S'pore office rents dip 1%

Prime office rents in Singapore are the third highest among 28 cities in the Asia-Pacific region for the first quarter of this year.

Annual gross rents for the city-state stood at US$81.59 per sq ft, only surpassed by the rents of US$115.32 and US$103.42 per sq ft for Hong Kong and Tokyo respectively.

Singapore has been in third place since the third quarter of 2009. However, leasing activity in Singapore subsided, evidenced by a 1.0 per cent dip in annual gross rents from the fourth quarter last year.

Average monthly gross rents for CBD Grade A office space also fell by 4.3 per cent over the first three months of this year, a larger fall compared to a 1.6 per cent dip over the last three months of 2011.

The easing of rents was attributed to lingering sovereign debt issues in the eurozone and continued economic uncertainties globally.

Looking forward, the forecasted new supply in 2012 amounting to 745,246 sq ft, much larger than in 2013, where the estimated pipeline is 141,759 sq ft.

The average vacancy rate in Singapore is projected to remain roughly constant, around 8.5 per cent.

According to a report, a long pipeline of new office completions, accompanied by an expected increase in sub-leased shadow space due to poor economic prospects, would continue to drag down rents.

Nevertheless, the projected fall in office rents is expected to be capped at 15 per cent for the whole of this year, with a continuing downward trend to about US$70 per sq ft in 2013.

Source: Business Times – 17 May 2012