Rents of Grade A office space in the CBD rose 1.2 percent in the first quarter of 2013 compared to the previous quarter, after declining for six consecutive quarters beginning Q3 2011.
“Rents for CBD Grade A office buildings may rise further if interest rates remain low and the economy holds steady, owing to a lack of new supply over the next three years,” said Alan Cheong, Senior Director at Savills Research.
Meanwhile, Louise Toovey, Senior Manager for Office Leasing at Knight Frank, noted that “the office leasing sector is likely to bottom out in late 2013 as leasing activity picks up”. According to a Savills report, 489,000 sq ft of CBD Grade A office space was taken up during Q1 2013 compared to 80,000 sq ft in the previous quarter and together with the absence of new supply, rents increased as overall vacancy rates in most micro-markets dropped for the second consecutive quarter to 5.9 percent compared to 7.8 percent at the end of 2012. However, occupancy rates of prime (AAA grade) office buildings in Marina Bay precinct (95 percent) have exceeded other Grade A offices (93.8 percent) for the first time since Q3 2011 due to the quick absorption of space in the newly-completed Asia Square Tower 1 and Marina Bay Financial Centre (MBFC) Tower 3.
While whole-floor rents remained unchanged from the previous quarter, strong demand for pocket space helped push up average rents of prime offices in Marina Bay by 2.9 percent quarter-on-quarter.
Meanwhile, office investment activity softened in Q1, but capital values of Grade A offices increased for the second straight quarter by 4.6 percent to S$2,667 psf compared to the previous quarter.
Source : PropertyGuru – 23 Apr 2013
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