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While rents of prime office space in Singapore have already increased by six percent in H1 2018, there is still room for growth as the market is still in the early stages of a recovery, according to JLL in a report by the South China Morning Post.
“Office rent is expected to increase by 20 to 25 percent between 2018 and 2020, of which 12 to 16 percent is expected in 2018,” said Regina Lim, JLL’s head of capital markets research for Southeast Asia.
The real estate consultancy noted that office landlords have better bargaining power to raise rents due to declining supply and robust pre-commitment levels that have dragged down the vacancy rate.
Moreover, Lim thinks that office supply in the city-state’s central business district (CBD) will remain low until 2023 to 2024, and that could push up rents between 2020 and 2023.
This is because the authorities are focusing on improving decentralised office hubs so that workers will be able to work near their homes.
In fact, there are no office sites either on the confirmed or reserve lists under the Government Land Sales (GLS) Programme for H2 2017 as well as for the first and second half of 2018. This is the first time this has happened since 2003.
Lim also revealed that investors are upbeat on Singapore’s office market, “with pre-commitment levels as high as over 70 percent in Marina One”.
Completed in end-2017, Marina One is a mixed-use project that offers 175,000 sq m of office space. Its tenants include PwC Singapore, Prudential and Facebook.
CapitaSpring, which will enter the market in April 2021, has also posted a pre-commitment level of 24 percent, with JP Morgan agreeing to lease 155,000 sq ft of office space there.
Meanwhile, Allianz is committed to occupy 50,000 sq ft of space at ASB Tower, which will be ready by July 2020.
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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