The rental occupier market in Hong Kong
ended the second quarter of 2013 in a stronger footing, with occupier demand
rising with a net balance of +21 from +6 in the previous quarter.

The RICS Occupier Sentiment Index rise as demand increased while
available space for rental properties declined, the survey, conducted by the
Royal Institute of Chartered Surveyors, said.

“On the investor side, investor enquiries have changed
little although transactions are still expected to decline, with the net
balance picking up from -10 to -3. The forward-looking indicator for investment
activity continues to look subdued,” the report said.

 The data shows that
the weaker economic backdrop appears to be hurting confidence among occupiers
in China.
Although still positive, the lettings market softened this quarter with the
occupier sentiment index “easing notably”, RICS said.

“Meanwhile, the investment market continues to hold up with
the RICS Investment Sentiment Index (ISI) indicating the mood among investors
remains positive. Both buyer enquiries and expectations of future transaction
activity recorded positive net balances. The number of distressed properties
coming to the market is expected to continue to pick up in the third quarter.
Meanwhile, the demand for distressed property rose more modestly in Q2,” the report
said.

On a brighter note, Japan’s market is positive, RICS
said, mainly driven by improving economic conditions. The occupier sentiment
index recorded a strong reading of +26 in Q2. Significantly, occupier demand
stood at a net balance of +51, a level consistent with strong demand for
commercial space, it said.

Singapore

In Singapore,
the occupier demand returned to positive territory in the second quarter but
remains below the rise in available space. Rental values are expected to edge
back into positive territory next quarter.

“In Asia, it was a quarter of greater uncertainty, with
concerns over the slowing Chinese economy, the overall strength of the US recovery,
and regional political risks affecting sentiment in the commercial property
market. The slowing growth in the region suggests occupier demand will likely
continue to soften in some parts of Asia,”
Andy Wu, RICS senior economist.

RICS Occupier Sentiment Index is constructed by taking an un-weighted
average of readings for three series relating to the occupier market measured
on a net balance basis; occupier demand, the level of inducements and rent
expectations.