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Singapore emerged as the 5th most expensive office market in the Asia Pacific during the last quarter of 2015, despite recording quarter-on-quarter rental drop of 1.4 percent, according to the latest report from JLL.
At the same time, capital values in the city-state dipped by 3.0 percent on a quarterly basis amidst the weak leasing demand and the worries over the interest rate hike in the United States.
However, the consultancy does not expect a recovery for Singapore’s office market in the near term as landlords are likely to aggressively trim down their rents due to the large supply in 2016 and 2017, coupled with the weak economy and forecasted low employment growth.
Despite this, JLL’s Research Head for Southeast Asia Chua Yang Liang sees a glimmer of hope for the republic in the long run.
“While the Singapore office market has short term risk, it remains a viable investment option beyond 2018 where we could see rental recovery on the back of stronger economic growth forecast,” he said.
Elsewhere, Hong Kong, Beijing, Shanghai and Tokyo were the four priciest office markets in JLL’s Asia Pacific Office Index for Q4 2015.
Office rents in Kuala Lumpur and Jakarta also declined more severely during the quarter as compared to the figures seen in Q3 2015. These office markets are expected to be impacted by the weakness in the commodity market and oil and gas sector, JLL said.
In Bangkok, given a dearth of quality grade office space, rents rose by more than 2.6 percent quarter-on-quarter on local currency terms, the highest rental gain across Southeast Asia for the quarter.
Finally, office rents in Manila inched up by 0.9 percent thanks to growth in the offshoring and outsourcing sector, coupled with new building completions.
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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