While Knight Frank sees a generally robust prime office rental market for 2016, the outlook remains more subdued for Singapore, which has seen real estate prices come off the boil in recent months.

A measure of office rentals in the prime locations of Asian cities shows rents rose on average by 1.4 per cent in the three months to the end of September this year, a result containing significant variations between cities.

At the top end of the scale, there was a quarterly jump in prime office rents of 6.8 per cent in the Central Three Wards area of Tokyo, and a gain of 4.3 per cent in Hong Kong’s Central District. By contrast, rents sagged by 2 per cent in the Raffles Place, Marina Bay area of Singapore, and fell by 0.6 per cent in Kuala Lumpur’s City centre, and fell by 0.4 per cent in various parts of Beijing, according to Knight Frank, the international real estate firm.

Looking ahead for Singapore, arguably the main wealth management hub in Asia, the firm said there is expected to be further softening in rents into 2016.  

“There have been rising strains on the demand of office spaces in Singapore, as economic growth prospects weaken and business enterprises exercise greater caution in signing leases,” Alice Tan, director and head of consultancy and research, Knight Frank Singapore, said. 

“In addition, the consolidation of office spaces particularly by large space occupiers, coupled with an impending supply of close to 4 million sq ft of office space next year are creating a tenants' market situation. Prime office rents are envisaged to decline by 6 per cent to 7 per cent year-on-year for the last quarter of 2015, with further downward pressure expected for 2016 in light of possible subdued business conditions."

Her colleague gave a more optimistic view on rental developments across Asia as a whole. 

“We are seeing opportunities for office occupiers in 2016. The construction boom inspired by past rental appreciation will deliver a barrage of new supply in a number of markets in Asia Pacific. This presents opportunities for tenants to upgrade their workspace in order to attract and retain talent,” Nicholas Holt, head of research for Asia-Pacific, said.