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Singapore’s office property market ended the year on a bright note, with continued rental growth for the whole of 2014, according to the latest report from Knight Frank.
Office buildings at Raffles Place and Marina Bay posted their sixth straight quarter of rental gains in Q4 2014. Specifically, Grade A+ office buildings in both market segments grew by 1.7 percent to S$12.10 per sq ft in the fourth quarter, representing their highest average quarterly rental level since 4Q 2011 and the best rental growth among various office segments in the city-state.
“This increment is attributed to landlords increasing their rents for new leases and renewals, as well as the inclusion of prime office space in CapitaGreen,” said the consultancy.
“Overall office rents in Raffles Place and Marina Bay climbed by 0.5 percent quarter-on-quarter, albeit at a marginally slower pace compared to the previous quarter of 0.6 percent,” it added.
On the other hand, Shenton Way, Robinson Road and Tanjong Pagar collectively posted a quarterly rental growth of 0.4 percent compared to just 0.1 percent in Q3 2014. The prime office sector at these three locations also outperformed other office segments within the same area with its quarterly rental increase of 1 percent to $8.30 per sq ft on average.
“Office spaces in Suntec / Marina / City Hall and Beach Road precincts kept their rental rates stable in Q4 2014 with minimal increase of 0.1 percent to reach S$10.40 and $7.40 per sq ft respectively,” it noted.
Finally, office spaces at Novena and Newton recorded a quarterly rental increase of 0.6 percent to hit S$8 per sq ft in the last quarter of 2014.
Looking ahead, the consultancy believes tenants will likely adopt a more cautious approach in terms of office space expansion and relocations in an effort to lower rental costs due to the forecasted slower economic growth and possible higher market volatility in 2015, coupled with a moderate inflow of new office spaces over the next two years
A total of 10.2 million sq ft of gross office space is expected to enter the market until 2018, with 4.7 million sq ft or 46 percent of which are expected to be completed by 2017.
Despite the limited supply and given these factors, Singapore prime office rents are forecasted to see a slower growth of 5 to 7 percent for the whole of 2015, Knight Frank added.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg.
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