL
Physical Indicators
Landlords of the recently completed Vietcombank Tower raised asking rents

after achieving a good performance at launch and this helped push up
average rents for Grade A office space by 0.6% q-o-q to USD 38 per sqm per
month.
35
30
30
25
25
20
20
15
15
10
10
OUTLOOK: LOWER NET ABSORPTION DUE TO NO NEW SUPPLY
No investment transactions were recorded in the Grade A office market in

4Q15. Most investors have focused their attention on the residential segment.
Market valuation-based yields remained stable at 9.3%.
Demand in the Grade A office market is likely to come from banking,

insurance, IT and FMCG sectors. However, total net absorption for 2016 is
expected to be lower than in 2015 due to less available space and no new
supply.
Rents are expected to maintain a positive growth trend over the next 12
months as landlords of buildings with high occupancy levels are expected to
raise rents.
Note: Ho Chi Minh City Office refers to Ho Chi Minh Citys Grade A office market.
Thousand sqm
40
Percent
40
35
0
11
12
13
14
15
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
is for 2016.
Vacancy remains elevated amid record new

supply in 2015 and moderate absorption.
Ashutosh Limaye, Head of Research, India
130
Index
110
INR 146
Rents
Rising
Large leasing transactions were mostly expansion-driven and absorption

volumes were higher on a q-o-q basis in Gurgaon and Noida as healthy
demand was evident from IT/ITeS, consulting and financial services firms.
Notable take-up was recorded by occupiers such as Oyo Rooms, Sabic, ZS
Associates and Bain Consulting in Gurgaon, and Barclays, EXL and Ericsson
in Noida.
90
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Financial Indicators are for the SBD.
Physical Indicators
1,400
35
1,200
30
1,000
25
20
600
15
400
10
200
0
14
15
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Quarterly new supply reached 2.6 million sq ft across six projects - four in
Noida and one each in Gurgaon and the SBD.
Vacancy rose by 90 bps q-o-q to 31.9%; the highest level on record for the
Delhi office market.
RENTS AND CAPITAL VALUES RISE IN GURGAON AND NOIDA
0
13
VACANCY RISES AS SUPPLY ADDITIONS REMAIN HIGH
The rent increase in Gurgaon was largely on account of transacted rents

rising in the DLF Cybercity office corridor. With limited quality space in both
the Noida City and Noida-Greater Noida Expressway corridors, rents rose in
Noida as transactions were recorded at slightly higher rentals than the
market average.
Capital values rose largely in sync with rents and yields remained generally
stable.
Percent
800
12
0.7%
STAGE IN CYCLE
Net absorption reached 0.95 million sq ft in 4Q15, the lowest level in four
quarters. A significant reason for the decline during the quarter was the
sluggish performance recorded by the SBD submarket, which had otherwise
seen improving performance in recent quarters.
100
11
SQ FT PER MONTH,
GROSS ON GFA
120
80
4Q11
RENTAL
GROWTH Y-O-Y
LEASING PERFORMANCE UNEVEN ACROSS SUBMARKETS
Financial Indices
Thousand sqm
28 OFFICE
DELHI
Source: JLL
is for 2016.
OUTLOOK: HEALTHY LEASING DEMAND AS OCCUPIERS PLAN EXPANSION

Future growth plans by large IT occupiers are geared towards a preference

for space in existing and planned SEZs, while demand from e-commerce,
financial services, consulting and small-sized firms is likely to be for quality IT
and non-IT space.
Quality office supply in emerging corridors is likely to find healthy occupier

traction. A lack of vacancy in superior projects in established office corridors
may fuel rental growth in these locations. Capital values are expected to
increase for leased assets and some strategic under-construction assets,
with yield movements likely to be limited.
Note: Delhi Office refers to Delhi NCRs Overall Grade A office market.
Signs of a demand revival in the Mumbai

office market.
2.2%
INR 220
STAGE IN CYCLE
Rents
Stable
DEMAND STRONGEST FOR SMALL SPACE UNITS

In 4Q15, net absorption was 1.5 million sq ft, an increase of 50% q-o-q. The
number of lease transactions was also higher than the previous quarter.
Transactions by healthcare and IT/ITeS companies drove demand for office

space during the quarter. Upcoming office supply in the SBD BKC and SBD
North submarkets also attracted pre-commitments.
Financial Indices
120
115
110
TWO NEW BUILDINGS PROVIDE 1.3 MILLION SQ FT OF SPACE
Mumbais total stock grew by 1.3% q-o-q to 102 million sq ft.
MIXED RENTAL PERFORMANCE

Select submarkets such as Western Suburbs, Eastern Suburbs and Navi

Mumbai witnessed rents appreciating moderately by 12% q-o-q.
However, in the CBD and SBD BKC submarkets, rents continued to decline,
causing yields to decrease slightly q-o-q in these submarkets.
OUTLOOK: NOTABLE LEASING ACTIVITY EXPECTED IN FORTHCOMING QUARTERS
2015 showed signs of improvement in the Mumbai office market and the
upcoming quarters are likely to see robust transaction activity, with
established businesses expanding and new foreign firms entering the market.
Occupiers requiring back-office space, and e-commerce and new start-up
companies should generate demand.
New launches of commercial projects will be evident in the Suburbs
submarket, while Thane-Belapur Road in Navi Mumbai is set to see a plethora
of IT developments in upcoming quarters.
95
90
4Q11
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Financial Indicators are for the SBD BKC.
Physical Indicators
1,500
12
1,200
20
900
15
600
10
300
Percent
105
100
In 4Q15, only two projects became operational, providing a total area of

1.27 million sq ft and with moderate levels of pre-commitments. Strong takeup in part due to commitments to new supply pushed overall vacancy down
slightly by 40 bps q-o-q to 19.7%.
Thousand sqm
29 OFFICE
SQ FT PER MONTH,
GROSS ON GFA
Index
RENTAL
GROWTH Y-O-Y
MUMBAI
0
11
12
13
14
15
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
is for 2016.
Note: Mumbai Office refers to Mumbais Overall Grade A market.
Strong expansion demand sees Bangalore record

more than 10 million sq ft of net absorption
in 2015.
BANGALORE
140
SQ FT PER MONTH,
GROSS ON GFA
9.6%
INR 57
STAGE IN CYCLE
Rents
Rising
4Q15 witnessed relatively slower leasing activity compared with the previous
quarter with 1.59 million sq ft of net absorption recorded. However, this
slowdown is likely to be temporary as there were increased enquiries for
space from occupiers which are likely to translate to leasing transactions in
the near term.
Key occupiers who leased space in the quarter included IBM, Software AG,
JC Penny, Exxon Mobil and MBRDI.
130
120
Index
RENTAL
GROWTH Y-O-Y
ANNUAL NET TAKE-UP IN 2015 SECOND HIGHEST ON RECORD
Financial Indices
110
100
VACANCY RISES BUT REMAINS BELOW 5% AMID ROBUST DEMAND
90
80
4Q11
4Q12
4Q13
Rental Value Index
Four new office buildings commenced operations in 4Q15 and another two
buildings completed refurbishments. These buildings supplied a total of
2.26 million sq ft of Grade A office space and pushed market stock to
93.1 million sq ft. All buildings became operational with good levels of precommitment.
Robust leasing activity helped limited the rise in vacancy which increased by
0.3 percentage points q-o-q to 4.8% in 4Q15.
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Financial Indicators are for the SBD.
Physical Indicators
1,200
12
1,000
10
RENTS CONTINUE TO APPRECIATE IN THE SBD AS DEMAND STRENGTHENS

In 4Q15, average rents increased in the CBD and SBD submarkets, while
remaining stable across all other submarkets in the city. The SBD witnessed a
3.6% q-o-q increase, while the CBD increased by 1.1% q-o-q.
Capital values increased q-o-q in the range of 13% in the CBD and SBD,
while the other submarkets remained stable in 4Q15. Market yields remained
relatively firm.
800
600
400
200
OUTLOOK: DEMAND SHIFT TO NORTH SBD AMID LOW VACANCY IN SOUTH-EAST
The east and south-east stretch of the Outer Ring Road have limited available
space and this is likely to shift demand towards the northern part of the city in
projects along Bellary Road. Demand is expected to remain strong as
indicated by increased enquiries from corporates. As there is limited
availability in the east and south-east stretch of the Outer Ring Road in the
SBD, this submarket is likely to witness built-to-suit leasing activity. The CBD
is also likely to witness good leasing activity in 2016 driven by two new
buildings expected to enter the market.
Rents are likely to rise across the city due to steady leasing activity, while
capital values are also expected to increase. Market yields should compress
along some stretches of the SBD Outer Ring Road in the SBD.
0
11
12
13
14
15
Percent
Thousand sqm
30 OFFICE
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
is for 2016.
Note: Bangalore Office refers to Bangalores Overall Grade A office market.
Strong job growth across New South Wales

translates into above trend net absorption in the
Sydney CBD.
SYDNEY
Andrew Ballantyne, National Director - Research, Australia
SQM PER ANNUM,

9.5%
AUD 679
STAGE IN CYCLE
Rents
Rising
STRONGEST ANNUAL NET ABSORPTION FIGURE SINCE 2005
Financial Indices
The Sydney CBD office market recorded an eighth consecutive quarter of

positive net absorption (24,400 sqm) and 144,800 sqm over 2015. This is the
highest annual net absorption figure since 2005 and is reflective of strong
activity in the Grade A sector with technology, education and professional
services firms in an expansionary mode.
The largest move of the quarter was Gilbert + Tobin Lawyers relocating to
pre-committed space in International Towers Sydney - Tower 2 (9,510 sqm).
Technology firms remained active with Dropbox and Expedia expanding their
occupational footprint in the Sydney CBD.
160
150
140
130
Index
100
90
80
4Q11
There were two completions totalling 34,500 sqm in 4Q15. This included the
second stage of International Towers Sydney Tower 2 (28,195 sqm). A further
261,300 sqm equating to 5.2% of total Sydney CBD office stock was under
construction as at end-4Q15 and expected to complete in 2016.
MODERATION IN INCENTIVES PUTS UPWARD PRESSURE ON EFFECTIVE RENTS
There were eight major sales totalling AUD 797.2 million in 4Q15 and this
pushed the annual total to AUD 4.34 billion. This 2015 figure is excluding the
Investa portfolio purchase by CIC (AUD 2.45 billion) which had assets in other
suburban and interstate office markets.
Strong demand for prime space and a decrease in incentives resulted in
prime gross effective rents increasing by 3.9% q-o-q in 4Q15 to AUD 679 per
sqm per annum. A drop in secondary incentives and growth in face rents
resulted in 5.4% q-o-q growth in secondary gross effective rents to AUD 463
per sqm per annum.
OUTLOOK: INFRASTRUCTURE PROJECTS INCREASE STOCK WITHDRAWALS

Office completions in the Sydney CBD over 2015 and 2016 will be the highest
since the early 1990s. The level of office construction activity is expected to
markedly drop off after 2016.
The development of the Sydney Metro City and Southwest infrastructure

project will result in compulsory acquisitions of office assets in the Sydney
CBD by the New South Wales state government. The displacement of tenants
will generate fresh leasing enquiry and exert downward pressure on vacancy
from 2017.
Note: Sydney office refers to Sydneys CBD office market (all grades).
4Q14
4Q15
4Q16
Capital Value Index
Physical Indicators
250
15
200
12
150
100
50
50
3
11
12
13
14
15
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
vacancy are year-end annual. Future supply is
for 2016.
Percent
4Q12
4Q13
Rental Value Index

Source: JLL
Thousand sqm
Despite the quarters strong net absorption figure, vacancy increased

marginally to 7.8% over 4Q15. This was predominantly because of new
developments completing which had some vacant space. Grade A vacancy
was below the market average at 6.6%3.7 percentage points tighter than in
2014.
120
110
DEMAND FOR GRADE A SPACE PULLS VACANCY DOWN OVER 2015

31 OFFICE
RENTAL
GROWTH Y-O-Y
A strong demand base in the leasing market,

despite some pressure coming from
sub-lease space.
MELBOURNE
150
130
Index
SQM PER ANNUM,

3.5%
AUD 406
STAGE IN CYCLE
Rents
Rising
Mining and resources companies downsized in 4Q15; however, public

administration and finance companies expanded over the quarter.
A 12-month break in completions is expected to support leasing activity in the

short term.
140
120
A BREAK IN THE COMPLETIONS CYCLE TO SUPPORT LEASING FUNDAMENTALS
110
100
90
80
4Q11
RENTAL
GROWTH Y-O-Y
TENANTS EXPAND IN MELBOURNE CBD
Financial Indices
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
A number of large sub-lease options came to the market and diminished the
impact of positive net absorption and lower vacancy.
Four office assets are under construction totalling 132,000 sqm, of which
88,000 sqm is pre-committed.
A STRONG SALES QUARTER STABILISES YIELDS; UPPER END BELOW 2007 PEAK

4Q15 was the largest sales quarter by volume for the Melbourne CBD in 2015.
Six sales totalling AUD 1.13 billion transacted in 4Q15, representing over 48%
of total sales in 2015. The largest Melbourne CBD sale for the year and the
quarter was Brookfields sale of a half-share in SX1 and SX2 to Blackstone for
a total of AUD 675.0 million.
Robust transaction activity continued to confirm the CBD prime yield range
which remained at 5.25%7.00%. The upper end of the range is 50 basis points
tighter than the 2007 peak.
Physical Indicators
200
12
150
100
50
0
3
50
11
12
13
14
15
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Percent
Thousand sqm
32 OFFICE
Dr David Rees, Head of Research, Australasia
OUTLOOK: YIELDS ARE EXPECTED TO STABILISE OVER THE SHORT TERM

A continuation of robust demand is forecast for 2016 with net absorption

projected to be above the five-year average. Vacancy is forecast to remain
around the 10% mark throughout the year, as development space comes
online in the second half of 2016.
Above average rental growth is anticipated over the next 12 months, with
landlords expected to begin easing incentives to match improving business
sentiment.
Source: JLL
for 2016.
Note: Melbourne Office refers to Melbournes CBD office market (all grades).
Record supply additions push vacancy higher in

2015 and place continued pressure on office rents.
PERTH
SQM PER ANNUM,

12.6%
AUD 491
STAGE IN CYCLE
Decline
Slowing
FAVOURABLE CONDITIONS FOR TENANTS DRIVING DEMAND
Financial Indices
Lease expiry, lower rents and higher incentives remained the drivers of
leasing enquiry and activity in the Perth CBD.
The Perth CBD recorded a further increase in vacancy over 4Q15, rising to
23.5%. This was mainly due to vacancy in newly completed buildings, backfill
space from relocations to new stock and additional sub-lease space being
offered to the market.
110
105
100
95
90
Index
75
70
The new completions in the quarter brought total supply additions for 2015 to
150,100 sqm. This is the highest annual addition to stock in the Perth CBD
since 1982.
The supply pipeline for the Perth CBD over the next 1224 months is limited,
with only one major development of 50,000 sqm under construction,
anticipated for completion in 2018.
85
80
THREE COMPLETIONS ADD 86,400 SQM TO STOCK

33 OFFICE
RENTAL
GROWTH Y-O-Y
65
60
4Q11
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
OCCUPIER AND INVESTMENT MARKETS REMAIN DISCONNECTED
Despite a steady fall in effective rents since 2013, the weight of capital from
both international and domestic investors in the last 12 months has
compressed the upper yield of the prime range by 75 bps.
OUTLOOK: PERTH CBD VACANCY EXPECTED TO PEAK IN 2016

Tenant enquiry and demand is expected to remain driven by lease expiry and
market conditions, as occupiers look to benefit from affordable rents and the
high availability of good quality office space. While downward pressure is
expected on effective rents over the first half of 2016, we expect signs of
stabilisation towards the latter part of 2016. Incentives may move higher in
specific assets and should play an important role in stimulating activity in the
market.
While 2015 was a low year for sales transactions in Perth, increased volumes
may be seen in 2016 with a number of assets on the market for sale in the
Perth market.
Note: Perth Office refers to Perths CBD office market (all grades).
200
28
150
21
100
14
50
50
100
14
11
12
13
14
15
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
for 2016.
Percent
CBD office sales in 2015 totalled AUD 6.6 million, with only one small asset
transacted. The dearth of transactions compared to previous years (nine
assets sold in 2013) highlights the shortage of investment stock over the last
1224 months. However, throughout 2015 a number assets came to market for
sale.
Physical Indicators
Thousand sqm
Rents continue to trend higher despite looming

supply pipeline.
Justin Kean, Head of Research, New Zealand
160
SQM PER ANNUM,

NET ON NLA
6.6%
NZD 461
STAGE IN CYCLE
Rents
Rising
The completion of 151 Victoria Street West drove positive net absorption in
2H15, with over 22,000 sqm being recorded during this period.
Leasing activity in the CBD stabilised in 2H15 with many occupiers looking to
the fringe and suburban markets to fulfil their accommodation needs.
150
140
130
Index
RENTAL
GROWTH Y-O-Y
OCCUPIER DEMAND REMAINS STABLE
Financial Indices
120
MARKET VACANCY PLATEAUS AFTER NEW COMPLETION
110
Vacancy levels remained relatively flat since 1H15 edging up 0.1 percentage
points to 5.0% by year-end. Vacancy across the different grades was largely
unchanged except for a slight increase in Prime vacancy due to newly
constructed stock entering the market.
The office development at 151 Victoria Street reached practical completion in

4Q15. This development added 18,600 sqm of office space to the Auckland
CBD market with only one floor not occupied as at year-end.
100
90
80
4Q11
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
INVESTOR APPETITE FOR CBD ASSETS DRIVES YIELDS LOWER

In 4Q15, average rents for Prime space increased 0.5% q-o-q to NZD 461 per
sqm per annum. This growth was largely due to deals completed in the Grade
A segment, which pushed values higher. Incentives in 4Q15 remain steady.
Prime indicative equivalent investment yields tightened 12.5 bps at the top end
to range between 6.4% and 7.5% in 4Q15.
Physical Indicators
50
15
40
12
30
20
10
Percent
Thousand sqm
34 OFFICE
AUCKLAND
0
11
12
13
14
15
OUTLOOK: NEW SUPPLY LIKELY TO INCREASE VACANCY IN 2016

Our forecasts suggest that vacancy could move moderately higher in 2016 as
new supply comes online.
Healthy demand from investors is likely to support further tightening of office

yields and push capital values higher.
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
is for 2016.
Note: Auckland Office refers to Aucklands CBD and Viaduct Harbour office markets.
35 RETAIL
Retail
High Street Shop rents decline as holiday season

fails to lift retail sales from a steady downturn.
HONG KONG
Cathie Chung, Director - Research, Hong Kong
140
Index
110
Leasing demand held firm despite the challenging environment for retail
growth. With landlords becoming more flexible on lease terms, retailers took
advantage of the bargains to be had by renewing their lease at a discount or
opening new stores. Others took up opportunities to snap up prime retailing
space surrendered by the previous occupant to contain losses.
36 RETAIL
90
4Q12
4Q13
4Q14
4Q15
4Q16
RV Index (High Street Shop)
CV Index (High Street Shop)
RV Index (Premium Prime Shopping Centres)
RV Index (Overall Prime Shopping Centres)

Source: JLL
Physical Indicators
MARKET AWAITS NEW RETAIL SUPPLY

No prime shopping scheme was completed in 4Q15. Supply remained tight

across the city, driving vacancy levels lower to 1.3% in 4Q15 for prime malls.
The market saw the completion of a 208,987 sq ft non-prime shopping centre

on 3 On Kwan Street in Shek Mun which has been stratified for pre-sale since
the beginning of 2015.
RENTS FOR HIGH STREET SHOPS MOVE LOWER
90
80
High Street Shops rentals decreased 5.1% q-o-q, a smaller decline than the
previous quarter and signalling that the worst of the ongoing correction may
have passed. Prime malls rents edged down 0.1% q-o-q, holding steady
across the market outside of a few individual shopping centres where rents
were marginally lowered to attract new tenants in the face of rising vacancy
pressure.
Market yields largely held flat. With rents continuing to decline and US
interest rates on the rise, capital values of High Street Shops softened in
tandem with rentals. Despite a quieter quarter, investment focus remained on
street shops and retail podiums in non-core locations where several en bloc
shopping centres changed hands.
Thousand sqm
70
60
50
40
30
20
10
12
Decline
Slowing
100
Completions
HKD 572.8
Mainland Chinese arrivals continued to slow, down 9.9% y-o-y over the
OctoberNovember period on a 20.7% decrease in Individual Visit Scheme
entrants. Led by an 18.9% y-o-y drop in jewellery & watch sales, retail sales
fell 5.5% y-o-y over OctoberNovember.
120
11
22.6%
STAGE IN CYCLE
130
SQ FT PER MONTH,
NET ON GFA
TOURISM SLUMP HAMMERS RETAIL SALES
Financial Indices
80
4Q11
RENTAL
GROWTH Y-O-Y
13
14
15
16F
Future Supply
Source: JLL
For 2011 to 2015, completions are year-end annual.
Future supply is for 2016.
Physical indicators relate to prime shopping
centres.
OUTLOOK: RENTAL CORRECTION LIKELY TO EASE

We expect High Street Shop rents to drop 1015% in 2016 in the face of
lacklustre demand from luxury retailers and ongoing vacancy pressure.
Prime Shopping Centre rents should be relatively stable as demand for these
properties should continue to outperform street shops due to their lower
rental outlays and higher footfalls.
On the investment front, the pressure on long-term individual owners and

portfolio landlords to off-load non-core retail assets is expected to continue.
However, the focus is less likely to be in traditional prime shopping areas,
given their sustained leasing appeal and limited supply.
Note: Hong Kong Retail refers to Hong Kongs Overall Prime Shopping Centres and High Street retail
markets.
Cosmetic brands reach a tipping point with

aggressive expansion plans in China.
SQM PER MONTH,

3.3%
RMB 871
STAGE IN CYCLE
Growth
Slowing
COSMETICS EMERGING AS A NEW DRIVER OF DEMAND
Financial Indices
Several projects with above-average market vacancy such as Solana and

Indigo saw vacancy decrease during the quarter after some mid-market F&B
and kids brands expanded and filled the space.
Kiehls opened at Parkview Green. Meanwhile, Xidan Joy City is rumoured to
be planning a new cosmetic area, after Beijing SKP and Beijing APM opened
dedicated cosmetic sections featuring a range of domestic and foreign beauty
products in 2015.
140
130
120
Index
100
ONE COMMUNITY SHOPPING CENTRE ENTERS THE MARKET IN WANGJING

Siyuan Plaza, totalling 63,000 sqm, opened next to IKEA in Wangjing.

Surrounded by residential buildings, the mall is the first project developed and
managed by Carrefour, one of the largest hypermarket chains in the world.
The mall achieved an impressive 99% commitment rate on opening day.
Urban vacancy dropped from 8.1% in 3Q15 to 6.3% in 4Q15 after high vacancyretail project Zhongguancun Plaza in northwest Beijing converted to office
space, which removed 148,000 sqm from the market. Core vacancy was flat
q-o-q.
90
80
4Q11
Yields remained flat for another quarter despite the market registering its
second en bloc retail transaction of the year. Solana purchased Zhuozhan
department store at West Changan Avenue for approximately RMB 6 billion,
in the largest-ever retail transaction on record in Beijing.
4Q14
4Q15
4Q16
Capital Value Index
Physical Indicators
600
550
500
450
Thousand sqm
Rents grew at their slowest pace since 2009, with the Urban market growing
at just 3.3% y-o-y while the Core market grew only marginally faster at 3.8%.
The slower economy, rising overseas sales and surge in e-commerce have
weighed on retail sales of bricks-and-mortar stores and subsequently, rents.
4Q12
4Q13
Rental Value Index

Source: JLL
SLOWEST RENTAL GROWTH RECORDED SINCE 2009; YIELDS FLAT Q-O-Q

110
400
350
300
250
200
150
100
50
OUTLOOK: RENTAL GROWTH NOT EXPECTED TO REBOUND IN 2016

Rental growth is unlikely to rebound in 2016. Chain-linked rental growth for the
Urban market is forecast at 4%, while the Core market should fare slightly
better at 4.3%. A handful of maturing community centres have been operating
for enough years to push for rental increases.
Eleven projects totalling some 1.3 million sqm are slated to enter the market in
2016, including three projects delayed from 2015. More than half of this retail
space is located in suburban areas, while China World Ph3 B is the only Core
project scheduled for the near future.
Note: Beijing Retail refers to Beijings Urban retail market.
11
12
Completions
13
14
15
16F
Future Supply
Source: JLL
37 RETAIL
RENTAL
GROWTH Y-O-Y
BEIJING
Luxury brands such as Burberry and Cartier are

going online to expand their customer bases.
SHANGHAI
Joe Zhou, Head of Research, China
130
Index
100
Growth
Slowing
In the mass market, fast fashion brands sustained their pace of expansion. In
4Q15, Muji opened three new stores, including its new global flagship store on
Huaihai Road. Uniqlo and H&M also opened multiple new stores in the city.
90
FIRST LARGE-SCALE MALL IN HONGQIAO TRANSPORTATION HUB OPENS

4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index
The Hub by Shui On Group opened in 4Q15 with a total GFA of 96,200 sqm. The
mall was anchored by fast fashion tenants including Uniqlo, H&M, Muji and
Gap, and provided a variety of lifestyle offerings to local office workers and
travellers. It also features a remote check-in counter for Hongqiao Airport and
a 13,000-sqm performance venue.
Vacancy decreased slightly to 7.4% in the core areas as several existing malls
in East Nanjing Road and the Hongqiao submarket filled up their empty space.
Vacancy held flat at 7.1% in the non-core market.

4Q10 =100
Index base: 4Q11
Source: JLL
Financial Indicators are for the Core market.
Physical Indicators
700
RENTAL LEVELS RISE AND ONE MAJOR INVESTMENT DEAL CLOSES
600
500
Thousand sqm
RMB 52.6
Although luxury brands remained cautious about opening new offline stores,
they are expanding their reach by setting up online stores in 4Q15, Burberry
opened its official flagship store on Tmall.com. Meanwhile, affordable luxury
brands continued to expand as Coach, Furla, Michael Kors and Kate Spade
opened new stores in key submarkets.
110
38 RETAIL
4.8%
STAGE IN CYCLE
120
In the core area, open-market ground floor base rents increased by 4.8%
y-o-y to RMB 52.6 per sqm per day. Non-core rents rose 5.1% y-o-y to
RMB 20.7 per sqm per day. In both markets, successful malls undergoing
tenant adjustment outperformed the market and drove rental growth.
In 4Q15, domestic investor Chengli Properties acquired Mall 818 from CBRE
Global Investors for a total price of RMB 1.01 billion.
400
300
200
100
0
SQM PER DAY,

NET ON NLA
AFFORDABLE LUXURY RETAILERS GAIN MOMENTUM IN 4Q15
Financial Indices
80
4Q11
RENTAL
GROWTH Y-O-Y
OUTLOOK: COMPETITION TO INTENSIFY IN KEY CROWDED AREAS

11
12
Completions
13
14
15
16F
Luxury retailers are expected to remain cautious opening fashion-only stores,

and will focus instead on experience-oriented sectors such as F&B and
cosmetics. In the mass market, fast fashion brands are expected to continue
to seek space and be highly sought after by landlords.
The non-core supply pipeline for 20162017 will be large, especially in the
Hongqiao Transportation Hub and Longbai areas. Intense competition should
lead to lower rental growth in these locations. Meanwhile, dominant malls in
key precincts and maturing non-core areas are expected to continue to drive
rental growth.
Future Supply
Source: JLL
Physical Indicators are for the Core market.
Note: Shanghai Retail refers to Shanghais Overall Core and Non-core retail markets.
Fast fashion speeds up expansion in new malls in

emerging areas.
Silvia Zeng, Head of Research, South China
SQM PER MONTH,

NET ON NLA
2.7%
RMB 367.1
STAGE IN CYCLE
Rents
Stable
FOREIGN MID-TIER BRANDS ACCELERATE EXPANSION INTO EMERGING AREAS
Financial Indices
The retail market continued to see adjustment of tenant and trade mixes,
having witnessed weakening expansion from general retailers and
subsequent vacancy pressure in several shopping malls in non-core
locations.
Fast fashion and F&B retailers were still leasing demand drivers, with
international mid-range retailers becoming key players in newly completed
malls in emerging precincts. For example, Uniqlo opened four stores in
Guangzhou in 4Q15. During the quarter, the large amount of new openings
pushed total net absorption to 278,000 sqm.
140
130
120
Index
110
100
90
80
4Q11
HEALTHY PRE-COMMITMENT EASES VACANCY PRESSURE AMID SUPPLY BOOM
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index
Three shopping malls all located in emerging precincts - opened during the
quarter. AEON Mall Panyuguangchang (GFA 103,000 sqm), Nansha Wanda
Plaza (GFA 100,000 sqm) and Sky+ (GFA 86,000 sqm) opened, increasing total
stock to 2.6 million sqm.

Source: JLL
Healthy pre-commitment rates helped relieve vacancy rate pressure in the

quarter, with overall vacancy decreasing by 0.1 percentage points q-o-q to
2.2%.
Physical Indicators
450
400
350
Landlords remained concerned about the slower expansion of general

retailers and were reluctant to raise rents. Thus, overall rents in Guangzhou
stayed broadly stable, rising just 0.3% q-o-q. Rental growth continued to be
driven by established malls in the mature Tianhe North precinct and drawn
back by decreasing rents in traditional shopping precincts.
As mall owners showed signs of more negotiability on asset prices, existing
buyers continued to pursue higher yields. Thus, market yields decompressed
and capital values trended down slightly.
OUTLOOK: MORE HIGH-QUALITY MALLS TO UPGRADE RETAIL LANDSCAPE

Experienced mall operators will continue to enter the market while landlords
of old malls are expected to optimise tenant and trade mixes. Despite
international fast fashion and F&B tenants seeing less impact from slowing
retail sales growth, most local general retailers are expected to focus on
rental cost control. Overall, we expect moderate demand momentum in 2016.
Healthy pre-commitment of the 360,000 sqm to new supply due in 2016 will
likely relieve vacancy pressure and overall vacancy rates should increase
slightly to 34% over the next 12 months. We retain our conservative rental
outlook in the short term and foresee investors maintaining their cautious
attitude.
Note: Guangzhou Retail refers to Guangzhou Overall Prime Retail market.
Thousand sqm
RENTS SUSTAIN LACKLUSTRE GROWTH MOMENTUM
300
250
200
150
100
50
0
11
12
Completions
13
14
15
16F
Future Supply
Source: JLL
39 RETAIL
RENTAL
GROWTH Y-O-Y
GUANGZHOU
An influx of tourists is aiding footfalls in Tokyos

prime retail areas and this is supporting healthy
retailer demand.
TOKYO
180
Growth
Slowing
Solid retailer demand in 4Q15, in particular from affordable luxury brands for
ground floor space and service-based retailers for upper floor space. New
openings in 4Q15 included Michael Kors on Ginza Chuo-dori and Moncler on
Maronier-dori Ginza. Kering opened a Saint Laurent store in Omotesando in a
building they acquired in 2013.
150
Index
JPY 77,189
Large-scale retail store sales were stable in OctoberNovember (0.6% y-o-y),

while department stores continued to register strong sales growth for
cosmetics (30% y-o-y) and luxury goods (13% y-o-y). Visitor arrivals registered
a record high in the OctoberNovember period (42% y-o-y) and this aided
footfall in prime areas.
160
140
130
120
110
100
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
VACANT SPACE REMAINS EXTREMELY LIMITED

No new supply entered the market and vacancy remained tight in 4Q15.
The tenant line-up for the 11-storey Tokyu Plaza Ginza (GFA 50,000 sqm) which
is due to open in 1Q16 was announced in 4Q15. Ground floor occupiers will
include Bally, Kiton and Emporio Armani, while upper floor tenants include
Japanese store Find Japan Market and a duty-free store (both customs and
sales tax exempted).
Retail Sales
10
8
RENTS CONTINUE TO RISE; GINZA GROUND FLOOR RENTS REACH RECORD HIGH
Rents averaged JPY 77,189 per tsubo per month at end-4Q15, an increase of
3.3% q-o-q and 11.6% y-o-y. Rental growth picked up with ground floor space
witnessing a slightly faster pace of growth than upper floor space. Ginza
ground floor rents continued to reach new highs and have surpassed the
previous peak level recorded in 2007.
Capital values increased 7.3% q-o-q and 34.3% y-o-y at end-4Q15. Quarterly
growth accelerated while cap rates compressed to their lowest level since
2007. Investment deals in the quarter were led by Japan Retail Funds
acquisition of G-Building Minami Aoyama 01 for JPY 3.65 billion or an NOI cap
rate of 4.0%.
4
y-o-y (%)
11.6%
STAGE IN CYCLE
170
40 RETAIL
TSUBO PER MONTH,

GROSS ON NLA
SOLID DEMAND AMID RESILIENT RETAIL SALES IN PRIME AREAS
Financial Indices
90
4Q11
RENTAL
GROWTH Y-O-Y
2
0
2
4
6
8
3Q10
3Q11
3Q12
3Q13
3Q14
3Q15
Sales Growth of Large-Scale

Retail Stores in Tokyo
Source: Ministry of Economy, Trade and Industry
OUTLOOK: RENTAL AND CAPITAL VALUE GROWTH TO BE SUSTAINED IN 2016

According to Oxford Economics, retail sales are expected to grow moderately

in 2016 (1.4%). During the same period, household disposable income is
projected to rise amid an improving labour market. Visitor arrivals should also
grow further with support from government tourism campaigns (e.g. Visit
Japan Campaign).
With robust demand and healthy forward commitments to new supply in

2016, vacant space is expected to remain scarce and support a further rise in
rents. Capital values are expected to increase, albeit at a slower pace, largely
reflecting rent growth.
Note: Tokyo Retail refers to Ginza and Omotesando Prime retail markets.
Fragile consumer sentiment impedes business

confidence, driving rents down.
Southeast Asia
SQ FT PER MONTH,
3.2%
SGD 36.85
STAGE IN CYCLE
Rents
Falling
SUBDUED CONSUMER SPENDING DAMPENS RETAILER CONFIDENCE
Financial Indices
After a quarter of modest recovery, growth in retail sales (excluding auto

sales) fell into negative territory in 4Q15. Retail trades such as furniture and
watches and jewellery recorded major declines in sales volumes. This
suggested that consumers have cut back on discretionary spending in view of
the economic slowdown.
On a positive note, visitor arrivals in October improved for the sixth straight
month, denoting a steady recovery. This provided retailers some confidence,
on top of the year-end festivities. New leases were mostly taken out in large
malls in the Orchard and Marina areas. The consolidation of non-profitable
stores continued across the island.
120
115
110
Index
100
95
90
4Q11
SEVERAL MALLS CLOSE FOR UPGRADING

In light of the continuing lacklustre leasing environment, more malls were
closed for upgrading. In 4Q15, a prominent Suburban mall, Compass Point,
was closed entirely for renovation while all of the shops in Tiong Bahru Plaza
except in the basement shut for refurbishment. Also, part of Orchard Central
will be closed for reconfiguration in 2016.
The opening of the Suburban mall, Waterway Point, was deferred to 1Q16 due
to construction delays. The Promenade @ Pelikat strata-titled mall, although
physically completed, did not open in 4Q15 as most of the units remained
vacant.
LANDLORDS GIVE MORE AGGRESSIVE RENT DISCOUNTS TO ATTRACT TENANTS

Prime space rents in top-tier malls in the Orchard shopping belt were
stable due to limited availability of space. However, rents in other projects,
especially strata-titled malls which had difficulty in attracting popular
retailers, fell significantly and this led to a deeper correction in average prime
rents in 4Q15 than the previous quarter.
The sluggish leasing market kept investment sentiment subdued. Large deals
were limited and mostly for malls with the purpose of redevelopment or
those undergoing major overhaul. Yields remained stable as the reductions in
rentals and capital values kept pace.
OUTLOOK: WEAK RETAILER CONFIDENCE TO HINDER RENT GROWTH

Over the next few quarters, the negative impact of rising interest rates on
purchasing power and spending propensity may result in more depressed
leasing demand. A fragile economic outlook coupled with modest tourism
growth may lead to further downward rental pressures in 2016.
Consolidation is expected to continue amid changing consumer preferences,

disruption from online retailing and a labour shortage. 2016 is expected to be
no less challenging than 2015.
Note: Singapore Retail refers to Singapores Primary, Marina and Suburban retail markets.
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Financial Indicators are for Orchard Road.
Physical Indicators
200
150
Thousand sqm
105
100
50
11
12
Completions
13
14
15
16F
Future Supply
Source: JLL
41 RETAIL
RENTAL
GROWTH Y-O-Y
SINGAPORE
International retail brands continue expanding

across the market, particularly in the
F&B segment.
BANGKOK
120
THB 2,443
Growth
Slowing
Prime grade retail space was still in demand in 4Q15 with positive net
absorption numbers driven by remarkably high pre-commitments at the
recently opened Central Festival East Ville and Zpell. As a result, the marketwide prime grade vacancy rate declined to 4.1% in 4Q15, down from 6.1% in
the previous quarter.
International retailers continued to show strong interest in entering the

Bangkok market as well as expanding existing footprints. In 4Q15, at least
three internationally recognised retailers opened their first stores in Thailand
in the city.
110
Index
4.2%
STAGE IN CYCLE
115
105
100
95
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
LARGE INCREASE IN SUPPLY FROM NEW COMPLETIONS AND ONE RENOVATION

Central Festival East Ville and Zpell opened in 4Q15 with total leasable space
of 122,500 sqm. Another completion in 4Q15 was the renovation of Central
Plaza Pinklao, which added a further 8,000 sqm. The three projects combined
brought the market-wide prime grade total stock to 2,988,000 sqm in 4Q15.
Retail operators continued to invest in existing assets, undertaking

renovations to increase competitiveness. We expect this trend to continue as
the appetite for building new large centres appears to be waning.
Physical Indicators
500
RENTS AND CAPITAL VALUES INCREASE SLIGHTLY

400
Thousand sqm
42 RETAIL
SQM PER MONTH,

GROSS ON NLA
NEWLY OPENED CENTRES SEE STRONG FOOT TRAFFIC AND COMMITMENTS
Financial Indices
90
4Q11
RENTAL
GROWTH Y-O-Y
Rents rose moderately, mainly due to solid leasing demand, especially from
international retailers and the limited availability of prime retail space.
Average gross ground floor rents in 4Q15 stood at THB 2,443 per sqm per
month, a 0.5% increase q-o-q.
Capital values increased 1.0% q-o-q to THB 181,830 per sqm. With capital
value growth outpacing rental growth in 4Q15, market yields declined slightly
to 12.5%.
300
200
100
11
12
Completions
13
14
15
16F
Future Supply
OUTLOOK: STRONG DEMAND IS EXPECTED IN 2016

Show DC with an NLA of 78,000 sqm is scheduled to complete in 2Q16 and

will open with a number of new-to-market brands including Lotte Duty Free.
Moreover, the refurbishments of two existing centres are expected to be
completed by 2Q16. The new expected completions and refurbishments will
add around 112,500 sqm to prime stock by end-2016.
Despite limited future projects from big developers in 2016, a large amount of
investment has been allocated by major developers for the refurbishment of
older existing retail centres. This should push up rents and capital values
higher.
Source: JLL
Note: Bangkok Retail refers to Bangkoks Prime retail market.
F&B remains the most active segment and some

existing fashion brands expand.
SQM PER ANNUM,

7.4%
IDR 5,822,743
STAGE IN CYCLE
Growth
Slowing
NET TAKE-UP REMAINS SUPPLY-DRIVEN DUE TO LOW VACANCY
Financial Indices
Net absorption was driven by new tenants entering St Moritz Phase II; the
majority of these were already-established retailers seeking expansion space
in the supply-constrained prime retail market. Persistently low vacancy rates
have meant that net absorption has been supply driven in recent quarters.
Anecdotal evidence suggested a challenging retail market in 4Q15 with some
retailers reporting shortfalls in their targets. Hardest hit was mid-end fashion,
while F&B remained strong. However, a sparse supply pipeline, healthy
occupancy and a large consumer base meant that many landlords remained
in strong positions.
140
130
120
Index
110
100
90
4Q11
NO COMPLETIONS IN 4Q15
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index
A moratorium on stand-alone retail development in the CBD has been in place

since 2011. While this is not an official policy, the Jakarta governor is
selective in signing off on new projects. Supply has been limited over the past
couple of years with only two new completions recorded since mid-2013.

Source: JLL
No new projects were delivered in the final quarter of 2015 and the market
vacancy rate decreased to around 6%. Limited supply and persistently low
vacancy rates meant that landlords of top-performing malls continued to
report waiting lists for prime units.
Physical Indicators
400
350
RENTS STABLE IN THE FINAL QUARTER; NO EN BLOC SALES
Despite low vacancy rates and a thin supply schedule, rental increments in
recent quarters have been slight. The retail environment in 4Q15 was a
challenging one, with slow economic growth and rupiah depreciation
continuing to impact the market and rents remained unchanged q-o-q.
Strong fundamentals meant that many landlords remained unwilling to offload
their assets in 2015 and, as such, no en bloc transactions were recorded in
the year. However, interest from international institutional investors remained
strong.
OUTLOOK: LOW VACANCY AND STEADY RENTAL GROWTH LIKELY TO CONTINUE

One new completion, Central Park Extension, is expected to boost total stock
by around 44,000 sqm in 2016. The low vacancy environment in Jakarta is
expected to mean that demand will continue to be supply-driven in 2016 and
we expect F&B to continue to be the most active segment.
Vacancy rates are likely to remain low and landlords of top-performing malls
are expected to continue to be in the enviable position of having waiting lists
for prime units. As such, a continuation of the historical trend of slow, steady
rental growth is likely over the next 12 months.
Note: Jakarta Retail refers to Jakartas overall Prime retail market.
300
Thousand sqm
250
200
150
100
50
0
11
12
Completions
13
14
15
16F
Future Supply
Source: JLL
43 RETAIL
RENTAL
GROWTH Y-O-Y
JAKARTA
DLF Mall of India becomes operational and

pushes net absorption to the highest level in
32 quarters.
DELHI
120
0.4%
INR 248
STAGE IN CYCLE
Rents
Rising
In 4Q15, DLF Mall of India in Noida became operational with nearly 86% of its
space pre-committed. This new mall was the main contributor to strong net
absorption (1.6 million sq ft) in the quarter.
Net take-up was sluggish in Prime South and Prime Others; while Suburbs
contributed nearly 96% of overall net absorption. H&M opened its second
store in Prime South and another store in Gurgaon along with GAP. H&M,
Smaash and LC Waikiki signed leases for big stores in DLF Mall of India along
with a host of other brands.
115
110
Index
SQ FT PER MONTH,
GROSS ON GFA
NET TAKE-UP JUMPS ON STRONG COMMITMENTS TO DLF MALL OF INDIA
Financial Indices
105
100
44 RETAIL
RENTAL
GROWTH Y-O-Y
95
90
4Q11
DLF MALL OF INDIA OPENS IN NOIDA

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

Source: JLL
Financial Indicators are for the Prime South.
Quarterly supply of 1.8 million sq ft was the highest in 32 quarters.
Vacancy fell by 110 bps q-o-q to 23.9% largely due to the new mall becoming
operational with strong pre-commitment. Prime Others had the highest
vacancy among all retail submarkets in Delhi.
CAPITAL VALUES EDGE UP IN PRIME OTHERS AND SUBURBS

Physical Indicators
Rents remained generally stable except for an increase in the Suburbs, which
was largely due to higher rents in recently completed malls in the Noida
precinct.
A lack of quality assets for sale continued to limit investment activity.
350
300
Thousand sqm
250
OUTLOOK: AVAILABILITY OF SPACE IN QUALITY MALLS TO IMPACT TAKE-UP
200
150
Most shopping centres expected to complete over the next 12-month period
had low to moderate pre-commitments as at end-4Q15. Nevertheless, some of
these malls should attract retailer interest as they come closer to completion.
Retailers are expected to remain keen to open stores in high foot traffic high
street areas and malls. Hypermarkets, entertainment outlets, F&B retailers
and international retailers are expected to remain active in expanding their
foot print.
100
50
0
11
12
Completions
13
14
15
16F
Future Supply
Source: JLL
Note: Delhi Retail refers to Delhi NCRs Overall prime retail market.
With two additional mall closures in the quarter,

2015 can be viewed as a year of
supply rationalisation.
MUMBAI
1.2%
INR 253
STAGE IN CYCLE
Rents
Rising
LEASING ACTIVITY SURGES

Suburbs recorded around 90% of the total leasing volumes in 4Q15, followed
by Prime South and Prime North.
Leasing activity in the quarter was dominated by apparel and F&B operators;
however, personal care, entertainment and electronics retailers were also
active.
Financial Indices
120
115
110
MORE MALLS WITHDRAWN FROM THE MARKET
105
100
Two malls in the Suburbs with a combined area of 5 million sq ft were closed
for refurbishment in 4Q15.
95
No new malls became operational in the city during the quarter.
90
4Q11
RENTS RISE AMID A PICK-UP IN LEASING ACTIVITY AT MAJOR PRIME MALLS
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index
Overall rents rose sharply by 3.2% y-o-y to INR 129 per sq ft per month in 4Q15,
with Suburbs witnessing the biggest uplift.

Source: JLL
Financial Indicators are for the Prime South.
In 4Q15, Suburbs recorded a mild compression in yields of 10 bps q-o-q to

11.2%.
Physical Indicators
OUTLOOK: RENTS AND CAPITAL VALUES TO CONTINUE TO EDGE UP IN 2016
350
300
2016 may witness atypical retailer categories such as e-commerce,

entertainment and personal care services establishing a bigger presence in
malls.
250
Thousand sqm
With more underperforming malls expected to close in 2016, this should

provide landlords of successful mature malls the opportunity to increase rents
moderately.
200
150
100
50
0
11
12
Completions
13
14
15
16F
Future Supply
Source: JLL
Note: Mumbai Retail refers to Mumbais Overall Prime retail market.
45 RETAIL
SQ FT PER MONTH,
GROSS ON GFA
Index
RENTAL
GROWTH Y-O-Y
Yield benchmarks for the Sydney CBD retail

market have been reset, with major core assets
now firmly priced below 5.00%.
SYDNEY
Andrew Quillfeldt, Associate Director Strategic Research,

Australia
120
Index
AUD 1,933
Rents
Stable
Leasing activity continued to be led by developments. H&Ms affiliated brand,

COS (Collection of Style), and German luxury luggage retailer, Rimowa, have
opened their first Sydney stores at the recently completed 5 Martin Place in
the CBD. 5 Martin Place will also house Canadian fashion retailer, Kit & Ace.
100
Refurbishment of Glasshouse Shopping Centre (5,000 sqm) completed during

the quarter, and now houses Sydney CBDs flagship H&M and Zara Home
stores. Westfield Chatswood (3,000 sqm), which also completed refurbishment
and extension works in 4Q15, had secured Topshop Topman, H&M and Uniqlo
as tenants.
90
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
COMPLETIONS REACH 223,800 SQM IN 2015, ABOVE LONG-TERM AVERAGE

Around 40,100 sqm of new retail space was added in metropolitan Sydney in
4Q15, across eight development projects. Stockland completed stage two of
the AUD 228 million redevelopment and extension to Stockland Wetherill Park.
Together the two stages added 17,000 sqm of additional space to the subregional centre.
The average specialty retail vacancy rate declined from 2.7% in 1H15 to 2.4%
in 2H15. The improvement was largely attributable to higher occupancy within
the CBD and neighbourhood sub-sectors.

Source: JLL
Financial Indicators are for regional shopping
centres.
Physical Indicators
300
Thousand sqm
0.0%
STAGE IN CYCLE
110
46 RETAIL
SQM PER ANNUM,

NET ON GLA
EXPANSION OF INTERNATIONAL RETAILERS REMAINS A MAJOR THEME
Financial Indices
80
4Q11
RENTAL
GROWTH Y-O-Y
250
AUD 862.7 MILLION OF INVESTMENT VOLUMES IN 4Q, A STRONG FINISH TO 2015
200
Rental growth was evident across the CBD, neighbourhood and bulky goods
sub-sectors, and very modestly in the sub-regional sub-sector, through 2015.
Individual performance of regional centres continued to vary and rents within
this sub-sector remained stable on average.
The largest single-asset transaction in Sydney in 2015 was the sale of a 50%
share in World Square, a CBD shopping centre, for AUD 285 million. Retail
yields have compressed significantly since 3Q14 due to robust investment
activity levels and investor demand for retail assets.
150
100
50
0
11
12
Completions
13
14
15
16F
Future Supply
Source: JLL
OUTLOOK: SYDNEY IS EXPECTED TO CONTINUE TO LEAD THE RENTAL RECOVERY

Retail supply additions are expected to moderate in 2016, from the strong level
reached in 2015. Landlords will continue to aim to secure new international
retailers as they expand their presence in Sydney.
Yields are likely to reach their low point for the current cycle in 2016. Yield
compression is unlikely to be a major driver of capital value growth beyond
the next 12 months, but a recovery in rental growth should support upward
pressure on capital values.
Note: Sydney Retail refers to Sydneys overall retail market.
Landlords continue to pursue major

redevelopment projects to attract new retailers and
grow market share.
Andrew Quillfeldt, Associate Director Strategic Research,
Australia
SQM PER ANNUM,
NET ON GLA
0.0%
AUD 1,462
STAGE IN CYCLE
Rents
Stable
HIGH RETAIL TURNOVER GROWTH EASES SLIGHTLY
Financial Indices
Retail turnover growth has eased but is growing at an above-trend pace (4.8%
y-o-y in November 2015), partly reflecting a slowdown in food sales growth.
Household goods continued to be the primary driver of overall retail spending,
with growth of 11.9% y-o-y in November 2015.
Many of the new international retailers that have expanded into Australia in
recent years continued to grow their store network in Melbourne in 2015.
H&M, Uniqlo, Sephora and more recently, MRP (Mr. Price) have expanded
and committed to new stores.
120
110
Index
90
SUPPLY INCREASES IN 2015 BUT REMAINS BELOW AVERAGE
The average vacancy rate for Melbourne remained stable in the second half
of 2015 (2.6% in December compared with 2.5% in June 2015). The CBD
vacancy rate fell further in 2H15, consistent with a national trend of improving
CBD retail market conditions. Conversely, the vacancy rate for neighbourhood
centres rose, in part reflecting higher than average neighbourhood shopping
centre supply and growing competition in the specialty store fresh food
segment of the market.
Overall supply in Melbourne rose from 121,000 sqm in 2014 to 160,100 sqm in
2015, but remains low compared to the 10-year average of 201,800 sqm. Many
shopping centres are going through refurbishment and extension works to
attract customers and new retailers. LaSalle Investment Management is
redeveloping St. Collins Lane in the Melbourne CBD, adding 1,300 sqm. The
project has attracted premium and luxury retailers.
RENT GROWTH EVIDENT ACROSS CBD AND BULKY GOODS SUB-SECTORS

A declining CBD vacancy rate and strong growth in household goods

spending has driven rental growth across the CBD and bulky goods subsectors. Leasing market conditions across other retail sub-sectors remain
diverse and rents have remained stable.
Retail investment volumes reached AUD 678.0 million in 4Q15 in Victoria.
Dandenong Plaza was sold by GPT Group for AUD 197.0 million.
OUTLOOK: RETAIL CONDITIONS LINKED TO THE HOUSING MARKET IN 2016

The drivers of retail spending growth suggest a positive outlook for 2016, but
there are risks. Retail spending is more exposed to the housing market than
it normally is. Growth in house prices has supported wealth and confidence,
while strong residential construction is boosting household goods spending.
Investment activity is likely to remain high in 2016, with a large number of

buyers and vendors motivated to undertake transactions to redirect their
portfolios towards different retail sub-sectors or assets with a different risk
profile.
Note: Melbourne Retail refers to Melbournes overall retail market.
80
4Q11
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16

Source: JLL
Financial Indicators are for regional shopping
centres.
Physical Indicators
350
300
250
Thousand sqm
100
200
150
100
50
0
11
12
Completions
13
14
15
16F
Future Supply
Source: JLL
47 RETAIL
RENTAL
GROWTH Y-O-Y
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49 RESIDENTIAL
Residential
Home sales come to a standstill as

US interest rates lift off.
HONG KONG
120
Growth
Slowing
Leasing activity slowed considerably as the market entered the quiet season.
Traditional luxury stock faced increased competition with residential units
offered at smaller lump sum rentals amid the ongoing tenant downgrading
trend and a surge in new completions ready for occupation.
105
Index
HKD 44.8
Average monthly home sales fell to an all-time quarterly low of 3,390 in 4Q15,
recording only 1,854 secondary transactions secondary transactions, which
was 70% lower than the long-term monthly average of 6,177. Ultra-luxury
properties seemed more immune to faltering sentiment as buyers fetched the
last two respective units available at Opus Hong Kong and 28 Barker Road.
110
100
95
90
85
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
SUPPLY FOR THE FULL YEAR REACHES THE HIGHEST LEVEL SINCE 2009

The expected delivery of 263 units to the luxury market, including 67 units at
Mount Nicholson on The Peak and 47 units at Ultima (Phase 1) in Homantin,
should boost supply for the full year to 486 flats, the highest level since 2009.
In its recently released quarterly land sale programme, the government

forecasts to contribute 20,300 flats to the land supply in FY2015/16, exceeding
the 19,000-unit annual private housing target.
Physical Indicators
700
SUSTAINED INTEREST IN NICHE PROPERTIES HOLD CAPITAL VALUES STEADY
600
With landlords turning more flexible in rental negotiations and agency fee
arrangements, rents of luxury properties edged down 0.8% on the previous
quarter, coming under pressure for the first time since 2Q14.
Investors eyed niche properties in the luxury segment, owing to their

perceived rarity against an expanding supply pipeline. BPE Asia Real Estate
showed its confidence in the long-term outlook for luxury properties in its 50%
share acquisition in the holding company of a development project in Tai Tam
from National Electronics.
500
Units
3.3%
STAGE IN CYCLE
115
50 RESIDENTIAL
SQ FT PER MONTH,
NET ON SA
SECONDARY SALES MARKET HIT HARD AS BUYERS HOLD OFF ON PURCHASES
Financial Indices
80
4Q11
RENTAL
GROWTH Y-O-Y
400
300
200
100
0
11
12
Completions
13
14
15
16F
Future Supply
OUTLOOK: LEASING AND SALES MARKET TO FACE GROWING CHALLENGES

Whilst the initial US interest rate hike had long been anticipated and priced in
by the market, a sustained cycle hike coupled with supply side pressure,
should eventually weigh on capital values, resulting in a correction of 05% in
2016 and a more substantial downside (up to 20%) in 20172018.
Leasing activity in the luxury segment should continue to face challenges

brought about by tenant downgrading trends and a surge in leasing stock.
With companies still looking to increase headcounts, we expect rents to grow
in the range of 05% for the full year, though any upside potential remains
limited.
Source: JLL
Note: Hong Kong Residential refers to Hong Kongs Overall Luxury residential market.
High-end prices face downside risk under slow

sales environment.
SQM PER MONTH,

GROSS ON GFA
0.4%
RMB 127
STAGE IN CYCLE
Growth
Slowing
LUXURY APARTMENT TRANSACTION VOLUMES DECLINE SIGNIFICANTLY
Financial Indices
Sales volumes for luxury apartments declined 32% q-o-q to only 432 units
in 4Q15. Abundant new supply gave buyers more choice, but much higher
quotations for new projects constrained the sales rate. However, 304 high-end
villa units were sold during the same period, up 2% q-o-q. Villa projects with
lower unit prices recorded higher sales volumes.
High-end residential leasing demand remained soft. Heavy air pollution
pushed some expatriates to consider relocation from Beijing.
160
150
140
Index
No new supply entered the serviced apartment leasing market. However,

Pacific Century Place, a serviced apartment project near Sanlitun, was
withdrawn as it underwent refurbishment. Not considering the withdrawn
project, the vacancy rate was largely stable for the serviced apartment
market.
PRIMARY MARKET DISCOUNTS WEIGH ON CAPITAL VALUES

Under year-end performance pressure, some developers offered small

discounts aimed at increasing their sales rate. The primary capital value for
luxury apartments and high-end villas declined 1.7% and 4.2% q-o-q in 4Q15,
respectively.
Rents for luxury apartments and serviced apartments were flat, while rents
for high-end villas continued to decline, by 1.1% q-o-q.
OUTLOOK: INCREASING LAND COST TO DRAG ON SALES RATE AND PRICE

The hot land sales market by year-end demonstrated that many developers
are confident. However, several developers cancelled the land they
purchased, reflecting the increasing risk and uncertainty of the market.
High prices at new projects, partially due to high land prices, and Beijings
continued house purchase restriction, are likely to restrict sales. Therefore,
prices should be stable in 2016 as price appreciation is expected to be limited
under the slow sales rate.
Note: Beijing Residential refers to Beijings Overall Luxury and High-end residential market.
100
90
4Q11
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Financial Indicators are for the Overall Luxury
market.
Physical Indicators
16,000
14,000
12,000
10,000
Units
Developers rushed to launch their projects before the end of year, further
encouraged by the active sales conditions over the past couple of quarters. A
total of 794 luxury apartment units entered the sales market in 4Q15, up 39%
q-o-q. The high-end villa sales market recorded 431 new units during the
same period, down 43% q-o-q, but up 12% y-o-y.
120
110
ABUNDANT NEW SUPPLY ENTERS THE SALES MARKET

130
51 RESIDENTIAL
RENTAL
GROWTH Y-O-Y
BEIJING
8,000
6,000
4,000
2,000
0
11
12
Completions
13
14
15
16F
Future Supply
Source: JLL
Financial Indicators are for the Overall Luxury
market.
Accommodative policy stance to drive growth in

sales volumes and prices.
SHANGHAI
Joe Zhou, Head of Research, China
130
Index
Rents
Rising
In the serviced apartment market, demand picked up slightly towards yearend. At the same time, there were no new openings of serviced apartment
projects. As a result, the vacancy rate was brought down by 1.1 percentage
points to 11.1% in 4Q15.
115
110
105
100
95
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
STRONG MARKET SENTIMENT ENCOURAGES NEW LAUNCHES

In the high-end segment, the number of new launches remained high amid
buoyant buying sentiment. 1,326 units were put on the market for sale in 4Q15.
For the full year, a total of 3,270 units were launched, the highest level since
2009.
In the serviced apartment market, three projects with a total of 450 units were
withdrawn in 4Q15 as landlords decided either to sell the units on a stratatitle basis or convert them to office use. As such, total stock of the serviced
apartment market fell by 7.3% y-o-y in 4Q15.
Physical Indicators
4,000
3,500
HIGH-END PRICES ON THE RISE TOWARDS YEAR-END
3,000
2,500
Units
RMB 137.3
Under an accommodative policy stance, market sentiment remained bullish

in 4Q15. Primary sales volumes in the mass market grew 22% q-o-q in 4Q15,
concluding the year with 15 million sqm sold, up 51% y-o-y. Likewise, the highend segment saw 934 units sold in 4Q15, bringing the full-years sales volume
to a six-year high of 3,166 units.
120
52 RESIDENTIAL
3.4%
STAGE IN CYCLE
125
On the back of strong sales, developers continued to raise their sales prices
through the quarter. Primary prices for high-end apartments grew 1.9% q-o-q
to RMB 86,305 per sqm in 4Q15, accelerating from last quarters 1.5%. For the
full year of 2015, high-end prices grew 6.2% y-o-y.
In the leasing market, as demand improved slightly and new supply remained
limited, some landlords regained confidence and raised rents mildly. As such,
average rents for serviced apartments edged up by 0.3% q-o-q. For the full
year of 2015, average rents rose by only 0.9% y-o-y.
2,000
1,500
1,000
500
0
SQM PER MONTH,

GROSS ON GFA
SALES VOLUMES IN 2015 REACH SIX-YEAR HIGH
Financial Indices
90
4Q11
RENTAL
GROWTH Y-O-Y
11
12
Completions
13
14
15
16F
Future Supply
Source: JLL
OUTLOOK: STRONG SALES MOMENTUM LIKELY TO CONTINUE IN 2016

As the policy stance is likely to remain accommodative in 2016, we expect the

strong buying sentiment to carry into 2016. As such, sales volumes in
Shanghai should remain high in 2016 for both the mass market and the highend segment. We also expect sales prices to grow further in 2016.
As most of the MNCs remain cautious on expansions, leasing demand from

expatriates should remain at a similar level in 2016 compared to that of 2015.
However, due to very limited new supply, vacancy for serviced apartments is
likely to drop in 2016, while rents could grow slightly.
Note: Shanghai Residential refers to Shanghais high-end residential market.
Another year of weak performance in the

Singapore residential market.
Ong Teck Hui, National Director Research, Singapore
SQ FT PER MONTH,
GROSS ON GFA
8.7%
SGD 3.77
STAGE IN CYCLE
Decline
Slowing
DEMAND CONTINUES TO SOFTEN
Financial Indices
A total of 271 transactions of non-landed residential units in Prime districts

9, 10 and 11 were recorded in 4Q15. This was a 31% decline from 3Q15 and
largely due to the year-end holiday and Christmas season. However, it was
also a decline of 21% y-o-y, which showed a further weakening in market
confidence.
Primary sales were affected more than secondary sales with only 56 units
sold by developers, a decline of 47% q-o-q and 56% y-o-y. This was partially
caused by the reduced number of units launched in prime districts as
developers were less willing to introduce new units into the sluggish market.
110
100
90
Index
80
70
60
4Q11
DRAMATIC FALL IN NEW UNIT LAUNCHES AND COMPLETIONS IN 2015

The completion of 260 units in 4Q15 brought the full-years total to 2,041, less
than half the 4,325 units completed in 2014, but about the same level as in
2013. New supply in prime districts is expected to decline significantly from
2016 onwards as a result of reduced development arising from a cut-back in
government land sales and dormant collective sales in prime districts since
2013.
The number of non-landed residential units launched in prime districts fell
drastically from 1,389 units in 2013 and 889 units in 2014 to only 100 units in
2015. Developers have delayed their launches due to poor sales responses.
4Q12
4Q13
RV Index (Prime)
CV Index (Prime)
4Q14
4Q15
4Q16
RV Index (Luxury)
CV Index (Luxury)

Source: JLL
53 RESIDENTIAL
RENTAL
GROWTH Y-O-Y
SINGAPORE
Physical Indicators
5,000
4,000
MARKET SENTIMENT REMAINS WEAK
Gross rents in the Typical Prime market fell 2.1% q-o-q to SGD 3.37 per sq ft
per month, while in the Luxury Prime segment rents declined 1.1% q-o-q to
SGD 3.77 per sq ft per month. The challenging local and global economy has
resulted in reduced accommodation budgets for expatriates, while
government restrictions on foreign labour have also limited leasing demand.
Typical Prime capital values fell 1.7% q-o-q to SGD 1,191 per sq ft, while
those for the Luxury Prime segment declined 1.3% q-o-q to SGD 1,991 per sq
ft. Government cooling measures and an economic slowdown continued to
impact capital values.
OUTLOOK: RENTS AND CAPITAL VALUES TO CONTINUE TRENDING DOWN

Rents are expected to decline further in 2016 as the key drivers of the leasing
market remain weak. Leasing demand continues to be constrained by
government restrictions on foreign labour, which are not expected to be
relaxed in the near term.
Capital values are also expected to weaken further due to downside risks
related to the economic slowdown and prolonged government cooling
measures.
Note: Singapore Residential refers to Singapores Overall Prime and Luxury residential markets.
3,000
Units
2,000
1,000
11
12
Completions
13
14
15
16F
Future Supply
Source: JLL
Competition for rental tenants in both

condominiums and traditional apartments is
fierce, leading to limited rental increases and
slowly declining yields.
BANGKOK
120
0.3%
THB 515
STAGE IN CYCLE
Growth
Slowing
Four new projects were launched during the quarter with a combined sales
rate of 45%. The most high profile launch was from Singha Estate PCL. The
ESSE Asoke, a 419-unit project on Asoke Road achieved a pre-sales rate of
60%.
The vacancy rate in the apartment market remained flat at 7.3% in 4Q15 as no
new suppy entered the market and leasing activity was limited.
115
110
105
Index
SQM PER MONTH,

GROSS ON NLA
ROBUST DEMAND DESPITE SUPPLY AND LAUNCHES BELOW EXPECTATION
Financial Indices
100
95
90
LABOUR SHORTAGES CONTINUE TO CAUSE DELAYS IN PROJECT COMPLETIONS
85
Five condominiums one luxury and four high-end - were scheduled to

complete in 4Q15, but three were delayed due to labour shortages. The two
high-end projects that were completed added 618 units to existing stock,
which now stands at 33,117 units.
No new luxury apartment projects were launched in 4Q15. The River Garden
apartment complex began renovations and reduced stock to 4,257 units.
80
4Q11
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
GRADUAL GROWTH IN RENTS; DEVELOPERS ACQUIRE PRIME LAND PLOTS

Physical Indicators
In 4Q15, gross rents rose slightly to THB 515 per sqm per month while
apartment rents increased 0.6% q-o-q to THB 361 per sqm per month. Capital
values edged up to THB 111,317 per sqm and market yields held generally
stable at 5.0%.
In the investment market, Siamese Asset Co., Ltd . spent nearly THB 1 billion
to acquire two prime land plots, one on Sukhumvit Road and another on
Charoenrath Road. Both sites are slated for high-end condominium
development.
8,000
7,000
6,000
5,000
Units
54 RESIDENTIAL
RENTAL
GROWTH Y-O-Y
4,000
3,000
OUTLOOK: PRIME CONDOMINUM MARKET EXPECTED TO SEE STRONG DEMAND
2,000
1,000
0
11
12
Completions
13
14
15
A total of 3,559 new high-end condominium units from sixteen projects in

Central Bangkok and the Central East are expected to complete in 1H16, with
a further 3,794 due to complete by year-end, most of which have very strong
pre-sales rates.
Despite a weak economy and continued pressure on consumer purchasing

power from high household debt levels, we expect demand for higher end
condominium product to remain strong, as most buyers / investors in the
prime segments are highly liquid and do not face the same debt servicing
requirements as mass market buyers.
16F
Future Supply
Source: JLL
Note: Bangkok Residential refers to Bangkoks Central high-end and luxury residential market.
Taxes, macro headwinds and currency

depreciation continue to impact sales.
JAKARTA
RENTAL
GROWTH Y-O-Y
SQM PER MONTH,

27.0%
IDR 3,460,870
STAGE IN CYCLE
Rents
Stable
OFF-PLAN SALES DEMAND STRONGEST IN THE MID-MARKET
Financial Indices
Demand for serviced apartments continued to be fuelled by business

travellers and embassy staff. This sector is closely linked to the performance
of the office market and with some oil & gas and mining firms downsizing in
4Q15, enquiries from these segments were down.
Demand for luxury condominiums dropped off in 2Q15 with the implementation
of new tax measures. Sales and enquiries for luxury units remained weak for
the remainder of the year due to the tax changes as well as relatively slow
economic growth and currency depreciation.
300
250
200
Index
150
100
50
NO PHYSICAL COMPLETIONS IN 4Q15
No new serviced apartments or luxury condominiums were physically

completed in 4Q15. However, a large volume of new supply is expected to
come online on both fronts over the next 12 months. Vacancy rates in the
serviced apartment market edged down marginally but remained in double
digits.
With off-plan sales demand thinning out at the top end of the market, most
new launches in recent quarters have been in the middle or middle-low
markets. For the most part, developers of luxury units continued to hold off on
launches as demand remained thin in 4Q15.
0
4Q11
Physical Indicators
600
500
400
Units
Due to relatively sluggish economic growth, rupiah depreciation and

adjustments to the super luxury tax, investment demand for luxury apartments
remained limited. However, demand for middle and middle-lower grade
condominiums remains solid. Serviced apartment rents crept down q-o-q.
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
SERVICED APARTMENT RENTS EDGE DOWN AS DEMAND REMAINS SUBDUED

4Q12
4Q13
Rental Value Index
55 RESIDENTIAL
300
200
Interest from both local and international investors remained strong

throughout 2015. Some investment projects were already in the planning
stage in 4Q15 while some international investors were looking for joint venture
partners.
OUTLOOK: DEMAND FOR LUXURY UNITS TO REMAIN SLUGGISH IN SHORT TERM

Short-term demand for condominiums is likely to be strongest in the lowermiddle and middle segments where affordability is stronger and the tax
burden is lower. Any lull in residential sales is likely to be a short-term blip
rather than a long-term trend as Jakartas huge population and expanding
middle class are strong demand drivers.
Serviced apartment rents are likely to turn negative over the next 12 months
as vacancy is likely to remain relatively high and low commodity prices are
expected to continue to impact the oil & gas and mining sectors, meaning
expatriate demand from this important segment is likely to remain thin.
Note: Jakarta Residential refers to Jakartas condominium and apartment markets.
100
0
11
12
Completions
13
14
15
16F
Future Supply
Source: JLL
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57 INDUSTRIAL
Industrial
Quarterly rental growth slows to less than 1% in

4Q15 for first time in more than three years.
HONG KONG
180
Index
140
HKD 12.1
Growth
Slowing
Weak demand from key trading partners saw the value of total exports and
imports fall by 2.8% and 7.1% y-o-y, respectively, in 4Q15. Airfreight cargo and
container throughput continued to recede, down 0.1% and 13.0% y-o-y, over
the same period.
New lettings were primarily being driven by relocation requirements from

3PLs being ousted by landlords looking to restack voids within their facilities
and for consolidation purposes. Hong Kongs Janco Global Logistics and
Koreas Pantos Logistics, for example, together leased over 100,000 sq ft at SF
Centre in Tsing Yi.
120
100
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
NEW LETTINGS AT SF CENTRE LEADS TO OVERALL VACANCY TIGHTENING

Take up at SF Centre in Tsing Yi contributed to vacancy in the overall market

tightening to 1.7%, 2.5 percentage points lower than the start of the year.
Nevertheless, an increase in shadow/marketable space led to some landlords
lowering asking rents.
About 30% of the floor space at Mapletree Logistics Hub in Tsing Yi

scheduled for completion in 1Q16has reportedly been pre-leased. No new
supply was completed in 4Q15.
Physical Indicators
500
INVESTMENT YIELDS CONTINUE TO TIGHTEN DESPITE INTEREST RATE HIKE
450
400
The investment market was dominated by end-users and long-term investors.

Of the three en bloc deals involving warehouse properties, the largest
transaction saw automotive dealer Jardine International Motors acquiring
Chivas Godown in Chai Wan for HKD 1.55 billion (HKD 3,523 per sq ft),
reportedly for self-use.
Investment yields, as a result, tightened by 10 bps q-o-q despite the US

Federal Reserves interest rate hike.
350
Thousand sqm
7.1%
STAGE IN CYCLE
160
300
250
200
150
100
58 INDUSTRIAL
SQ FT PER MONTH,
NET ON GFA
RELOCATION REQUIREMENTS DRIVE LEASING DEMAND
Financial Indices
80
4Q11
RENTAL
GROWTH Y-O-Y
50
0
11
12
Completions
13
14
15
16F
Future Supply
OUTLOOK: A MODEST YEAR AHEAD

The slowdown and rebalancing of the Chinese economy and uncertainties in

the global economy are likely to weigh on Hong Kongs external trade over the
next 12 months. Together with the completion of new supply, vacancy in the
overall market is likely to increase. Rental growth is therefore expected to
flatten out over the course of 2016.
The expiry of the revitalisation policies at end-March 2016 is likely to put

downward pressure on capital values of industrial properties. However, the
low vacancy environment and limited supply of warehouse properties should
continue to attract demand from end-users and long-term investors.
Source: JLL
Note: Hong Kong Industrial refers to Hong Kongs Industrial Warehouse market.
Rents continue to increase despite the slightly

subdued year-end demand.
SQM PER DAY,

3.6%
RMB 1.11
STAGE IN CYCLE
Growth
Slowing
LEASING TRANSACTIONS SLUGGISH DESPITE 3PL FIRMS REMAINING ACTIVE
Financial Indices
Demand was subdued in 4Q15 due to both tight market conditions and the
traditional low season despite there being some small vacant space in Daxing
and Tongzhou Logistics Park (TLP) submarkets. Still, a large commitment in
emerging Pinggu brought the total net take-up to 5,000 sqm.
Third party logistics (3PL) firms were still the most active industry as several
tenants renewed deals while others expanded in Daxing and Pinggu.
Limited vacant space in favourable locations within Beijing restricted large
requirements from e-commerce firms. Meanwhile, JD.com committed to
30,000 sqm of warehouse space in nearby Wuqing, Tianjin.
130
125
120
115
Index
110
105
100
95
90
4Q11
VACANCY CONTINUES TO SLIDE WITH NO NEW SUPPLY FOR THREE QUARTERS
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index
Originally scheduled for completion in 4Q15, Prologis is now targeting 1Q16 for
the completion of its second project in Beijing Airport Logistics Park following
construction delays. Consistent with a growing trend in Beijing, the 99,200
sqm-project will feature a three-storey format.

Source: JLL
Despite the slow demand, no new supply over three consecutive quarters
caused the vacancy rate to continue to slide, declining 0.3 percentage points
q-o-q to 3.0%.
Physical Indicators
400
RENTS RECORD STEADY GROWTH AT 1.1% Q-O-Q
Landlords at projects in mature submarkets still have the power to increase

rents when there are tenant changes. Therefore, overall rents continued to
increase, up by 1.1% q-o-q to RMB 1.11 per sqm per day, or 3.6% y-o-y, the
highest annual growth rate of the past three years.
The Beijing government re-started warehouse land supply sales, which was
previously stopped in 2Q14. A joint-venture between BJ Properties and Kerry
Logistics purchased two warehouse plots in TLP with a total land area of
around 234,000 sqm and leasable area of 350,600 sqm; this is expected to help
relieve tight market conditions in the future.
OUTLOOK: NEW SUPPLY TO LIMIT RENTAL GROWTH

Five projects totaling 368,900 sqm are scheduled for completion in 2016 in both
mature and emerging submarkets, amounting to the highest supply levels in
the past decade. Abundant supply is likely to push the vacancy rate up.
However, with the majority of space at new projects in mature submarkets

committed or under negotiation by tenants requiring large space, these
projects are not expected to weigh on the market. However, landlords in
emerging areas may experience greater leasing challenges. Overall market
rents should still have opportunities to rise in 2016.
Note: Beijing Industrial refers to Beijings prime non-bonded logistics market.
350
300
Thousand sqm
250
200
150
100
50
0
11
12
Completions
13
14
15
16F
Future Supply
Source: JLL
59 INDUSTRIAL
RENTAL
GROWTH Y-O-Y
BEIJING
Robust demand pushes 2015 net absorption to

the highest level since 2010.
SHANGHAI
Joseph Kim, Associate Director - Research, Shanghai
SQM PER DAY,

0.8%
RMB 1.28
STAGE IN CYCLE
Growth
Slowing
DEMAND FROM DIVERSE SECTORS CONTRIBUTES TO STRONG NET TAKE-UP
Financial Indices
140
Non-bonded net take-up rose from 3Q15s 90,000 sqm to over 132,000 sqm in
4Q15, and was evenly spread across submarkets. Total absorption in 2015
reached 380,000 sqm, impressive given the years limited new supply.
Absorption also was strong in the bonded market, with most of the 120,000
sqm-new completion in 3Q15 leased out to a range of tenants.
3PLs, retailers, e-commerce companies and manufacturers were all active in

the quarter, leasing space across the city. For example, clothing seller E-land
leased the entire recently completed Prologis Jinshan project.
130
120
Index
RENTAL
GROWTH Y-O-Y
110
100
90
80
4Q11
NON-BONDED VACANCY CONTINUES TO DROP DUE TO LIMITED SUPPLY

4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index
There was only one new completion in the non-bonded market in 4Q15.
Prologis delivered a 48,000 sqm-project in Jinshan, becoming the first prime
warehouse in that south western district. Two big projects totalling nearly
350,000 sqm were pushed back to early 2016, leaving 2015 supply for the nonbonded market at 120,000 sqm, the lowest level since 2003.
Non-bonded vacancy fell 2.0 percentage points to 9.2% in 4Q15, as a result of

robust demand and limited supply. Vacant space is concentrated in
East Shanghai, especially the Lingang area; vacancy that had built up in
West Shanghai in 2H14s supply wave has almost been fully absorbed.

Source: JLL
Financial Indicators are for the Non-bonded
market.
Physical Indicators
800
700
RENTS REMAIN FLAT DESPITE STRONG LEASING ACTIVITY
Thousand sqm
600
500
Non-bonded rents were flat in 4Q15, resulting in a 0.8% growth for the whole
year 2015. Competition from nearby cities and Shanghais own upcoming
supply wave led landlords to remain cautious about raising rents in spite of
the years encouraging absorption.
There were no en bloc transactions in the quarter. However, Shanghai and

its satellite cities continued to receive interest from both developers and
investors. We expect to see more M&As among existing players as the
industry consolidates.
400
300
200
60 INDUSTRIAL
100
0
11
12
Completions
13
14
15
Future Supply
16F
Source: JLL
OUTLOOK: SUPPLY WAVE TO PUSH UP VACANCY IN THE NEAR FUTURE

With two big projects delayed in 2015, supply in 2016 is likely to achieve a
record high of more than 800,000 sqm, which should push up vacancy over the
next 12 months.
Rental growth in 2016 is expected to be modest due to the satellite city

competition and booming supply in Shanghai. We expect to see a wider
spread of rental growth rates as high-quality projects in the best locations
maintain strong growth even as others grow at relatively slow rates.
Note: Shanghai Industrial refers to high-quality modern warehouses in Shanghai City.
Solid demand and major new supply drives net

absorption to a record level.
TOKYO
TSUBO PER MONTH,

GROSS ON NLA
4.7%
JPY 4,182
STAGE IN CYCLE
Growth
Slowing
BAY AREA DRIVES TAKE-UP
Financial Indices
Industrial production was generally stable in the OctoberNovember period.

However, exports were sluggish during the same period, decreasing for the
first time in 14 months in October and declining further in November.
Robust demand continued to come from third party logistics players, online
retailers and manufacturers. This, combined with pre-commitments to new
supply in the Bay area, resulted in net absorption increasing strongly to
318,000 sqm in 4Q15. For the full year, net absorption totalled 763,000 sqm,
increasing 144% y-o-y.
150
140
130
Index
90
The vacancy rate stood at 6.5% at end-4Q15, increasing 370 bps q-o-q or 330
bps y-o-y. Despite robust demand pushing down vacancy in the Bay area, the
Inland area saw a significant rise of 650 bps q-o-q as new supply entered the
market with low commitment rates - 30% on average.
CAPITAL VALUE GROWTH SLOWS WHILE RENTS DECLINE

Rents averaged JPY 4,182 per tsubo per month, down 0.4% q-o-q but up 4.7%
y-o-y. Growth tipped into negative territory for the first time in 12 quarters.
Rents were stable in the Bay area but decreased slightly in Inland areas.
Capital values increased 0.4% q-o-q and 13.9% y-o-y. Growth slowed in 4Q15
compared with the previous quarter and cap rates further compressed. A
sales transaction announced in the quarter was GLP J-Reits acquisition of
GLP Matusdo for JPY 2.356 billion or an NOI cap rate of 5.9%. This transaction
is scheduled to close in early 2016.
OUTLOOK: MODERATE RENTAL AND CAPITAL VALUE GROWTH EXPECTED IN 2016

According to Oxford Economics, industrial production is expected to

increase moderately (1.1%) in 2016. At the same time, private demand should
strengthen further while exports rise moderately.
In 2016, vacancy rates are expected to rise amid a large supply pipeline that
is equivalent to 160% of the past five-year annual average. However, the
increase will be tempered by strong demand. Overall rents are expected to
rise moderately, driven by the Bay area, where vacancy should remain tight.
Capital values are expected to grow at a slower pace than in 2015 and largely
reflect rental growth.
Note: Tokyo Industrial refers to Greater Tokyos Prime logistics market. Compiled in collaboration with
Ichigo Real Estate Services Co., Ltd.
80
4Q11
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Physical Indicators
1,200
1,000
Thousand sqm
In 4Q15, six distribution facilities totalling 578,000 sqm (GFA) entered the
market, increasing stock by 9.7% q-o-q. The new facilities include Namamugi
Distribution Centre in the Bay area and SG Realty Higashi Matsuyama in the
Inland area, both of which completed with 100% pre-commitment. For the full
year of 2015, stock increased 18.3% y-o-y.
110
100
VACANCY RISES FOR THE FIRST TIME IN TWO QUARTERS AMID LARGE SUPPLY

120
800
600
400
200
0
11
12
Completions
13
14
15
Future Supply
Source: JLL
vacancy rates are year-end annual.
16F
61 INDUSTRIAL
RENTAL
GROWTH Y-O-Y
Purpose-built developments provide a healthy

level of supply.
SINGAPORE

Southeast Asia
120
105
Index
SGD 3.81
Rents
Falling
New business park projects, both single and multi-tenanted, continued to be

supported by the science and IT related clusters. Take-up in 4Q15 was one of
the strongest on record as a sizable number of tenants in Galaxis physical
occupied space.
Net absorption for 4Q15 was strong at 145,000 sqm, bringing total take-up for
the year to an estimated 311,000 sqm, much improved on the 83,000 sqm in
2014. Support came mainly from Galaxis which achieved full occupancy.
110
100
95
90
PURPOSE-BUILT DEVELOPMENTS PROVIDE A HEALTHY LEVEL OF SUPPLY
85
4Q12
4Q13
Rental Value Index
Physical Indicators
300
24
250
20
200
16
150
12
100
50
Percent
28
0
12
13
An estimated 78,000 sqm of space was completed in 4Q15, based on data

released by the Building and Construction Authority of Singapore. The major
development completed in the quarter was the purpose-built Mediacorp
campus at Mediapolis (77,600 sqm).
Amid a healthy level of supply in 4Q15, take-up was correspondingly high and
supported an improvement in vacancy which declined by 4 percentage points
to 11.5%.
INVESTORS CAUTIOUS AMID GLOBAL ECONOMIC UNCERTAINTY
350
11

4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Thousand sqm
2.0%
STAGE IN CYCLE
115
62 INDUSTRIAL
SQ FT PER MONTH,
GROWTH INDUSTRIES SUPPORT BUSINESS PARK TAKE-UP
Financial Indices
80
4Q11
RENTAL
GROWTH Y-O-Y
14
15
16F
Take-Up (net)
Completions
Future Supply
Vacancy Rate
Source: JLL
is for 2016.
The value of investment sales in 4Q15 grew 26.4% q-o-q to SGD 694 million,
owing to some deals being done above SGD 100 million. In regard to Business
Parks, A-Reit reportedly signed a conditional sale option for One @ Changi for
SGD 420 million.
Although investment volumes rose, it was led by a handful of sizable deals

and overall market sentiment did not improve much. Investors remained
cautious in part due to uncertainty surrounding the timing of the first US Fed
rate hike.
OUTLOOK: STABLE INVESTOR SENTIMENT

The US Fed hike provided mild relief to interest rate uncertainty but underlying
investor sentiment remained subdued and this is expected to persist. With no
immediate improvement expected for the demand drivers of business parks,
rents and capital values are likely to remain under downward pressure.
New supply in 2016 is expected to be at a similar level to 2015. Vacancy is

likely to rise but pre-commitments to new supply should help ease vacancy
pressures.
Note: Singapore Industrial refers to Singapores island-wide Business Park market.
Insatiable demand for investment opportunities

drives 2015 transaction volumes to near
record levels.
SYDNEY
Nicholas Crothers, Director - Research, Australia
SQM PER ANNUM,

NET ON GFA
0.0%
AUD 113
STAGE IN CYCLE
Rents
Stable
MAJORITY OF DEVELOPMENTS HAVE SIGNIFICANT PRE-COMMITMENT
Financial Indices
Occupier demand strengthened further with 241,200 sqm of gross take-up

recorded over the quarter. Occupier activity was predominantly focused in the
Outer Central West precinct which accounted for 63% of activity. Annual takeup totalled 859,500 sqm which is well above the 10-year average of 604,200
sqm.
Major deal announcements in the new build market in the quarter include the
rebuild of a 30,000 sqm distribution centre for Hyundai Mobis at Eastern Creek
and the development of a new 24,500 sqm distribution centre for DB Schenker
in Frasers Eastern Creek Business Park.
140
130
120
Index
100
90
80
4Q11
ANNUAL SUPPLY IN 2015 AT A FIVE-YEAR LOW

Four projects totalling 58,100 sqm reached practical completion in 4Q15

100% of the space was pre-committed. The largest project to complete in the
quarter was the design & construct of the new 28,760 sqm warehouse and
manufacturing facility for Lindt in the Sydney Business Park at Marsden Park.
Annual supply in 2015 reached 342,300 sqm which is expected to be a low

point in the Sydney supply cycle. The Outer Central West precinct accounted
for 42% of completions and Outer North West precinct accounted for 30% of
completions.
110
Physical Indicators
900
800
600
Investment volumes strengthened further in 4Q15, with 29 assets transacting

for a combined AUD 810.2 million. Annual sales for 2015 totalled
AUD 2.05 billion, which is the third consecutive year annual industrial sales
have eclipsed AUD 2.0 billion.
OUTLOOK: DEVELOPMENT PIPELINE IS EXPECTED TO INCREASE IN 2016

New land estates entering the market in 2016 are expected to result in more
development activity and competition. There is currently 255,200 sqm of
supply under construction and due to complete in 2016 and a further 234,000
sqm with plans approved.
Yields in some industrial precincts are already below pre-Global Financial

Crisis levels and are expected to tighten further over the next 12 months.
Investors are expected to increasingly turn their interest to the secondary
market, where they can add value in the near term and meet higher return
hurdles.
Note: Sydney Industrial refers to Sydneys industrial market (all grades).
Thousand sqm
700
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Financial Indicators are for Outer Central West.
STRONG INVESTMENT ACTIVITY IN 4Q15

Average rents were broadly stable for prime existing stock whilst average
secondary rents recorded moderate growth in 4Q15. Average prime rents
increased in the Outer South West (2.4%) and the Inner West (0.9%) industrial
precincts.
4Q12
4Q13
Rental Value Index
500
400
300
200
100
0
11
12
13
Take-Up (gross)
14
15
Completions
Future Supply
Source: JLL
For 2011 to 2015, take-up and completions are
year-end annual. Future supply is for 2016.
16F
63 INDUSTRIAL
RENTAL
GROWTH Y-O-Y
Investment activity strengthens over 4Q15, with

total transaction volumes reaching AUD 1.5
billion in 2015.
MELBOURNE
130
115
Index
AUD 82
Rents
Rising
Gross take-up of 217,800 sqm was recorded in 4Q15, taking the annual gross
take-up figure to 694,900 sqm. The West and South East precincts accounted
for approximately 45% and 44% of annual gross take-up respectively.
Demand in 4Q15 was led by the retail trade sector with the three largest
leasing transactions coming from these occupiers. Woolworths precommitted to a 68,750 sqm distribution centre in Dandenong South, Target
pre-committed to a 61,300 sqm distribution centre in Truganina, and The
Reject Shop pre-committed to a 37,700 sqm distribution centre in Drystone
Industrial Estate in Truganina.
120
110
105
100
95
4Q12
4Q13
Rental Value Index
4Q14
4Q15
4Q16
Capital Value Index

Source: JLL
Financial Indicators are for South East.
NINE PROJECTS TOTALLING 176,500 SQM REACH PRACTICAL COMPLETION

The strong fourth quarter took annual supply to 451,300 sqm which is the
largest supply pipeline delivered nationally in 2015. New supply in 2015 was
distributed across the West (45%), North (32%) and South East precincts
(21%).
In 4Q15, there was a major focus on the North precinct with the completion of
new facilities for major logistics companies. The specialised facility preleased to Toll (71,000 sqm), and the design & construct of a 38,000 sqm sorting
facility for TNT were the largest completions during the quarter. Both facilities
are located in the Melbourne Airport Business Park, Tullamarine.
Physical Indicators
800
700
600
Thousand sqm
0.4%
STAGE IN CYCLE
125
RESIDENTIAL DEVELOPERS TARGETING CITY FRINGE SITES CONTINUING TREND
500
400
Investment transaction volumes strengthened further and reached

AUD 583.0 million across 28 assets in 4Q15. The North and City Fringe
precincts recorded prime yield compression in 4Q15, with the yield range
tightening between 25 and 50 bps to 6.50%7.50% in both precincts.
Notable single asset transactions in 4Q15 include the acquisition of 704744

Lorimer Street, Port Melbourne and 217223 Separation Street, Northcote.
AMP Capital Wholesale Australian Property Fund acquired the Port
Melbourne asset for AUD 36.2 million whilst Chip Eng Seng acquired the
Northcote asset as a residential conversion site for AUD 27.0 million.
300
200
100
64 INDUSTRIAL
SQM PER ANNUM,

NET ON GFA
ANNUAL GROSS TAKE-UP EXCEEDS THE 10-YEAR AVERAGE IN 2015
Financial Indices
90
4Q11
RENTAL
GROWTH Y-O-Y
0
11
12
13
Take-Up (gross)
14
15
16F
Completions
Future Supply
Source: JLL
For 2011 to 2015, take-up and completions are
year-end annual. Future supply is for 2016.
OUTLOOK: YIELD COMPRESSION; MORE CORE DISTRIBUTION ASSETS TO TRADE

Rental growth forecasts for prime net face rents remain unchanged with
growth below the rate of inflation expected in the near term.
The supply pipeline is expected to improve further with approximately 207,200

sqm of supply currently under construction and scheduled to complete in
2016. There is also an additional 234,000 sqm with plans approved.
Note: Melbourne Industrial refers Melbournes industrial market (all grades).
65 HOTELS
Hotels
Hotel performance continues to decline but at a

slower pace than the previous quarter.
HONG KONG
4,000
100
3,500
90
60
2,000
50
1,500
40
30
1,000
Occupancy (%)
70
2,500
HKD 2,673
Decline
Slowing
Mainland Chinese arrivals continued to decline as tourists from this source

market are being enticed by other destinations with more attractive currency
exchange rates. India is a strong emerging market for Hong Kong, registering
growth of 2.8% y-o-y as at YTD October 2015 and accounting for
approximately 4.1% of total arrivals (excluding Mainland China).
0
May 10
Nov 10
May 11
Nov 11
May 12
Nov 12
May 13
Nov 13
May 14
Nov 14
May 15
Nov 15
STOCK GROWS BY NEARLY 2% IN 2015 AND MAINLY OUTSIDE CENTRAL AREAS
RevPAR
Occupancy (%)
There were approximately 1,417 new hotel rooms in Hong Kong in 2015. Of the
11 newly-opened hotels, only TUVE and Grand City Hotel are on Hong Kong
Island. Hotel supply has been concentrated in the midscale segment located
mainly on the Kowloon Peninsula.
A further 3,289 rooms are expected in2016 and this will increase stock by 4.4%
should all projects materialise. The most significant project expected is the
599-room Kerry Hotel proposed by Shangri-La, located in Hung Hom.
Source: STR Global, JLL

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

3,500
MIDSCALE AND ECONOMY SEGMENT SHOWS LARGEST REVPAR DECLINE
3,000
2,500
No. of rooms
7.4%
10
All hotel segments recorded a decline in performance as at YTD November

2015, although it is the midscale and economy segment that has suffered the
most. This reflects weakened leisure demand from Mainland China while
corporate demand which supports the upscale and luxury segments remained
fairly robust during the year.
As at YTD November 2015, occupancy for luxury hotels declined 0.8

percentage points y-o-y to 77.4% while Average Daily Rate (ADR) declined by
6.3% to HKD 3,455. As a result, RevPAR declined by 7.4% y-o-y to HKD 2,673.
On a moving monthly average basis, RevPar has fallen from HKD 2,881 in
January 2015 to HKD 2,698 in November 2015.
2,000
1,500
1,000
500
11
12
13
Additions to Supply
Source: Industry sources, JLL
66 HOTELS
STAGE IN REVPAR CYCLE
Overnight visitor arrivals continued to decline (4.0% y-o-y) as at YTD October

2015 while same day visitor arrivals showed a marginal increase of 2.1%,
resulting in an overall decline of total visitor arrivals to approximately
49.5 million.
20
500
YTD NOVEMBER 2015
80
3,000
ADR
REVPAR
GROWTH Y-O-Y
TOTAL VISITOR ARRIVALS RECORD A SLIGHT DECLINE AS AT YTD OCTOBER 2015
Luxury Hotel Trading Performance
ADR / RevPAR (HKD)
Phoebe Teo, Senior Vice President - Hotel Advisory, Hong Kong
14
15
16F
Future Supply
OUTLOOK: HONG KONG HOTEL MARKET FACES CHALLENGES

The Hong Kong hotel markets reliance on the Mainland Chinese market
makes it vulnerable to Chinas economic slowdown and political links
between Hong Kong and Mainland China.
Going forward, we expected hotel trading performance to be weak in the

short to medium term. Various factors such as currency depreciation of other
major tourist markets as well as the socio-political situation with Mainland
China could also impact the citys short- to medium-term outlook.
Note: Hong Kong Hotels refers to Hong Kongs Luxury hotel market.
REVPAR
GROWTH Y-O-Y
YTD NOVEMBER 2015
3.0%
RMB 693
RevPar
Stable
VISITOR ARRIVALS WITNESS SLIGHT DECREASE IN 2015

A weak global economy and air pollution in Beijing contributed to the decline
in international visitors. Although business demand from key sectors such as
real estate, mining and heavy industry has slowed down, Beijing is seeing
strong business demand from tertiary industries such as finance and
information technology.
Upscale Hotel Trading Performance

1,200
The hotel market has seen several projects being postponed due to pressure
on room rates, as a result of increased competition from new hotels, a
slowing economy and government anti-corruption policies. The future supply
pipeline from 2016 onwards is expected to see over 5,000 rooms enter the
market.
ADR DECLINES BUT OCCUPANCY CONTINUES TO GROW

As at YTD November 2015, occupancy continued on a growth trend increasing

3.9 percentage points y-o-y to 72.9%. In contrast, Average Daily Rate (ADR)
declined by 2.5% compared with the previous year, dropping to RMB 950.
However, Revenue Per Available Room (RevPAR) increased 3.0% during the
same period due to higher occupancy.
On a moving annual average basis, occupancy reached 71.9% in November
while ADR was recorded at RMB 939, resulting in a relatively stable RevPAR
of RMB 679.
80
70
800
60
600
50
40
400
30
20
200
10
0
ADR
RevPAR
Occupancy (%)


3,500
3,000
2,500
No. of rooms
In 2015, four hotels positioned in the mid to upscale segment opened,

contributing 1,353 rooms to the hotel market. New hotels included the 306room Kempinski Sunrise Hotel, the 439-room Hotel Nuo, the 362-room Orient
MGM Beijing and the 264-room Tangram hotel.
90
1,000
MODERATE NUMBER OF NEW HOTELS ENTER THE BEIJING MARKET IN 2015

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

international visitor arrivals to Beijing decreased by 1.6% y-o-y to 3.9 million
as at YTD November 2015. The decline in visitor arrivals was driven by
western countries, with Russia and Germany declining of 26.4% and 6.6%
y-o-y, respectively. Key Asian source markets including Korea and Japan
witnessed stable growth during the same period.
BEIJING
May 10
Nov 10
May 11
Nov 11
May 12
Nov 12
May 13
Nov 13
May 14
Nov 14
May 15
Nov 15
Frank Sorgiovanni, Head of Research - Hotels & Hospitality Group,

Asia Pacific
ADR/RevPAR (RMB)
Stable hotel performance in 2015 as a result of

balanced supply and demand.
2,000
1,500
1,000
500
0
11
12
13
Additions to Supply
14
15
16F
Future Supply
In 2016, significant new supply is expected to enter the market and put some
downward pressure on hotel trading performance.
As Beijing will be the host city for the 2022 Winter Olympic Games, the city is
expected to redevelop as a modern tourist destination with various
international MICE events, entertainment options and improved transport
connectivity to attract more visitors.
Note: Beijing Hotels refers to Beijings Upscale hotel market.
67 HOTELS
OUTLOOK: ADR TO DECLINE DUE TO LACK OF HIGH-END DEMAND
Shanghai hotels show improvements in trading

performance in 2015.
SHANGHAI
100
ADR/RevPAR (RMB)
60
600
40
50
30
Occupancy (%)
70
800
Mar 11
Jul 11
Nov 11
Mar 12
Jul 12
Nov 12
Mar 13
Jul 13
Nov 13
Mar 14
Jul 14
Nov 14
Mar 15
Jul 15
Nov 15
ADR

Moderate hotel supply entered the market in 2015. Six hotels positioned in the
midscale and upscale segments opened, adding 1,856 rooms to the market.
Over 7,000 new rooms are expected in 2016 and this wll increase stock by 14%
if all projects materialise. Some projects were postponed to 2016 due to the
delayed opening of Shanghai Disney Resort. Disney estimates that annual
visitors to the park will reach 10 million visitors once opened, this additional
demand has led to hoteliers holding a more positive view for the future.

8,000
SHANGHAI ACHIEVES RARE INCREASE IN BOTH ADR AND OCCUPANCY
7,000
No. of rooms
6,000
As at YTD November 2015, Revenue Per Available Room (RevPAR) increased

by 7.4% y-o-y to RMB 764, driven by both occupancy and Average Daily Rate
(ADR) growth. ADR increased by 1.5% y-o-y to RMB 1,096 compared with the
same period in 2014. Occupancy continued to improve, increasing by
3.8 percentage points y-o-y to 69.7%.
On a moving annual average basis, ADR reached RMB 1,080 in November and
was relatively stable in the months prior. Occupancy continued to rise,
reaching a 12-month average of 68.7% through November, with a significant
increase of 9.0% y-o-y. This improvement helped drive RevPAR higher to
RMB 747, up 10.7% compared with last year.
5,000
4,000
3,000
2,000
1,000
11
12
13
Additions to Supply
68 HOTELS
RevPar
Rising
LARGE HOTEL SUPPLY IN 2016 IS LIKELY TO PUT PRESSURE ON RATES
RevPAR
Occupancy (%)
RMB 764
Asian countries remained the major source markets of international arrivals.

Visitors from Korea and the Philippines continued their positive momentum by
increasing 12.7% and 53.4% y-o-y, respectively. However, demand from the US
and European countries have decreased in varying degrees, mainly caused
by lacklustre economies and weaker export demand.
10
7.4%
20
200
Based on data from the Shanghai Statistics Bureau as at YTD November 2015,
international visitor arrivals to the city reached approximately 6.6 million,
registering an increase of 0.6% y-o-y. This marginal increase is a result of
restrained travel demand due to the global economic backdrop.
80
1,000
400
YTD NOVEMBER 2015
90
1,200
REVPAR
GROWTH Y-O-Y
INTERNATIONAL VISITOR ARRIVALS SHOW MARGINAL IMPROVEMENT

1,400

Asia Pacific
14
15
16F
Future Supply
OUTLOOK: NEW BUSINESS DISTRICTS AND ATTRACTIONS TO AID HOTELS

The expansion of financial districts and free trade zone, together with the two
completed convention centres, aided a rise in corporate and MICE demand in
2015, and these factors are expected to provide further support in 2016.
Hotel projects were postponed to 2016 in order to coincide with the opening of
Shanghai Disney Resort which contributed to a balanced hotel supply in 2015.
Shanghai Disney Resort is likely to induce more inbound visitation which is
expected to increase demand for lodging. However, new supply concentrated
in Pudong District will also enter the market next year and may place further
pressure on rates.
Note: Shanghai Hotels refer to Shanghais Upscale hotels.
Tokyo hotels show strong performance

attributable to inbound visitation increase.
TOKYO
Tom Sawayanagi, Managing Director Hotels & Hospitality Group,

Japan
REVPAR
GROWTH Y-O-Y
YTD NOVEMBER 2015
15.3%
JPY 43,158
RevPar
Rising
INBOUND VISITORS BUILD A SOLID BASE FOR LODGING DEMAND
Domestic leisure travellers including Active Seniors, namely retired people

who have time and money for themselves, contributed to growth in
accommodation demand. This generation has the financial resources and
population to make a large impact as leisure travellers.
NO MAJOR OPENINGS OF FOUR OR FIVE-STAR HOTELS IN 4Q15
80
70
60
50
40
30
20
10
0

The 109-room Futako-Tamagawa Excel Hotel Tokyu, a small upscale hotel in

Tokyo, opened in July 2015. This was the sole upscale hotel opening during
2015.
ADR
Hotel trading performances in Tokyo continued to show an improvement, as

reflected by Revenue Per Available Room (RevPAR) increasing 15.3% y-o-y as
at YTD November 2015. This is attributed to the healthy growth in Average
Daily Rate (ADR) and the modest growth in occupancy. On a moving annual
average basis, RevPAR has been on a growth trajectory since 2Q12.
There were no hotel investment transactions in the luxury hotel sector in
Tokyo during 4Q15.
RevPAR
Occupancy (%)
500
400
No. of rooms
90
There were no luxury hotel openings in 2015. Two new luxury hotels are in the
pipeline for 2016. The 84-room Hoshinoya Tokyo is scheduled to open as a
ryokan style lodging facility in the Marunouchi area. The 250-room Prince
Gallery Tokyo Kioicho, the former Grand Prince Hotel Akasaka, is scheduled to
open as part of the redevelopment project.
TOKYO HOTELS CONTINUE TO SHOW STRONG PERFORMANCE IN 4Q15

100
May 10
Nov 10
May 11
Nov 11
May 12
Nov 12
May 13
Nov 13
May 14
Nov 14
May 15
Nov 15
55,000
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Occupancy (%)
Inbound visitation to Japan recorded a y-o-y growth of 47.5% to 18.0 million as

at YTD November 2015. The improvement was led by visitors from Mainland
China, which recorded a significant y-o-y growth of 109.4%.
ADR/RevPAR (JPY)
300
200
100
OUTLOOK: REVPAR GROWTH TO CONTINUE BUT AT A SLOWER PACE
2015 saw strong RevPAR growth driven by a weakening JPY which helped
offset an ADR increase in USD terms. However, given the emerging risks for
the world economy, JPY is expected to continue to perform strongly as a
result of risk aversion in 2016. This may cause a slowdown in ADR increases
and result in modest RevPAR growth.
11
12
13
Additions to Supply
14
15
16F
Future Supply
With regard to the hotel investment market, the volume of hotel transactions
in Japan has been limited. This can be attributed to hotel owners preference
to hold onto properties in order to further benefit from recent cash flow
increases due to improved market conditions. However, investors appetite for
hotel assets remains strong.
Note: Tokyo Hotels refers to Tokyos Luxury hotel market.
69 HOTELS
International visitor arrivals in line with

forecasts, leading to some stabilisation in
hotel performance.
SINGAPORE
100
400
90
350
80
70
300
60
250
50
200
40
150
30
100
Occupancy (%)
20
50
10
0
May 10
Nov 10
May 11
Nov 11
May 12
Nov 12
May 13
Nov 13
May 14
Nov 14
May 15
Nov 15
ADR/RevPAR (SGD)
450

3.0%
SGD 323
RevPar
Falling
A continued recovery in arrivals from Mainland China has helped make up for
weakness in other source markets, with total arrivals to Singapore rising
slightly by 0.1% y-o-y as at YTD October 2015 to 12.6 million. Visitors from
Mainland China increased by 21.3% y-o-y, while y-o-y growth was registered
in several other key source markets including India (+6.1%), South Korea
(+6.9%) and the USA (+2.4%).
Despite the lull in visitor arrivals early in the year, the Singapore Tourism
Board remains confident that Singapore will welcome more than 15 million
visitors in 2015, in line with their projections.
There was one new hotel opening in Singapore in 4Q15, the Hotel Grand
Central which opened in October with 264 rooms.
2016 is likely to see an influx of new supply into the market with several large
openings expected. This includes the remaining rooms at South Beach
(454-rooms), Hotel Boss (1,500 rooms), Holiday Inn Express Katong
(451-rooms) and Midlink Hotel (396-rooms).

4,500
OCCUPANCY, ADR AND REVPAR CONTINUE TO FALL
4,000
As at YTD November 2015, occupancy for luxury hotels in Singapore was

79.1%, a marginal fall of 0.3 percentage points y-o-y. Average Daily Rate (ADR)
declined by 2.7% y-o-y to SGD 408 as hotels continued to be rate competitive
in order to maintain occupancy.
As a result of falling occupancy and ADR, Revenue per Available Room

(RevPAR) declined by 3.0% y-o-y to SGD 323. On a moving monthly average
basis, RevPar declined from SGD 331 in January 2015 to SGD 322 in November
2015.
3,500
3,000
No. of rooms
YTD NOVEMBER 2015
A LARGE NUMBER OF NEW ROOMS ENTER THE MARKET IN 2015
RevPAR
Occupancy (%)
2,500
2,000
1,500
1,000
500
0
11
12
13
Additions to Supply
14
15
16F
Future Supply
OUTLOOK: NEW SUPPLY COULD PUT FURTHER PRESSURE ON PERFORMANCE

The expected large influx of new supply is likely to put increasing pressure on
hotels to lower rates in order to maintain occupancy and attract demand from
both business and leisure travellers. The government continues to introduce
new initiatives such as the Experience Step-Up Fund to help develop the
tourism industry and attract more visitors.
Given its established reputation for both corporate and leisure visitors, we
expect tourism numbers to remain stable, helping to support growth and
activity in Singapore.
70 HOTELS
REVPAR
GROWTH Y-O-Y
INTERNATIONAL VISITOR ARRIVALS RISE AS MAINLAND CHINESE RETURN
ADR
Frank Sorgiovanni, Head of Research Hotels & Hospitality Group,

Asia Pacific
Note: Singapore Hotels refers to Singapores Luxury hotel market.
REVPAR
GROWTH Y-O-Y
YTD NOVEMBER 2015
33.0%
THB 4,025
RevPar
Rising
BANGKOK ON COURSE FOR RECORD ARRIVALS IN 2015

The main source markets to Bangkok are the regional markets, with Mainland
China the largest source market to Bangkok, followed by Japan, Korea and
India. As at YTD October 2015, the fastest growing markets to Thailand were
Mainland China (103.1%) and Malaysia (41.0%). Russia has dropped out of the
top ten source markets to Bangkok.

7,000
In 2015, 1,314 new rooms opened in Bangkok. Notable recent openings

include the 297-room Mvenpick Bangkok Sukhumvit 15, the 250-room Amara
Bangkok and the 201-room Red Planet Hotel Surawong.
The upcoming supply pipeline comprises 4,255 rooms expected to be

operational by end-2016, with 35.4% of total new supply concentrated in the
upscale segment followed by 32.8% in the midscale segment. The majority of
upcoming supply is planned in the Sukhumvit area, accounting for 26.2% of
total supply.
70
4,000
60
3,000
40
On a moving annual average basis, RevPAR has continued on a growth trend

since 3Q14, reaching THB 4,100 in November 2015, largely supported by
growth in occupancy levels to 69.7%.
50
30
2,000
20
10
0
ADR
RevPAR
Occupancy (%)


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

indicates strong Revenue Per Available Room (RevPAR) growth with a 33.0%
y-o-y increase to THB 4,025. Average Daily Rate (ADR) increased by 1.6%
y-o-y to THB 5,804 in the same period. The increase in RevPAR was driven by
a significant growth in occupancy to 69.3% from 53.0% during the same period
in the previous year.
80
1,000
HOTEL TRADING PERFORMANCE CONTINUES TO SEE STRONG REVPAR GROWTH

90
5,000
NEW SUPPLY IS CONCENTRATED IN THE MIDSCALE AND UPSCALE SEGMENTS

100
6,000
Occupancy (%)
Bangkok received 15.5 million international visitors in 2014, a decline of 11.3%

y-o-y, as a result of political unrest in the city. However, a stable political
environment and increased consumer confidence has led to a 30.3%
improvement in tourist arrivals as at YTD October 2015, reaching around
15.8 million arrivals.
BANGKOK
May 10
Nov 10
May 11
Nov 11
May 12
Nov 12
May 13
Nov 13
May 14
Nov 14
May 15
Nov 15

Asia Pacific
ADR/RevPAR (THB)
Record tourist arrivals leads to significant

occupancy rise and this supports RevPAR growth.
3,000
2,000
1,000
0
11
12
13
Additions to Supply
14
15
16F
Future Supply
The Thai government has set in motion half-year multiple-entry visas for
foreigners which is expected to boost visitation and continue to drive visitor
numbers after record arrivals in 2015.
A stable political climate and expansion of key infrastructure facilities

including the reopening of Don Mueangs Terminal 2 and the Phuket airport
expansion is expected to facilitate increased tourism arrivals through the
countrys capital.
Note: Bangkok Hotels refers to Bangkoks Luxury hotel market.
71 HOTELS
OUTLOOK: RELAXED VISAS AND INFRASTRUCTURE PROJECTS DRIVE GROWTH
Kuala Lumpur continues to face challenges from

falling visitor arrivals and a strong
supply pipeline.
KUALA LUMPUR
90
400
80
350
70
300
60
250
50
200
40
150
30
100
20
50
10
0
May 10
Nov 10
May 11
Nov 11
May 12
Nov 12
May 13
Nov 13
May 14
Nov 14
May 15
Nov 15
ADR/RevPAR (MYR)
100
450
Occupancy (%)
500
RevPAR
8.5%
MYR 332
RevPar
Falling
Double-digit y-o-y falls were also recorded for visitors from Japan (16.1%),
the United Kingdom (12.6%) and Mainland China (11.7%).
LIMITED NEW HOTEL OPENINGS IN 2H15

There was only one new hotel opening in Kuala Lumpur in 4Q15, namely Sri
Jati Hotel along Bukit Bintang which added 154 new rooms to stock.
There are a significant number of new projects due to complete in 2016, many
of which have seen their completion dates delayed from 2015. New projects
set to complete include The Ritz-Carlton Residences, The St Regis
Kuala Lumpur, Oasia Suites Kuala Lumpur and Movenpick Hotel & Convention
Centre KLIA.
FALLING OCCUPANCY PLACING DOWNWARDS PRESSURE ON REVPAR

4,000
As at YTD November 2015, occupancy in Kuala Lumpurs luxury and upscale

hotels fell by 6.6 percentage points. The continued fall in international visitor
arrivals to Malaysia has placed downwards pressure on occupancy.
While Average Daily Rate (ADR) enjoyed marginal growth of 0.6% y-o-y to
MYR 496, falling occupancy meant that Revenue Per Available (RevPAR) fell
by 8.5% to MYR 332. In terms of moving annual average, RevPAR has been on
the downward trend, declining from MYR 352 in January 2015 to MYR 332 in
November 2015.
3,500
3,000
No. of rooms
Malaysia recorded a total of 12.6 million international tourist arrivals as at YTD

June 2015, down 9.4% y-o-y. Arrivals fell y-o-y from all of the top ten key
source markets, with the most significant fall being visitors from Australia,
which dropped by 22.2%.

2,500
2,000
1,500
1,000
OUTLOOK: CHALLENGES FROM LARGE SUPPLY PIPELINE AND FALLING ARRIVALS
500
11
12
13
Additions to Supply
14
15
Kuala Lumpur hotels need to remain rate competitive in order to attract

business amid falling international arrivals to Malaysia. The large supply
pipeline over the next few years is likely to continue to place pressure on
hotels to reduce rates in order to maintain occupancy.
The government is targeting 30.5 million tourists in 2016. MYR 1.2 billion has
been allocated to the Tourism and Culture Ministry, and the new online visa
application process for visitors from Mainland China, India, Myanmar, Nepal,
Sri Lanka, the United States and Canada is expected to help to boost tourist
arrivals to Malaysia.
16F
Future Supply
72 HOTELS
YTD NOVEMBER 2015
Occupancy (%)
REVPAR
GROWTH Y-O-Y
INTERNATIONAL VISITOR ARRIVALS TO MALAYSIA CONTINUE TO DECLINE
ADR

Asia Pacific
Note: Kuala Lumpur Hotels refers to Kuala Lumpurs Luxury and Upscale hotel market.
Sydneys hotel market continues to perform in

line with strong market fundamentals.
Asia Pacific
REVPAR
GROWTH Y-O-Y
YTD NOVEMBER 2015
7.4%
AUD 211
RevPar
Rising
BUSY EVENTS CALENDAR AND CORPORATE SECTOR SUPPORT DEMAND
Despite the closure of the Sydney Convention and Exhibition Centre and the
traditionally lower yielding winter months, demand remained strong
throughout 2015 and this is expected to persist in 2016.
RELATIVELY MODEST NEW SUPPLY IN 2015
Two new build hotels entered the Sydney City market in 4Q15, adding 236
rooms to stock.
Room stock growth is anticipated to average 4.0% per annum between 2015
and 2020, with recent additions including The Tank Stream St Giles Premier
Hotel (281 rooms), The Primus Hotel (172 rooms) and Megaboom City Hotel (64
rooms).
100
90
80
70
60
50
40
30
20
10
0
May 10
Nov 10
May 11
Nov 11
May 12
Nov 12
May 13
Nov 13
May 14
Nov 14
May 15
Nov 15
300
275
250
225
200
175
150
125
100
75
50
25
0
Occupancy (%)
Marketwide Hotel Trading Performance
Sydney maintained a high occupancy of 88% as at YTD November 2015, with

major events including Sydneys Spring Carnival supporting demand.
ADR/RevPAR (AUD)
SYDNEY
ADR
RevPAR
Occupancy (%)

STRONG FUNDAMENTALS SUPPORT POSITIVE HOTEL PERFORMANCE
The moving annual average recorded in Sydney for RevPAR as at YTD

November 2015 was AUD 209, which is marginally below the record high.
OUTLOOK: ACCOMMODATION MARKET EXPECTED TO STRENGTHEN IN 2016

High occupancy in combination with continued ADR increases are expected

to further drive up RevPAR.
Whilst a major influx of supply is due to enter the Sydney market throughout
the next 1224 months, it is anticipated that demand generated by existing
infrastructure developments such as the International Convention Centre
Sydney and Barangaroo renewal project should be able to absorb these new
rooms with limited impact on the trading environment.
Note: Sydney Hotels refers to all grades of accommodation and includes both hotels and serviced
apartments.

800
700
600
500
400
300
200
100
0
11
12
13
Additions to Supply
14
15
16F
Future Supply
Source: Australian Bureau of Statistics, JLL
73 HOTELS
As at YTD November 2015, occupancy increased by a modest 1.0% y-o-y;

however, it is at a historically high level. An improvement in occupancy
coupled with Average Daily Rate (ADR) growth of 6.4% y-o-y has resulted in
Revenue Per Available Room (RevPAR) increasing by a significant 7.4% to
AUD 211.
No. of rooms
JLL Research - Asia Pacific
ASIA PACIFIC
Dr Jane Murray
Head of Research Asia Pacific
+852 2846 5274
jane.murray@ap.jll.com
Shenyang
Carol Lin
Analyst
+86 24 3109 1300
carol.lin@ap.jll.com
The Philippines
Claro Cordero
Head of Research Philippines
+63 2 902 0887
claro.cordero@ap.jll.com
GREATER CHINA
Hong Kong
Denis Ma
Head of Research Hong Kong
+852 2846 5135
denis.ma@ap.jll.com
Wuhan
Daisy Hu
Assistant Manager
+86 27 5959 2151
daisy.hu@ap.jll.com
Thailand
Andrew Gulbrandson
Head of Research Thailand
+66 2 624 6420
andrew.gulbrandson@ap.jll.com
Xian
Lisa Zou
Senior Research Analyst
+86 29 8932 9835
lisa.zou@ap.jll.com
Vietnam
Stephen Wyatt
Country Head - Vietnam
+84 8 3910 3968
stephen.wyatt@ap.jll.com
Taipei
Jamie Chang
Assistant Manager
+886 2 8758 9886
jamie.chang@ap.jll.com
Malaysia
Dr Chua Yang Liang
Head of Research - South East Asia
and Singapore
+65 6494 3721
yangliang.chua@ap.jll.com
China
Joe Zhou
Head of Research China & Shanghai
+86 21 6133 5451
joe.zhou@ap.jll.com
Beijing
Steven McCord
Head of Research - Beijing
+86 10 5922 1371
steven.mccord@ap.jll.com
Guangzhou
Silvia Zeng
Head of Research Guangzhou
+86 20 3891 1238
silvia.zeng@ap.jll.com
Macau
Mark Wong
Senior Analyst
+853 2871 8822
mark.wong@ap.jll.com
Chengdu
Frank Ma
Head of Research Chengdu
+86 28 6680 5072
frank.ma@ap.jll.com
NORTH ASIA
Japan
Takeshi Akagi
Head of Research Japan
+81 3 5501 9235
takeshi.akagi@ap.jll.com
Qingdao
Celia Chen
Assistant Manager, Research
+86 532 8579 5800 ext 817
celia.chan@ap.jll.com
South Korea
Yongmin Lee
Head of Research South Korea
+82 2 3704 8888
yongmin.lee@ap.jll.com
Tianjin
Chelsea Cai
Head of Research - Tianjin
+86 22 8319 2233
chelsea.cai@ap.jll.com
SOUTH EAST ASIA

Singapore
Dr Chua Yang Liang
Head of Research South East Asia and
Singapore
+65 6494 3721
yangliang.chua@ap.jll.com
Chongqing
Sherry Li
Research Analyst
+86 23 6366 9062
sherry.li@ap.jll.com
Indonesia
James Taylor
Head of Research - Indonesia
+62 21 2992 3888
james.taylor@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.
WEST ASIA
India
Ashutosh Limaye
Head of Research - India
+91 22 6620 7575
ashutosh.limaye@ap.jll.com
AUSTRALASIA
Dr David Rees
Head of Research Australasia
+61 2 9220 8514
david.rees@ap.jll.com
New Zealand
Justin Kean
Head of Research - New Zealand
+64 9 366 1666
justin.kean@ap.jll.com
HOTELS & HOSPITALITY
Frank Sorgiovanni
Vice President, Research & Strategic
Advisory Asia Pacific
+65 6536 0606
frank.sorgiovanni@ap.jll.com
JLL offices
ASIA PACIFIC
AMERICAS
EMEA
9 Raffles Place
#39-00 Republic Plaza
Singapore 048619
tel +65 6220 3888
fax +65 6438 3361
www.jll.com.sg
200 East Randolph Drive

Chicago IL 60601
tel +1 312 782 5800
fax +1 312 782 4339
www.us.jll.com
22 Hanover Square
London W1A 2BN
tel +44 20 7493 6040
fax +44 20 7408 0220
www.jll.co.uk
JLL worldwide
ASIA PACIFIC
Adelaide
Auckland
Bangalore
Bangkok
Beijing
Brisbane
Canberra
Cebu City
Chandigarth
Chengdu
Chennai
Chongqing
Christchurch
Coimbatore
Colombo
Guangzhou
Hanoi
Ho Chi Minh City
Hong Kong
Hyderabad
Jakarta
Kolkata
Kuala Lumpur
Macau
Manila
Melbourne
Mumbai
Nanjing
New Delhi
Osaka
Pasig
Perth
Phuket
Pune
Qingdao
Quenzon
Seoul
Shanghai
Shenyang
Shenzhen
Singapore
Sydney
Taguig
Taipei
Tianjin
Tokyo
Wellington
Wuhan
Xian
AMERICAS
Atlanta
Austin
Baltimore
Boston
Buenos Aires
Chicago
Cincinnati
Cleveland
Columbus
Dallas
Dayton
Denver
Detroit
Ft. Lauderdale
Houston
Kansas City
Los Angeles
McLean, VA
Mexico City
Miami
Minneapolis
Monterrey
Montreal
New Orleans
New York
Orange County
Orlando
Parsippany, NJ
Philadelphia
Phoenix
Pittsburgh
Portland, OR
Rio de Janeiro
Sacramento
St. Louis
Salt Lake City
San Diego
San Francisco
Santiago
Sao Paulo
Seattle
Tampa
Toronto
Vancouver
Washington DC
EMEA
Abu Dhabi
Amsterdam
Antwerp
Barcelona
Berlin
Birmingham
Brussels
Bucharest
Budapest
Dubai
Dublin
Dusseldorf
Edinburgh
Eindhoven
Frankfurt
Glasgow
Gothenburg
The Hague
Hamburg
Helsinki
Kiev
Leeds
Lisbon
Liverpool
London
Luxembourg
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Madrid
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Marbella
Milan
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Prague
Rotterdam
Seville
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St. Petersburg
Tel Aviv
Utrecht
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Warsaw
Wiesbaden
www.jll.com
COPYRIGHT JONES LANG LASALLE 2016. All rights reserved. For further details or to unsubscribe, please email joneslanglasalle.research@ap.jll.com. The items in this publication have
been compiled from the various sources acknowledged. The information is from sources we deem reliable; however, no representation or warranty is made to the accuracy thereof.

JLL Asia Pacific Property Digest 4q 2015

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JLL Asia Pacific Property Digest 4q 2015

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Bright finish for office

Asia Pacific Economy and

2015: Close to a record year for

The changing profile of the

How can Chinas tier 3 and

The year ahead in Jakarta

A rocky start to the year

Sluggish global demand weighing on exports

regions second biggest economy, saw declines for three straight

More rate cuts while inflation remains moderate in most

Steady growth expected but downside risks to the outlook

regional and global economies. Other notable risks to the outlook

Figure 1: Outlook for Major Economies

Real GDP Growth (%)

ASIA PACIFIC PROPERTY MARKET

Active year for the region in 2015

Pre-leases help ease impact of new completions

Asia Pacific leasing activity continued to strengthen in 4Q15 with

Across the region, Grade A stock additions were up by a solid 65%

to slow as its economic transformation persists while growth is

Net effective rents increased in two-thirds of all markets in 4Q15

Mixed retailer demand

3PLs and e-commerce firms support demand for logistics

Figure 2: Office Rental & Capital Value Changes

Rate cut supports residential sales in China; most other

Another solid year for commercial real estate investment

Office capital value growth accelerates

Office leasing to strengthen. Rent and capital value growth to

Figure 3: Direct Commercial Real Estate Investment

Figures relate to the major submarket in each city

Rents gather pace in Asia Pacific

Kuala Lumpur, Jakarta

Sydney, Melbourne, SE Queensland*

Ho Chi Minh City, Mumbai

*For Luxurious Residential Properties

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

Source: JLL (Real Estate Intelligence Service), 4Q15

ABOUT THE AUTHOR

Figure 4: Rental Property Clocks, 4Q15

2015: Close to a record year for Indias

Manufacturing/ E-Commerce Consultancy

Source: JLL (Real Estate Intelligence Service)

Source: JLL (Real Estate Intelligence Service)

ABOUT THE AUTHOR

Figure 2: 2015 and 2011: Changes in citys share of office absorption

A few emerging categories, such as e-commerce, telecom and

Figure 1: 2015 and 2011: Changes in industrys share of office absorption

While the absorption of 2015 is similar to 2011, it is distributed

absorption of about 33 million sq ft. However, we do not foresee

Office Absorption (mil sq ft)

Indias office space absorption during 2015 was 36.2 million sq ft

The changing profile of the Sydney CBD

Recent announcements by the State Government for further

Source: JLL (Real Estate Intelligence Service)

ABOUT THE AUTHOR

The new ranking of the precincts is reflected also on the demand

Sydney CBD Prime Gross Effective Rents by Precinct

the emerging hubs of Bankstown and Liverpool. New transport

JLLs head office on George Street in the Midtown precinct of the

How can Chinas tier 3 and 4 residential markets

over time. Going forward, China will continue to invest heavily

In December 2015, Chinas central leadership held a closed-door

ABOUT THE AUTHOR

The year ahead in Jakarta