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Despite the expected onslaught of supply in 2015, Singapore’s office property market is expected to be stable, with rents of Grade A office space forecasted to rise by 12.9 percent next year, according Savills Research.
“Going into 2015, newly minted CBD Grade A office supply in moving condition is limited to CapitaGreen, South Beach and PS 100, totalling 1.25 million sq ft. With Equity Plaza taken off the market in March 2015, the net supply is just shy of 1 million sq ft,” said Alan Cheong, Senior Director at Savills Research.
“Take-up in a slow year like 2014 is already about 0.71 million sq ft. Setting this as the baseline for 2015 and adding 260,000 sq ft of demand from tenants moving out of Equity Plaza, demand would just about match the supply for CBD Grade A office space.” This means the office property market would be fundamentally sound next year, he explained.
In a press release, Savills noted that in 2016, when office completions are projected to rise sharply, rents may still increase because many of the upcoming buildings will actually be ready for occupancy later in 2017, given the time required for finishing the interior fittings.
It said there are likely to be no problems in terms of supply over the next two years. Consequently, landlords would be under less pressure to lower their rents just to fill up the new buildings entering the market during the said period.
However, office rents could correct in mid-2017 when the stock of new office buildings have been completely fitted out, Cheong added.
On the demand side, more new to market office tenants are expected to enter Singapore in 2015, but these companies have smaller space requirements than banks and financial institutions, which are still reeling from the effects of 2008 Global Financial Crisis, he said.
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg.
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