The growth momentum in Asia Pacific slowed in the third quarter as a result of continued uncertainty. Several countries lowered their GDP growth forecasts and most central banks in the region have in place tightening cycles on hold. Nevertheless, office fundamentals remained strong except for supply heavy markets. We expect a continued slowdown as we enter 2012 but the Asia Pacific region is well positioned to weather a challenging global economy.
We are pleased to present our inaugural edition of the Asia Pacific Office Forecasts. The report provides an in-depth outlook for the region whose fundamentals and potential are by far the strongest in the current global economic climate. While a downshift in exports to the West would still be felt, particularly for open small economies, the region as a whole has evolved to be more resilient. The regional office property market should similarly reflect this. The combination of growing economic clout, still-sturdy property market fundamentals and the abundance of capital will continue to position the Asia Pacific favorably in this period of economic uncertainty and thus remain a magnet of investor interest.
First quarter data confirmed that the regional slowdown we have been expecting is under way. However, some economies have showed considerable resilience and steady growth. Markets such as China and India continued to see buoyant performances amid a strong stream of supply. Inflationary pressures also retreated across the region, despite remaining high in some parts like Vietnam. C&W expects economic growth to moderate in the second half of 2012 with leasing activity still healthy while rents will be softening in places with abundant new supply such as Ho Chi Minh City and Kuala Lumpur.