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Cumulatively, Singapore CBD Grade A rent increased 5.4 percent in the first half of the year.
Grade A office rents within Singapore’s central business district (CBD) hit a 10-year high as it rose 12.6 percent year-on-year to $9.93 per sq ft per month (psf pm) in the second quarter of 2019, revealed a Colliers International report.
Out of the six office micro-markets monitored, Beach Road/Bugis continued to register the strongest rental growth at 4.6 percent quarter-on-quarter and 18 percent year-on-year to $9.8 psf pm, largely due to tight vacancies in office buildings within the area.
Cumulatively, Singapore CBD Grade A rent increased 5.4 percent in the first half of the year. Colliers expects office rents to climb five percent in 2020 and continue to moderate from the 15 percent year-on-year growth registered last year.
“Tighter vacancies coupled with healthy space take-up among certain occupier segments – particularly technology and flexible workspace firms – continued to support rental growth in Q2 2019,” said Tricia Song, head of research for Singapore at Colliers International.
“While we think the rent growth momentum remains strong, the pace of increase has probably peaked as tenants become more resistant to rent hikes. We are projecting CBD Grade A rents to rise in 2019 and 2020, before dipping moderately in 2021 in view of new supply and potentially softer economic outlook.”
Meanwhile, Colliers noted that the office property investment market continued to be robust on the back of firmer rents. In fact, the office market felt negligible impact despite the ongoing US-China trade dispute.
In Q2 2019, transactions surged 176 percent quarter-on-quarter to $2.63 billion, bringing the rolling 12-month volumes of office and mixed-use commercial transactions to $7.17 billion, or up 27 percent from the previous quarter.
The two major contributing deals were Oxley’s $1.03 billion sale of Chevron House to US based real estate fund AEW and Frasers Property’s $982.5 million divestment of a 50 percent stake in Frasers Tower to Korea’s National Pension Service.
Looking ahead, Colliers expects capital transactions “to remain robust on a favourable interest rate outlook and tight local office demand-supply dynamics in Singapore”.
Victor Kang, Digital Content Specialist at PropertyGuru, edited his story. To contact him about this or other stories, email victorkang@propertyguru.com.sg
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