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Office rent decline eases as confidence returns

Posted on 18 Sep 2009 | Comments Off

Recovery seen next year, but market remains fragile in short-term

OFFICE rents fell for the fourth consecutive quarter, but the pace of decline has eased on the back of returning business confidence, a new report from CB Richard Ellis (CBRE) showed.

Data from the firm said that prime office rents averaged $7.50 per square foot per month (psf pm) in the third quarter. This reflected a 12.8 per cent quarter-on-quarter decrease, compared with the 18.1 per cent decline in Q2 2009 and 18.6 per cent contraction in Q1 2009.

In all, prime rents have fallen 53.4 per cent since their peak in Q3 last year.

Similarly, rents of Grade A office space – which is the top range of prime office space – slipped to $8.80 psf in Q3 2009. This represents a 13.3 per cent quarter-on-quarter decline, which is an improvement over the 18 per cent contraction in Q1 and 17.5 per cent decline in Q2.

However, vacancy rates continued to climb. Grade A vacancy rose to 4.2 per cent in Q2 2009, up from 3.6 per cent in the past quarter. It was 1.2 per cent just a year ago in Q3 2008. The take-up for Grade A space for the first three quarters in 2009 amounted to negative 223,397 sq ft. Likewise, the islandwide take-up was negative 570,000 sq ft for the first half of the year. Continue reading →

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Posted in Office / Retail / Industrial, Property Market / Real Estate

Tagged Office Rental, Office Space, Singapore Office, Singapore Office / Retail, Singapore Property

Banks also hit by property clampdown

Posted on 17 Sep 2009 | Comments Off

So far the market seems to have taken in its stride the removal of the interest absorption scheme (IAS) for properties. The knee-jerk decline of 43 points by the STI on Monday was followed by a sharp rebound on Wednesday as broader economic recovery factors continue to dominate. But there is an impending overbuilding of residential property in Singapore. According to Leong Wai Ho,director and senior regional economist at Barclays Capital, some 62,000 units are in the pipeline between now and 2013. In the first eight months of this year, almost 12,000 units were taken up compared to just over 4,000 units for the whole of last year.

However sales were already slowing month on month even before the government’s latest measures. What is the impact of this inventory on corporate Singapore?

The initial impact could well be felt by the banks. Mortgages represented the only area of loan growth for the banks this year, up 6% year to date, versus a contraction of 0.1% for total loans. According to Trevor Kalcic, regional banking analyst at RBS Securities, it will reduce the sector’s future growth by around 0.5%, through a negative impact on both volumes and margins. Continue reading →