According to a report published by Jones Lang LaSalle Incorporated (JLL), a leading real estate investment trust (REIT), office rentals in Asia is increasing gradually with net absorption or change in occupied office space in Tier I cities climbing 13% sequentially from the previous quarter to 4.3 million square feet.
The Jones Lang report revealed that rents increased in Greater China, led by Hong Kong, Shanghai, and Singapore. According to the research study, these cities are likely to lead the recovery across the Asia-Pacific region, with rental rate of office space expected to rise between 10% and 30% in 2010. However, recovery of office markets in Tokyo and some Indian cities are expected not before than 2011.
On the other hand, direct commercial property transactions in the Asia-Pacific region in the second quarter of 2010 declined 32% sequentially on quarter-to-quarter basis. However, overall transaction volumes of Jones Lang were still up by 24% from the year-earlier period.
Jones Lang provides corporate, financial and investment management services to corporations and other real estate owners, users and investors worldwide. The company operates as a single-source provider of real estate solutions with a broad range of real estate product and services, and an extensive knowledge of domestic and international real estate markets.
Jones Lang faces stiff competition from international, regional and local players in the market due to which it has to continually invest in value drivers that act as key differentiators. Consequently, the company is under severe stress to maintain its profitability. We maintain our Neutral rating on Jones Lang with a Zacks #3 Rank, which translates into a short-term Hold recommendation.
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