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Rents of prime office space in Singapore’s Raffles Place and Marina Bay continued to decline in Q1 2016 for the fourth straight quarter, as demand for new spaces slowed as more businesses consolidate their premises to cut costs, the latest Knight Frank research bulletin revealed.
During the quarter, average monthly gross rents for Grade A and Grade A+ office buildings in the area each fell by 3.9 percent quarter-on-quarter.
“With increasing vacancies, City Hall Grade A offices experienced the steepest drop, falling by 4.1 percent in Q1 2016. This was followed closely by Marina Centre/Suntec Grade A offices where rents weakened by 4 percent over the same period,” said the report.
At the same time, rents of Grade A office space in Shenton Way/Robinson Road/Tanjong Pagar slid by 3.6 percent, while similar properties in Orchard Road posted a dip of 1.7 percent.
Looking ahead, average rents of prime office space in Singapore is expected to weaken further over the next three to six months.
In particular, rents for such properties in Raffles Place/Marina Bay are forecasted to fall by 8 percent to 12 percent for the whole of 2016, given the upcoming completion of some large-scale office project by year-end.
Due to the projected rental downturn, Knight Frank noted that now is a good time for tenants in Grade A premises to lease in Grade A+ buildings with higher quality specifications, larger areas and better locations.
Specifically, the average vacancy rate for Grade A+ office buildings in Raffles Place/Marina Bay fell from 6.3 percent in Q4 2015 to 5.5 percent during the first quarter. Conversely, the vacancy level of Grade A buildings in the same area rose to 2.9 percent from 2 percent previously, Knight Frank added.
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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