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Office rents here may decline further by as much as 25 percent in a prolonged slump that may last until the end of 2018 as demand slows, Daiwa Securities said.
In a note to clients, Daiwa analyst David Lum said 2018 is expected to be a highly risky year for lease renewals and forecasts that rents will continue to fall until then. He forecasts a 25 percent decline in rents from the peak in the first quarter of 2015 through the fourth quarter of 2018, while predicting 14 percent decline in office values during the same period.
Daiwa downgraded real estate investment trusts tied to offices to negative from neutral, and lowered all individual stock ratings to underperform from hold, Bloomberg reported.
Lum said, “we are concerned that [office REITs’] year-to-date performances are now at odds with the deteriorating fundamentals of the office sector.”
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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