A range of headwinds continued to affect office leasing demand in Q2 2019, resulting in a 58% y-o-y decline in net absorption. The vacancy rate rose to 20.9%, making a record high.
Around 1.13 million sq. m. of new retail space was completed in Q2 2019. Pre-leasing in new projects is favourable, with an average opening rate of 92%. However, ageing retail space continued to be closed for renovation or redevelopment, with 630,000 sq. m. of space removed from the market during H1 2019.
Leasing activity remained steady in Q2 2019, supported by domestic consumption-backed 3PLs and retail occupiers. However, ongoing relocations by e-commerce platforms to self-built facilities, as well as several retailers moving to customised warehouses, weighed on net absorption.
Despite the slowdown in activity and weaker market sentiment, foreign investors remain active. As slower economic growth and weaker leasing activity prompts investors to turn more risk averse, a stronger focus on core assets in gateway cities is emerging.