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While office rents in Singapore continued to increase by up to 0.6 percent on a quarterly basis in Q1 2015, this rate is slower than the rental growth of 1.7 percent and 2.6 percent seen in the fourth and third quarter of 2014 respectively, according to Credit Suisse citing the Urban Redevelopment Authority’s (URA) latest statistics.
The softer overall rental growth is attributed to the 0.8 percent quarterly drop in fringe office rents, which is the first time it recorded a negative growth in eight consecutive quarters. Another factor is rents in the central area rose by only 0.9 percent in the first quarter versus 2.0 percent and 2.8 percent in the fourth and third quarter of 2014 respectively.
The Swiss financial institution said that the weakening rental growth could be due to the 4.6 million sq ft of office space coming on stream in 2016 and 2017, with pre-leasing activities for the upcoming supply likely to pick up in the second half of the year.
Given the substantial office pipeline for 2016 and 2017, landlords have signified that they will prioritise retaining tenants over higher rental gains, noted Credit Suisse.
Meanwhile, overall retail rents in the republic declined marginally by 0.4 percent in the first quarter compared to the 0.5 percent hike in Q4 2014.
Although the drop in island-wide retail rents was partly offset by Fringe rents which climbed by 0.4 percent on a quarterly basis, it was dragged down by the heftier 0.7 percent fall in the Central area.
On the other hand, overall industrial rents in Singapore improved by 0.4 percent in Q1 2015 thanks to the 0.6 percent expansion in warehouse rents and the 0.1 percent hike in the multi-user factory segment.
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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