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Singapore’s office market is presently stable but rental growth is expected to slow down this year, according to JLL’s Office Market Sentiment Survey for Q1 2015.
“The Singapore office market is quite stable at the moment even though vacancy is low and net take-up has been below average,” said Andrew Tangye, Regional Director at JLL Singapore.
“So we think that it’s neither a landlord nor tenant’s market. However, it has been favoring landlords more recently, particularly in the CBD, where a lot of the leasing activity has been taking place.”
Moreover, there has been a strong pre-commitment on a couple of new office buildings due for completion in December 2014 and February 2015.
According to JLL, there is a lot demand for office space from the technology sector in the city-state currently, with social media companies like LinkedIn, Facebook, Twitter and Google all expanding in the CBD. The firm also said these companies are taking up spaces previously occupied by banks.
Another driver are multinational corporations (MNCs) looking to site their headquarters in Singapore, such as General Motors and Sanofi, it said. The former transferred their HQ from Shanghai, while the latter moved their Asia Pacific HQ in South Beach.
On the other hand, JLL noted that the banking sector is still very quiet. “We’re not seeing a seeing a huge amount of expansion activity from them. In fact, it’s pretty stable and in some cases some of the banks are giving up space,” Tangye noted.
Looking ahead, the consultancy expects monthly office rents in Singapore to continue grow in the first half of this year following a quarter-on-quarter increase to US$6.36 per sq ft in Q4 2014.
“At 2H 2015, rents will probably start to come under a little bit more pressure just before the next wave of new supply, which is expected to come through from the middle of next year to 2016 onwards,” he 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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