Tag Archives: Office Rental

Rise in office rents to slow this year

Office rents in Singapore are likely to rise at a slower pace this year, even as supply, especially in prime areas, remains tight.

Robust demand for grade A office space by financial institutions and other companies will still contribute to overall rental growth, but it would not match the upward spiral seen last year, said property consultants.

“A variety of factors indicate a slower pace of rental growth. These include companies’ willingness to move outside prime areas, a few signs of rising caution due to external issues in the United States and the growing realisation by occupiers that the market will be more friendly beyond 2010,” said CBRE’s Moray Armstrong, executive director of office services.

“Office rental growth is reaching a point of inflection, not a turning point,” according to Mr Steve Smith, deputy managing director at property consultancy Savills. He expected prime office rentals to grow 15 to 20 per cent this year, after rising 90 per cent last year.

While the top-end office rents in Singapore still remain lower than Hong Kong’s, “the average Grade A office rents in Singapore could possibly exceed Hong Kong’s by the second quarter this year because Hong Kong has a bigger supply coming through this year, about 3 million sq ft,” Mr Smith added.

The supply crunch in grade A office space prompted the Government to put forth plans during Budget 2008 last week to make available more space in the central area. Finance Minister Tharman Shanmugaratnam said the Government planned to relocate some agencies out of the central area to free up 20,000 sq metres of office space by early next year. It has also released 15 transitional office sites that will add 150,000 sq metres of office space in the near term.

According to the Urban Redevelopment Authority (URA), office rentals islandwide rose 56.1 per cent last year. In the last quarter, competition for the pockets of vacant space in the central business district remained intense and prime office rents averaged $15 psf per month, said CBRE. By the end of the year, prime rents could average $17 per square foot per month, it added.

Source : Today – 22 Feb 2008

Experts say Grade A office rentals to continue rising in 2008

Rentals of Grade A offices in Singapore are expected to continue rising this year.

According to property consultant Savills, average office rentals here may even nudge above that of Hong Kong’s, currently the highest in the region.

They added that Singapore’s office property sector will continue to remain buoyant despite worries over the US sub-prime crisis.

One Raffles Quay in Singapore’s Central Business District

“Even in the current environment which is rather uncertain, we noticed that the financial services community is continuing to grow in Asia. And we noticed this in HK and in Singapore, so demand remains very strong here. That is going to continue to push up rents in the grade A office market,” said Simon Smith, Deputy Managing Director, Savills Valuation and Professional Services.

Savills is expecting prime office rents in Singapore to jump by 15-20% this year, down from the 90% jump in 2007. Vacancy rates for offices hit as low as 0.2% late last year.

Savills said Singapore is attractive to overseas investors looking at the office property sector in the region.

Robert McKellar, CEO (Asia Pacific), Savills Asia Pacific said: “Office is primarily very attractive. Of course, (there are) very few assets for sale and that makes it very difficult for any overseas investor to get access to stock. Nevertheless, if the opportunity arises, then definitely we’ll go for a secure investment in Singapore.

“For example some of the German open-ended funds that are increasingly wanting to have a bigger slice of the Asian real estate markets; they see Singapore as an attractive market because of the fact that its lots are risk-free.

“They are looking to have a base from which to invest into the region, and (it’s) ideal for them, acquiring an asset in Singapore which is risk-free, which has stabilised market, strong economy and low taxation.”

Meanwhile, another property consultant CB Richard Ellis (CBRE) is estimating that about 10.1 million square feet of new office space in Singapore will be completed by end of 2012.

Some 67% of the supply coming into stream within the next three years is expected to be Grade A office space. This means a doubling of prime office space.

CBRE said monthly rentals for prime office space averaged S$15 per square foot from October to December of last year, up 92% on year. It is expecting these to average S$17 per square foot by the end of the year.

Meanwhile, luxury residences will also see prices jumping between 8-12% in 2008. – CNA /lsSource : Channel NewsAsia – 22 Feb 2008

Singapore is world’s 7th most expensive office location

Singapore has moved up 10 spots to become the world’s seventh most expensive office location.

According to Cushman & Wakefield’s global ranking, prime office rents shot up 78 percent in Singapore last year.

The property consultancy expects demand for office space from companies across most industry sectors to remain strong this year against a tight supply till 2010.

Cushman is predicting that the effect of a US slowdown on Asia will be muted.

However, it said the uncertainty of growth plans of US institutions, especially banks, may possibly result in an easing of demand.

Cushman said rents are likely to trend up, but at a slower pace compared with last year.

London retains its title as having the most expensive office occupancy costs in the world. A square metre of prime space in London’s West End cost US$3,354 a year.

In second place is Hong Kong, where rents were up 40 percent to about US$2,550 per square metre. – CNA/ms

Source : Channel NewsAsia – 13 Feb 2008

Q3 office occupancy rate soars to 97.6% in Singapore

The strong demand for office space in the central business district has spilled over to the rest of Singapore.

According to property consultants DTZ, the occupancy rate for office space islandwide climbed to 97.6 percent in the third quarter.

This is largely because of an acute shortage of office space in the Central Business District (CBD).

DTZ says the shortage is due to the demolition of Asia Chambers Building and the alteration works being done at two office blocks, OUB Building and Ocean Building.

The office market saw a net loss of 455,000 square feet of stock in the three months to September.

Occupancy rates in Raffles Place rose by 1.1 percent from the previous quarter.

With higher asking rents and lack of office space in the CBD, many companies have flocked to the CBD fringe and decentralised areas.

This has boosted occupancy in these regions with the Alexandra area, for example, rising 3.5 percent to full occupancy.

Average monthly rents for Alexandra have increased by 13 percent to S$6.80 per square foot per month from the second quarter.

Another area, Novena, achieved 98.5 percent occupancy. – CNA/ch

Source : Channel NewsAsia – 28 Sep 2007