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Continuing a climb that began at the end of 2017, office rents in Singapore rose three percent in the first quarter of 2018 – indicating that the market rebound is in full swing, according to JLL.
The city-state registered the strongest quarterly growth in office rents in Asia Pacific during Q4 2017, on the back of better occupancy rates. During that period, net absorption in the central business district (CBD) hit the highest level in 11 quarters.
“The uptick follows sharp rental declines in 2015 and 2016, when a glut of new development projects in the CBD, coupled with weak economic growth, resulted in an oversaturated market,” noted JLL.
“Since then, developers have reduced the amount of office supply in production.”
JLL Singapore head of markets Andrew Tangye expects most of the remaining stock from 2016 to 2018 to be absorbed in the next year or so.
Given the “limited supply pipeline and a growing economy”, rents are expected to continue to increase through 2021, he said. In fact, the average Grade A CBD office rent in Singapore is expected to finish the year 8.0 to 9.0 percent higher than the previous year, before increasing by another 12 to 16 percent in 2019.
The pace of growth in the city-state has been particularly strong compared with regional counterparts. This is partly because rent in Singapore’s business district is cheaper than most other key cities in the region, noted Tangye.
The latest edition of JLL’s Premium Office Rent Tracker showed that rent in Singapore is not only lower than that in Hong Kong, but also in Tokyo, Seoul, Shanghai, Beijing and Shenzhen.
Moreover, the government is pushing ahead with infrastructure improvements while “focusing on further developing the sub-regional infrastructure hubs, like Jurong East, which will provide room for the economy to grow”.
Most tenants believe that the “perks of continuing to operate out of this crucial economic hub will more than outweigh the additional costs”.
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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