The market for offices by financial institutions will be strong this year in countries such as China, Indonesia and India, whereas consolidation of firms and slower growth in more developed locations paints a slower picture elsewhere, according to property consultants and research firm Cushman & Wakefield.

The firm’s briefing on the state of the Asia-Pacific real estate market for offices used by banks shows a contrast between the buoyancy of Chinese cities such as Shanghai and the more muted look to centres such as Sydney and Tokyo.

One force cooling demand for offices is “consolidation” - firms shrinking some of their workforces, merging unit and cutting risk exposures in the wake of recent financial strains, the report said. Staff cuts are reducing demand for office space in locations such as Hong Kong, it said.

By contrast, cities in India and Indonesia are stronger. “These growth markets will continue to be the focus of the industry’s expansion efforts in the near to medium-term as developed markets face weaker growth, tightening regulations and operational streamlining,” the report said.

In Hong Kong, for example, the Cushman & Wakefield report noted – as previously reported by this publication – the dramatic fall in the number of initial public offerings on the jurisdiction’s stock market last year (a fall of 78 per cent), which weighed on the financial sector and its associated demand for office space, leading to more space becoming available.

“Several investment banks and securities firms, which were relatively new to the Hong Kong market, have faltered over the past year,” the report said. In the case of Singapore, meanwhile, the report noted that its banks faced more headwinds last year amid tighter lending margins and slowing loan growth. In that climate, demand for office space fell 26.5 per cent in the first nine months of 2012 from the year before, to 1.69 million square feet.

By contrast, China’s economic rebound from a period of decelerating growth, coupled with foreign banks’ determination to push into the market, have driven demand for offices. In Beijing, for example, the vacancy rate in the city’s financial district is at the “extremely low level of below 2.0 per cent”, the C&W report said. The report reckoned that supply of office space will remain at historic lows for the next three years. In Shanghai, the vacancy rate was 3.3 per cent at the end of the third quarter of 2012, a fall from a year before.

“The overall financial sector [in China] is still in a relatively healthy state and progressing towards a more mature phase,” it said, adding that the new Qualified Foreign Institutional Investor regulation, issued in July last year, allows more smaller foreign investors, private equity funds and other bodies to enter the market, ensuring that financial firms continue to help drive real estate.