Bookmark & Share
New office supply in Singapore is high, with around 3.4 million sq ft of new office space expected to enter the market this year, said JLL.
However, office take-up is at a historical low as financial institutions cut back on headcount. It noted that financial institutions take up more than 60 percent of prime office space in the CBD.
With this, prime office rents fell 15 percent in 2015, while prime office capital values dropped six percent.
Given the competition between existing landlords, new buildings and shadow space from financial institutions, prime office rents and capital values are expected to fall by 10 to 20 percent this year. “While the short term rental decline could be steep, we expect rents to recover in the medium term given Singapore’s attractiveness as a global financial city,” said JLL.
Over at the retail front, occupancy rate has been stable since 2012 at 98 to 99 percent as take-up has largely been supply-led.
However, retail supply, excluding Jewel@ Changi Airport, would be at a 10 year low in 2016 to 2018. This comes as the government disapproved the initiation of new retail space since 2013, it said.
Retail sales slowed in 2012 to 2015 following a drop in tourist spending. Notably, tourist spending account for 15 to 20 percent of total retail sales. In Orchard Road, Marina Bay Sands, tourist spending account for more than 50 percent of retail sales.
Meanwhile, shopper traffic and tenant sales in well managed suburban malls slightly recovered by 4.5 percent year-on-year in 2015.
“We believe these malls are bringing higher value goods and brands into the suburbs to lift sales and rents.”
JLL noted that the gradual recovery in tenant sales could drive rental recovery in 2016.
Nikki De Guzman, Editor at CommercialGuru edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg
Related Articles:
Mixed Q1 results for office, retail and industrial market: CBRE
CBD office rents decline in Q3: DTZ