Bookmark & Share
Office rents fell further in Q4, posting a 1.8 percent decline from the previous quarter where it recorded its biggest drop for the year, recording a 2.9 percent decline. Overall, office rents fell 6.5 percent in 2015. Meanwhile, office space prices moderated slightly by 0.1 percent in Q4, after registering the same decline in Q3.For the whole of 2015, prices of office space declined 0.1 percent.
“Office leasing activity remained lacklustre in the fourth quarter due to a slump in business sentiment amid weak macroeconomic conditions,” said Christine Li, Director and Head of Reseach at Cushman & Wakefield. “The office leasing market continues to face challenges in the short term as the impact of China’s slowing growth and continued volatility in the Chinese stock market reverberates throughout the global economy.”
“Despite the fall in rents, office prices remained resilient with both a quarter-on-quarter and year-on-year dip of just 0.1% in Q4. The resilience could be attributed to sellers maintaining their asking prices due to the scarcity of prime assets available for sale, and buyers who are willing to pay a premium for well-tenanted properties with established cash flows,” she added.
As at the end of 4th Quarter 2015, a total supply of about 993,000 sq m GFA of office space was in the pipeline, URA data show. As at the end of 4th Quarter 2015, there was a total supply of about 993,000 sq m GFA of office space in the pipeline.
The amount of occupied office space decreased by 10,000 sq m (nett) in Q4, compared to the 15,000 sq m (nett) increase in the previous quarter. The stock of office space decreased by 21,000 sq m (nett) in Q4, compared to the decrease of 3,000 sq m (nett) previously. As a result, the island-wide vacancy rate of office space at the end of 4th quarter fell to 9.5 percent, from 9.6 percent at the end of 3rd quarter 2015.
Over at the retail front, rents declined 1.3 percent in Q4, following 2.0 percent decline in the previous quarter. Meanwhile, retail space prices decreased by another 0.1 percent in Q4, after declining 0.3 percent in Q3. For the whole of 2015, prices of retail space had declined by 0.8 percent while rentals had declined by 4.1 percent.
According to Desmond Sim, Head at CBRE Research, Singapore and East Asia, the decline in retail rents reflects “the outpacing of supply over demand, weak demand for space due to headwinds with more tenants choosing to consolidate rather than expand.”
“The retail market is restructuring in response to the changing patterns in consumer spending with the use of technology in retail,” he added.
As at the end of Q4, there was a total supply of 808,000 sq m GFA of retail space from projects in the pipeline, said URA. “The amount of occupied retail space increased by 8,000 sq m (nett) in 4th Quarter 2015, compared to the decrease of 13,000 sq m (nett) in the previous quarter. The stock of retail space increased by 22,000 sq m (nett) in 4th quarter last year, compared to the 24,000 sq m (nett) decrease in the previous quarter. As a result, the island-wide vacancy rate of retail space rose to 7.2% at the end of 4th quarter, from 7.0% at the end of Q3.”
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg
Related Articles:
CBD office demand remain subdued in Q3