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Prime office rents in Singapore is expected to grow by 15.8 percent over the next three years as demand starts to exceed supply, according to the fourth edition of Knight Frank’s “Global Cities: The 2018 Report”.
Aside from the reverse and the softening in office rents since Q2 2015, this represents the third highest projected increase in the Asia Pacific region behind Brisbane (16.5 percent) and Manila (19.1 percent) between end-2017 and the same period in 2020.
“For Singapore, while rental recovery continues to be sustained by flight-to-quality movement, we are seeing the supply from looming vacancies in the older buildings exerting an overall check on rents,” said Knight Frank Singapore’s Executive Director and Head of Office Advisory, Calvin Yeo.
The city-state was also ranked fourth in annual occupancy costs, taking into account office rent and average salaries for a firm of employing 100 people.
In fact, Singapore’s occupancy cost reached about US$4.62 million per year compared to Tokyo’s US$4.9 million, US$5.02 million in Sydney and Hong Kong with US$5.96 million.
Moreover, Singapore secured the fifth spot in the report’s Skyscraper Index, which looks into the upper level rents of commercial buildings with a height of more than 30 storeys.
As of Q2 2017, rents for such premises here stood at US$66 psf per annum after Shanghai (US$67), Sydney (US$107), Tokyo (US$140) and Hong Kong with US$304 psf per year.
“Demand from Chinese mainland institutions has been a major contributing factor in driving rents upwards in skyscrapers clustered around Central on Hong Kong Island,” noted Nicholas Holt, Knight Frank’s research head for Asia Pacific.
“Elsewhere in Asia, Tokyo, which stands third in the global list offers skyscraper office space for less than half the rents that an office occupier would be expected to pay in Hong Kong; while Singapore is less than half of that again.”
Meanwhile, Knight Frank’s Global Cities: The 2018 Report named Shoreditch in London as the world’s most expensive tech district as occupants need to pay prime rent of US$90.75 psf, which is more than double that of Singapore’s One-North (US$41.45).
Bangkok’s central business district (CBD) including Rama 1, Sathorn and Sukhumvit Soi 21 (US$74.25) and Beijing’s Zhongguancun (US$55.05) are the only two tech districts in Asia Pacific on the global top ten list, while One-North here is third in the regional ranking.
“Singapore’s advantage is in the provision of business park offices for technology companies, which on average is around 49 percent lower than CBD office rents,” added Yeo.
This article was edited by Keshia Faculin.
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