Bookmark & Share
Prices and rents of both office and retail spaces here fell – albeit at a slower pace – in the third quarter, the latest statistics from the Urban Redevelopment Authority released on Friday (28 October) revealed.
Rents for office space moderated by 1.1 percent in Q3, after falling 3.5 percent in the previous three-month period. Prices of these spaces also decreased, easing further by 0.4 percent in the July to September period—lower than the previous decline of 1.5 percent in Q2.
Office space vacancy rate edged up by 1.3 percentage points as a result of weaker take-up and increasing supply. The third quarter saw the office space supply increase by 101,000 sq m, higher that the increase of 27,000 sq m previously.
Source: URA
Analysts say the office market is expected to continue on the downtrend next year.
“With the economic growth forecast remaining subdued and an uncertain global economy, rents are likely to drop by at least 10 percent next year. Underlying causes include cyclical factors and structural changes in the economy such as changes in business models, disruptive technology and such,” said Dr Lee Nai Jia, director and head of Southeast Asia Research at Edmund Tie & Company.
Meanwhile, rents for retail spaces also fell in Q3.
Rents for retail spaces eased further by 1.5 percent following a decline of 3.9 percent in the previous quarter. Prices of retail space also corrected in the third quarter by 0.6 percent, after a decline of 3.1 percent in the previous three-month period.
Islandwide retail space vacancy rate inched up by 0.6 percentage points to 8.4 percent in the third quarter as retailer consolidate their businesses amid challenging business sentiment.
Source: URA
“Amongst other factors, the retail market continued to be plagued by weak retail spending as job insecurities amid rising unemployment rate and job redundancies saw consumers further tightening their belts,” said Tay Huey Ying, head of Research at JLL Singapore.
“To rise above the challenge, retailers are increasingly jumping on the omnichannel bandwagon. Retailers’ focus towards expanding their e-commerce reach has resulted in fewer retailers looking towards physical expansion, and this has exacerbated the already weak demand for retail space, leading to the retail sector continuing to set new records in terms of vacancy rate,” Tay added.
Looking ahead, analysts expect the retail environment to remain challenging.
“Retail spending for the rest of the year could be affected due to weaker-than-expected economic growth and soft job market,” said Christine Li, director of Research at Cushman & Wakefield. Li added that amid economic challenges, vacancy rates “could worsen with the ongoing retail business consolidations arising from higher operating costs and competitions from e-commerce.”
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg.
Related Articles:
Hi-tech, business park space rents down in Q3
Asia-Pacific real estate transaction volumes hit US$33.1bil in Q3