Wednesday, August 9 2006 10:13 Hrs (IST) - World Time -

Bangkok: Strong demand for office space and lack of fresh supply in Asian cities have pushed rents to new highs, with prices approaching pre-1997 peaks in some Southeast Asian capitals and in India too.

"Regional office markets have shown resilience during a time of volatility in the equity market," said Jane Murray, head of research (Asia Pacific) at Jones Lang LaSalle, an international property consultant. "The financial centres of Hong Kong, Singapore, Shanghai, Sydney and Tokyo all registered gains, while the developing markets of Bangkok, Kuala Lumpur, Manila and Jakarta are trading a shade off their previous peaks in 1997," she added.

The past five years of recovery in most Asian economies has led to growing demand for office space by the banking and finance sectors, professional services and IT companies, says Jones Lang LaSalle (JLL) in its latest Asia Pacific Property Digest. "In India, the core markets of Delhi, Mumbai, Bangalore and Chennai witnessed a surge in enquiries with rents in some of the core cities reaching the levels of Singapore despite the lack of professional property management on the premises," it said. Southeast Asia's property prices crashed after the 1997 financial crisis, which started in Bangkok when the government was forced to float the baht currency because of a loss of international confidence in the economy prompted in part by massive over-lending to the property sector. Rents in Bangkok's central business district in the second quarter of 2006, for example, increased 2.9 percent over the last quarter or 12.2 percent year-on-year.

Hong Kong's rental rates jumped 8.9 percent quarter-on-quarter or a whopping 39.8 percent year-on-year. "This is the 11th consecutive quarter of growth and the longest streak in 20 years," said Murray of the Hong Kong office market. In Singapore rents jumped 13.5 percent from the previous three months or 44.4 percent year-on-year, while in Manila's Makati area rents were up 5.1 percent quarter-on-quarter and 40.1 percent year-on-year. In other Asia cities office rents last quarter were up 14.9 percent year-on-year in Shanghai, 2.8 percent in Beijing, 9.7 percent in Tokyo, 1.5 percent in Seoul, 12.5 percent in Mumbai and 10.2 percent in Sydney, JLL said. The international property consultant was bullish on the region's rental outlook given the ongoing demand fuelled by growing economies and increased investments. "Our short-to-medium-term analysis suggests that the real estate market will stay robust," said Murray.

"With new quality supply remaining tight and demand strengthening, rents should increase further," he said.