Asian office occupancy costs more competitive now: Survey

SINGAPORE, Jan 2: Asia has become more competitive in terms of office occupancy costs which are expected to ease moderately or stabilise in 2000, according to a poll released here, says AFP.

Cost of office space and other realestate in Asia was dragged down by a regional economic crisis which erupted in mid 1997 following a currency meltdown.

"Due to the impact of the Asian economic crisis, cities in Asia are now more competitive in terms of office occupancy costs," according to the report on a survey conducted last month by global property consultancy DTZ Debenham Tie Leung.

The survey covered 72 cities worldwide and measured occupancy costs as opposed to rents.

Occupancy costs includes rents, property tax and maintenance costs.

The poll findings noted that with the exception of Johannesburg, the other nine most competitive cities surveyed were all in the Asia-Pacific - Christchurch, Bangkok, Surabaya, Dalian, Kuala Lumpur, Wellington, Manila, Adelaide and Tianjin.

"While demand is returning, albeit cautiously in some cities, the general over-supply situation in the next few years will ensure that office occupancy costs remain competitive," according to the report's 2000 forecast for office occupancy in the Asia-Pacific region.

It added that office users were becoming more cautious in managing occupancy costs and many were no longer confining themselves to the central business districts.

"With lower costs, major office users are taking a medium to long-term view of their accommodation requirements to consolidate their operations in one location and relocate into better quality space," it said.

The survey showed that only three Asian office districts - Tokyo's Central 5 Wards and Outer Wards, and Hong Kong - were in the list of top 10 districts worldwide with the highest occupancy costs.

Before the regional crisis, seven Asian districts were on the list.

Tokyo Central 5 Wards was ranked by the global survey as the most expensive in terms of office occupancy costs while the Japanese capital's Outer Wards took fourth spot.

Hong Kong which topped the list prior to the crisis has dropped to the fifth position.

The survey also showed that Tokyo, Hong Kong, Taipei and Singapore had the highest occupancy costs in the region.

Looking ahead, office occupancy costs are expected to ease moderately or stabilise in almost all the cities", the survey report said. "Recovery in the economies will continue to firm occupancy costs and underpin the office markets," it said.

On a regional basis, the Asia-Pacific emerged from the poll as the most competitive in terms of office occupancy costs, beating Western Europe, North America and Eastern and Central Europe.