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Singapore remains one of the most competitive office rental markets in Asia despite being one of the most expensive Asian countries for expatriates and locals, revealed a Cushman & Wakefield’s Office Space Across the World report.
The consultancy noted that office rents in the city-state are still 49 percent cheaper than Hong Kong, which posted the most expensive in the region.
However, annual office occupancy cost in the republic increased by 9.8 percent to US$93 (S$127.16) per square feet last year. As a result, Singapore emerged as the world’s 12th most expensive office leasing market from 13th previously in 2013.
Moving forward, occupancy cost in the city-state is expected to rise by another 5 to 6 percent due to robust leasing demand and limited supply arising from fewer completions of new projects.
However, the firm warns that tenants remain cost-conscious due to lingering uncertainties over the global economy. In fact, new leases are largely made by occupiers looking for cheaper rents, or buildings that can fulfill their critical business requirements.
Despite the lack of new supply this year, about 1.59 million sq ft of space are expected to become available because of relocations and subleasing, alleviating the supply and demand gap in 2015.
“We are forecasting the average annual space absorption to be around 0.8 million sq ft in 2015 and this is expected to rise to more than 1 million sq ft in 2016 barring any economic conditions which may slow take-up rates,” said Toby Dodd, Country Head of Cushman & Wakefield Singapore.
Next year, around 4 million sq ft of new space are projected to enter the market from major developments such as DUO Tower, Marina One and Guoco Tower, said the consultancy, adding that this would stabilize the rents of prime Grade A office space.
Meanwhile, London retained its title as the most expensive office rental market in the world with annual rents at US$264 (S$361) per sq ft, followed by Hong Kong at US$184 per sq ft (S$251.6) and New York with US$131 (S$179.12) per sq ft.
Rio de Janeiro and New Delhi completes the top five with office rents at US$129 (S$176.38) per sq ft and US$120 (S$164.08) per sq ft respectively.
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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