Rentals of Office Space in Singapore Gets More Competitive

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Singapore’s Central Business District (CBD) recorded a 52% decline in rent last year, compared to Hong Kong.

This year, renting office space in Singapore’s Central Business District (CBD) is a lot more cheaper – almost 52% less – than in Hong Kong’s business district.

Cushman & Wakefield, in their report titled Office Space Across the World 2013, note that year-on-year rents in Singapore have fallen by almost 16%.

Cushman’s forecast is for a bottoming out of rentals in 2013, with increases predicted later in 2013 or early on in 2014.

According to the Managing Director for Asia Pacific region of the property and real estate consultancy form, Sigrid Zialcita, “Singapore’s rent ranking globally and regionally slipped in 2012, which is emblematic of conditions in other financial centres in the region. The combination of below-trend leasing activity and relatively elevated vacancies in super-Grade A space have kept rents on a downtrend over the past year, and among the lowest compared to other financial centres including Hong Kong, Tokyo, Sydney and Shanghai.”

In the meantime, rents in Singapore are growing more competitive in comparison to other areas in the region.

This is evident for instance when comparing Hong Kong’s rental value of S$16.66/sq. foot versus that of Singapore’s at a mere S$8.61/sq. foot.

The government in Singapore has signalled its intent to maintain competitive rents in CBD by following a strategy of decentralization of business activities into commercial hubs beyond the CBD.

And according to Cushman & Wakefield, rents will likely remain stable, thanks largely to robust demand for rental properties, and a healthy mix of supply.

According to the Country Manager of Cushman & Wakefield in Singapore, Toby Dodd, “Now is still a good time for occupiers to secure long term lease agreements in Singapore, although these opportunities may decline as the year progresses. Rents have reached the bottom of the cycle and will remain steady given strong supply pipeline of new buildings, including Asia Square Tower 2 and CapitaGreen, while other Grade A space returns to the market at buildings such as One Raffles Quay and Capital Tower as tenants realise their decentralisation strategies.”

The report also reveals that London now ranks as the world’s most costly office property market, with Rio de Janeiro following closely in third place.

Rental values in London have risen sharply due to a dearth of quality office space, especially in the city’s West End.

 

Source: Channel News Asia

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