ST : S'pore prime office rents spike in Q3

Nov 19, 2010

S'pore prime office rents spike in Q3

Biggest increase since end-2007, with 7.2% quarter-on-quarter rise

By Gabriel Chen

RISING prime office rents in Singapore accelerated in the third quarter, jumping the most since the end of 2007, according to a new report by CB Richard Ellis (CBRE).

CBRE said prime rents saw a big jump of 7.2 per cent quarter-on-quarter, from $6.90 per sq ft per month to $7.40 psf per month during the period, thanks to increasing demand from financial institutions, insurance firms and professional business service companies.

The major leasing deals reported during this period were primarily focused on various new Grade A or prime developments.

In another boost for the office market, the vacancy rate at Grade A buildings fell, the report said.

The CBRE findings come on the heels of a Colliers International report, which indicated that Singapore notched up the biggest increase in rents across the Asia-Pacific region in the third quarter.

Colliers found that in US dollar terms, Central Business District Grade A office rents leapt 15.6 per cent in the three months ended Sept 30 compared with the previous quarter.

'Singapore has enjoyed particularly strong occupier demand over the past six months,' said CBRE Singapore's executive director for office services, Mr Moray Armstrong.

'Even while the volume of leasing activity may ease going into 2011, we remain optimistic on the market outlook.'

The CBRE report noted that overall office rents in Asia rose 3.2 per cent quarter-on-quarter in the third quarter of this year.

Aside from the higher office rents in Singapore, the increase was also attributable to the strong growth in Greater China.

For example, the Hong Kong office market recorded the largest rental growth of any market in the region.

However, rental growth in cities such as Guangzhou, Shanghai and a number of major ones in India is already being constrained by the large amount of new supply coming on stream in the short to medium term, CBRE said.

In Japan, the Tokyo Grade A office market saw mixed fortunes during the quarter with well-located Grade A buildings securing new tenants but other Grade A buildings in less attractive locations continuing to have trouble finding tenants.

gabrielc@sph.com.sg


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BRIGHT OUTLOOK

'Singapore has enjoyed particularly strong occupier demand over the past six months... Even while the volume of leasing activity may ease going into 2011, we remain optimistic on the market outlook.'

Mr Moray Armstrong, CBRE Singapore's executive director for office services