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Rents of Grade A office space in Singapore’s Central Business District (CBD), particularly in the Marina Bay area, rose at a faster pace in Q3 2017, according to data from property consultancy JLL.
Overall, average monthly gross rent in the CBD increased by 4.3 percent to $8.86 psf from $8.50 psf in the preceding quarter, up from the 0.7 percent quarter-on-quarter gain in Q2 2017.
The Marina Bay submarket recorded the highest quarterly growth of 5.2 percent from 1.3 percent previously after rents rose from $9.51 psf to $10.01 psf.
JLL noted that the remaining submarkets such as Marina Centre, Raffles Place and Tanjong Pagar posted rental increases ranging from 2.6 percent to 3.0 percent.
“As of Q3 2017, JLL’s preliminary estimates show that CBD Grade A office rents have recovered 5.0 percent from the recent bottom of $8.44 psf in Q1 2017 but are still some 16.1 percent from the recent peak of $10.56 psf in Q1 2015. In the Marina Bay submarket, the average monthly gross rent regained 6.6 percent of its lost ground and is currently some 22.5 percent below the recent peak of $12.90 psf in Q1 2015.”
As for the average vacancy rate, that in Marina Bay was tight at 3.3 percent, while that in the CBD remained steady at about seven percent.
Meanwhile, the recovering office rental market is pushing up average capital values of Grade A office space. In the CBD, quarterly growth accelerated from 2.3 percent in Q2 2017 to 5.1 percent after capital values increased to S$2,376 psf. In Marina Bay, these premises recorded a 6.0 percent gain in capital values from 3.2 percent previously, with the figure hitting $2,781 psf.
“Two straight quarters of rent and capital value growth, with the second coming in at a stronger pace than the first, is a reaffirmation that the CBD Grade A office market is now firmly on a recovery path,” said JLL Singapore’s research head Tay Huey Ying.
Looking ahead, she expects rents of Grade A office space in the CBD to increase between six percent and eight percent, while capital values could see higher growth of over 10 percent for the entirety of 2017.
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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