TODAY ONLINE : Prime office rentals to rise 'strongly' in H2

Prime office rentals to rise 'strongly' in H2

05:55 AM Jun 02, 2010

by Julie Quek

SINGAPORE - Office rentals for international Grade A office space in Singapore's prime financial district look set to climb higher by at least 25 per cent over the next two years.

This was the view of property analysts who believe that office property rents have already reached bottom, and will likely see a strong pick-up from the second half of this year.

"International Grade A" refers to a new generation of office buildings in Singapore that are less than 10 years old, such as the Marina Bay Financial Centre (MBFC) and One Raffles Quay.

However, office rentals for Grade A-minus or Grade B buildings - developments in the financial district that are more than 10 years old - may still remain soft, said Mr Donald Han, managing director of Cushman and Wakefield.

A key driver propelling rents up is the strong demand from financial institutions and law firms for such International Grade A office property, said Mr Han.

He pointed out that these big players are moving to the MBFC so that they can expand and consolidate all their offices in one location.

"Companies are also looking to expand their offices this year, due mainly to the stronger than expected Singapore economy seen in the first quarter," said Mr Han.

Mr Tony Darwell, Nomura Singapore's executive director, noted that during from late 2007 to end of 2008, many companies faced a shortage of available office property space in Singapore.

As a result, many banks had to compromise and site their offices in different locations, said Mr Darwell.

Over the past six months, he has seen a surge of precommitment deals for International Grade A office space.

"In fact, some companies are even committing as early as one year before their current lease expires," said Mr Darwell.

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