Average office rents in the Central Business District (CBD) area in the second quarter of the year stayed flat quarter-on-quarter at S$10.85 per sq ft, property consultant DTZ said in a news release on Wednesday (Jul 1).
According to DTZ, the slowdown in rental growth was also a result of slower demand in the face of uncertain global situations such as the risk of a sharp correction in China’s real estate market, or the possible default and exit of Greece from the Eurozone. However, it said the net demand growth in the CBD was still positive.
In H1 2015, net demand was 526,000 sq ft, almost 90 per cent higher than the 277,000 sq ft registered in H2 last year. Office occupancy in Raffles Place grew the most by 4.1 percentage points to 96.6 per cent and occupancy rates in the Beach Road/North Bridge Road micromarket inched up by 0.7 percentage point in Q2, DTZ added.
As for the average monthly gross rents in Marina Bay, it remained the highest at S$13.75 per sq ft, followed by Raffles Place at S$10.80 per sq ft, it added.
While rents were supported by the lack of new completions for the rest of 2015, DTZ said leasing activity was modest on the back of the 4.45 million sq ft of pipeline supply in 2016. Major 2016 developments in the CBD include Guoco Tower, Marina One, and Duo Tower totalling about 3.3 million sq ft.
Ms Cheng Siow Ying, DTZ’s Executive Director of Business Space, said: “With a large supply coming on board in the second half 2016, firms will have more premium and Grade A office options in the CBD and fringe locations.
“Some firms may take this opportunity to relook and strategise consolidation or expansion plans, while others may employ a wait-and-see approach through the supply wave of 2016. Notwithstanding, prime office space is still likely to command a premium, especially for iconic developments like Marina One and Guoco Tower.”
Source : Channel NewsAsia – 2 Jul 2015