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Singapore saw the second highest quarterly office rental growth among Asia Pacific countries at 3.5 percent in Q3 2014, just next to Manila’s 6.5 percent, according to a CBRE report.
“In Q3 2014, Manila and Singapore saw continued strong growth as a result of limited prime space in central business districts,” said CBRE’s Director of Research Jonathan Hsu, adding that both
Specifically, the robust rental growth in the Philippines was propelled by the flourishing business process outsourcing (BPO) industry, while office rents in Singapore are forecasted to rise further, he explained.
As such, the city-state is expected to be one of the top performers in the Asia Pacific for the last quarter of 2014. Moreover, yields of prime office space there edged up by 23 basis points to 3.8 percent.
Elsewhere in the region, Sydney, Melbourne and Shanghai all saw positive rental growth in Q3 2014, reversing a decline of more than a year. However, rents in Seoul and Mumbai dropped further, while that in Beijing decreased for the first time since the market entered the upcycle in 2010 to 2011.
Consequently, CBRE’s Office Rental Index for the region increased by 0.93 percent on a quarterly basis compared to 0.8 percent in Q2 2014, while annual growth reached 2.9 percent – its highest since Q1 2012.
Additionally, the new supply of office space in APAC rose by 12 percent to 8.9 million sq ft compared to the preceding quarter, while the region’s vacancy rate fell by 27 basis points to 8.4 percent – its lowest figure since Q2 2008.
Net absorption also receded by 17 percent to 8.5 million sq ft on a quarterly basis, but this is not a sign of a slowdown in office leasing as total net absorption surged 34 percent year-on-year to 27.9 million sq ft.
“Looking ahead, a significant increase in new office supply will lead to more focus on tenant retention. Emerging markets such as Jakarta and Beijing will see a supply peak, forcing landlords to be more flexible towards rental negotiations,” said CBRE’s Head of Brokerage Services and Regional Managing Director Manish Kashyap.
“Elsewhere, an increasing number of large new projects are expected to be completed in 2015 in Brisbane, Melbourne and Sydney, ensuring they remain tenant markets. These trends will put tenant retention as a top priority for landlords in the near future,” he added.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this and other stories, email nikki@propertyguru.com.sg
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