While economic conditions in the Asia-Pacific continue to lead the rest of the world, growth prospects have mellowed in the first half of 2013, thereby leading to a slowdown in prime office occupier markets, a recent study by London-based property consultancy firm Knight Frank shows.

With China's expansion rate dropping 7.5 per cent year-on-year at the end of the second quarter 2013, concerns that this could dip lower have come up. Add this to the current account deficit in the Indian market, which continues to see capital flight and a depreciating rupee. 

The office market trickled down, especially in China, where a decline in prime rents was felt in Beijing, Guangzhou and Shanghai. The recent change in government in Australia has also not lifted the gloomy mood in the area. Only two markets were reported to have an upward trajectory in the rental cycle: Bangkok, which continued to see an increase in prime office rents, and Jakarta, which leads the pack with a 25.5 per cent increase in the first half. 

Investment volume during the period held steady, but was down marginally by 1.8 per cent year-on-year at $57.9 billion. Japan remained the most active market (up 12.1 per cent), followed by Australia, Hong Kong, China and South Korea. 

According to Knight Frank, the strengthening US economy could pave the way for an increase in invest into emerging Asia in the next months, particularly for commercial real estate. The stabilising Chinese economy, which is reorienting toward domestic consumption, could also boost demand for retail and retail-related logistics. In addition, the Australian dollar and the Japanese Yen are starting to provide attractive opportunities for offshore investors.