Annual GDP is expected to reach 4% by the end of 2002 and 3.8% for 2003. Tokyo, at the other end of the spectrum continued to struggle in 2002. Better results are forecast for 2003 but it will be some time before strong international occupier demand for Tokyo office product returns. Asset and debt restructuring will however continue to generate substantial opportunities in the investment sector.
Foreign direct investment continues to flow into Asia Pacific markets with investors focussing more on market stability, low risk and transparent economies and safe but solid returns on their investment. Minimal speculative development is occurring, with developers instead opting to secure tenants for potential projects before committing to large scale construction. Take-up across Asia Pacific has slowed somewhat. However, due to the various economic and market cycles in Asia Pacific there are always special cases worthy of comment, for example, take-up in Kuala Lumpur and Bangkok continued to be healthy in 2002.
Vacancy levels across Asia Pacific partially reflect the relative position of the local economy. Mature economies have significantly lower vacancy rates while developing nations have traditionally higher rates. The direction of vacancy rates is more important to watch in continents with mixed economies. Vacancy rates in both Bangkok and Adelaide have reduced over the last two years, helping to maintain rental growth in both centres during 2002. Given the tough global economic conditions, both Mumbai and Shanghai deserve mention for maintaining vacancy at current levels.