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CIMB Research expects the large new supply to continue to pressure rents for Keppel REIT.
CIMB noted that Keppel REIT has a remaining 5.6 percent of leases due for renewal in FY2017 and another 22.5 percent in FY2018, with expiring rents at around the low $9 psf range.
In Q4 2016, the trust renewed 621,000 sq ft of space, keeping portfolio committed occupancy high at 99.2 percent, and retention rate at 95 percent.
However, reversion rents fell by nine percent amid fierce competition from newly completed buildings as the oversupplied market conditions continued to drag on rents and take-up levels, said the research firm.
“We think rents are likely to continue to come under pressure in H1 2017, but the sentiment could improve as we move past the wall of incoming new supply in the latter part of 2017.”
With this, CIMB expects Keppel REIT to “continue to experience slightly negative rental reversion this year”.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
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