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The pace of office rental growth in Singapore is expected to accelerate the fastest in the Asia Pacific region at around 10 percent, on the back of moderating supply pipeline, strengthening the economy and improving business confidence, revealed a Cushman & Wakefield report.
“With rents in Singapore playing catch-up after more than two years in a downtrend, this will erode some of the cost competitiveness created between itself and Hong Kong,” said Sigrid Zialcita, Managing Director, Research, Asia Pacific.
“Still, the average premium commanded by Hong Kong’s core Greater Central market over the Singapore’s CBD areas remains hefty at an estimated 164 percent in 2018. This differential is expected to be sustained in the short term as rental trends in both these markets are unlikely to diverge in the next two years.”
Cushman & Wakefield sees take-up levels across major cities it tracks in the Asia Pacific region surging to “their highest levels in 2018, at 120 million sq ft”.
It expects Hong Kong’s Greater Central office property prices and rents to continue to increase in 2018, with Chinese corporates fuelling demand.
“Hong Kong’s transactions market has been surging with record amounts paid for a commercial land plot and an office tower in 2017, setting benchmarks for future leases. Hong Kong will continue to retain its position as a premium office location for some time,” said Zialcita.
“However, in view of the rising decentralization trend, we believe landlords in Greater Central are more open to commence early rental renewal/restructure discussions with anchor tenants ahead of their lease expires.”
With vacancies among the lowest within the region, Australia’s major markets – Melbourne and Sydney – are also predicted to witness record rents this year.
“Their fundamentals will remain solid due to high occupier demand and limited supply completions in 2018,” said Cushman & Wakefield.
This article was edited by Keshia Faculin.
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