Office fit-out costs across Asia Pacific increase slightly, up 0.5% year-on-year: JLL
Philippines construction costs increase lower than inflation
The cost to fit-out workplaces in Asia Pacific continues to rise, mirroring ongoing inflationary pressures, higher commodity prices and increased construction costs. According to global real estate consultant JLL’s (NYSE:JLL) Asia Pacific Fit-Out Cost Guide 2023/2024, the average cost to fit-out workplaces across the Asia Pacific region increased 0.5% year-on-year with the average fit-out cost per sqm rising to US$1,161, up from US$1,159 last year.
“Inflation in Asia Pacific markets is returning to normal levels as widely projected, but certain supply chain challenges remain for mechanical, engineering and plumbing, information technology and audio-visual items,” says Martin Hinge, Executive Managing Director, Project Development Services, JLL Asia Pacific. “Going forward, we foresee factors like commodity process, energy costs, and wage increases will continue to impact pricing for some fit-outs in Asia Pacific.”
Sustainability remains top of mind, with leasing office space in sustainable buildings is becoming non-negotiable for occupiers committed to ESG. Among other factors, sustainable fit-outs are gaining prominence as an initiative to decarbonize workplaces. In a survey of 240 CRE leaders across Asia Pacific, one-in-two cite sustainable fit-outs as a priority to be actioned within the next three years.
For sustainable fit-outs, cost savings over the long term can offset upfront capital expenditure (CAPEX) costs. Sustainable materials or pieces of equipment may be more expensive upfront but those with better energy ratings or longer lifespans will save businesses money in the long run.
Responding to inflationary pressures that projects are facing, one-third of JLL market leaders in Asia Pacific report that pursuing a sustainable design is dependent on the overall project cost. 56% of them, the bulk of which was in Australia and Southeast Asian markets, also confirmed that reduced CAPEX on initiatives was being considered as a means to work within budgets.
Calum Swinnerton, Head of Project Development Services, JLL Philippines, says, "In the Philippines, construction costs are increasing, albeit much lower than rate of inflation. At the end of the day, costs vary on a case-to-case basis, and the fit-out guide serves as a springboard to discuss the needs per project."
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