The Asia Pacific region’s property markets showed “mixed trends” during 2012, according to a new report from global property company Jones Lang LaSalle, with increased caution by corporates driving down office leasing activity levels by 30 per cent, while commercial investment activity remained relatively stable, with total volumes of $95 billion for the year.

The company says it expects that overall take-up of office space in 2013 will remain at similar levels to last year, with a potential for upside “as and when the global economy strengthens.”

Over the short term, Jones Lang says rental growth is likely to be limited in most markets, while Hong Kong and Singapore should see further moderate declines, while rents are expected to edge lower in a few Australian cities, including Melbourne and Brisbane.

The retail sector remained relatively resilient across the region in 2012, with Greater China in particular buoyed by the ongoing expansion of international retailers. Rental growth continued at a moderate pace in the fourth quarter with the exceptions of Australia, Singapore and India, which saw mostly flat rents in relatively challenging conditions.

In 2013, retailer demand for space in the larger Asia Pacific cities is likely to remain relatively strong, and most markets are expected to see a further upswing in rents, albeit moderate.

Alastair Hughes, CEO of Jones Lang LaSalle Asia Pacific, said “The slowdown of the property market in 2012 is, in some part, due to events the year before. Back in 2011 China applied the handbrakes to its economy in order to calm its residential property market, worried that a ‘bubble’ was exaggerating the wealth gap and that a ‘burst’ might cause social tensions. This managed slowdown of China had an effect in 2012 right across Asia and Australia, as demand slowed across the region.”

He continued “This ‘soft landing’ in China, plus slow growth in the West, has taken some of the heat out of the markets in Asia Pacific.”

The Southeast Asian economies of Indonesia, Thailand and the Philippines all experienced strong economic and property market growth for different reasons, Jones Lang said, pointing out that office rents in Jakarta grew by over 30 per cent in the year.

“Despite American cliffs and Euroland squabbles,” Hughes said, “I am feeling quite optimistic about 2013. The political guard in China has now changed and will want to introduce some initiatives to stimulate growth. There are also early signs of renewed optimism in India as the politicians prepare for the general election in 2014”

Hughes estimates that global transaction volumes in commercial real estate during 2012 is at a shade under $450 billion, and the company forecasts that to figure rise to just under $500 billion in 2013, with Asia Pacific’s share forecast at around $110 billion.

To contact the reporter on this story: Rupert Winchester at [email protected]