Reworking Lease Expires

KEY MESSAGES

88% of markets (22 out of 25) are forecast to experience rental growth by the end of 2026.

Similarly, the level of under renting in Brisbane is forecast to rise dramatically reflecting strong market rental growth. Brisbane is forecast to become the most under-rented market by early 2026.

For South East Asian cities, especially Hanoi, Ho Chi Min City, Singapore and to a lesser extent Kuala Lumpur, arguably the best time to act has past, though gaps between market rents and lease rents will continue to grow suggesting there is some benefit in bringing forward negotiations. 76% of markets in Asia Pacific are currently over-rented, but this will decline through to 2027 as ongoing rental growth takes effect. This suggests there is a window of opportunity for occupiers to act on their lease expiries before markets start to shift.

In contrast, In India, significant annual rental escalations of 5% against forecast market rent rises of 2% to 3% mean that these markets are expected to remain over-rented.

For the remaining markets, varying levels of over renting are expected to endure. However, Sydney, Shanghai, Manila and Bangkok are forecast to become under-rented toward the end of the forecast horizon. Notwithstanding, all markets should be regularly assessed to identify opportunities to rethink lease strategy and perhaps reset rents where local conditions allow.

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