“In Asia Pacific, the financial market turmoil is starting to significantly affect the occupancy market for major financial office centres. Net leasing activity has been negative and vacancy rates have been on the rise for several quarters in Sydney, Tokyo, Singapore and Hong Kong,” JLL said in a latest report.

The consultant pointed out that rentals in Tokyo, Sydney and Hong Kong have already moved in downward phase of the cycle, with Singapore expected to follow suit in this quarter.

It has forecast that largest rental declines over the next one or two years are expected to be seen in the mature Asian markets following the demand contraction and the very strong rental increases observed in recent years.

JLL also noted that in the tier I cities in China and in some Indian suburban micro markets, the next two year will see abundant new supply hitting the market as demand begins to fall which would result in increased vacancy levels that could lead to major correction in rentals in short and medium term.

“In leasing markets where financial services companies contribute significantly to office occupancy and have driven rents to record levels, the increases now are beginning to reverse as the landlord-tenant power play shifts,” JLL said.

The report further pointed out that economic impact on real estate fundamentals are hitting more gradually in Europe than in the middle east and North Africa or Asia Pacific.