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Marina Bay and Raffles Place saw rents drop by around 1% quarter-on-quarter, while rents within the other submarkets remained stable.
Singapore’s office property market has peaked, with rents for Grade A CBD office falling 0.5% quarter-on-quarter to $10.61 per sq ft per month (psf pm) in the first quarter of 2020, revealed a Cushman and Wakefield report.
Marina Bay and Raffles Place saw rents drop by around 1% quarter-on-quarter, while rents within the other submarkets remained stable.
But with many companies cash-strapped with no budget for fit-out costs, rental rates for renewal are presently more resilient, while rents for new leases witnessed a bigger decline.
However, Cushman and Wakefield expects the disparity between rents for new leases and renewals to narrow in the future, particularly if landlords “start offering incentives for new leases in the form of fit-out subsidies”.
In Q1 2020, Equinix moved to a 70,000 sq ft space at 79 Robinson Road in Shenton Way, while Delivery Hero relocated to a 50,000 sq ft space at Afro-Asia Building. Meanwhile, Spotify moved to 51 Central at 51 Bras Bash within the Bugis submarket.
With Covid-19 pandemic likely to result to a double whammy of a local and global recession, Cushman and Wakefield expects Grade A CBD rents to moderate by around 10% in 2020 with a further decline seen in 2021.
“The stimulus provided by the supplemental Resilience Budget will mitigate some of the economic downside expected. Nevertheless, with mounting evidence that the impact of the global pandemic could exceed that of the Global Financial Crisis, landlords should brace themselves for a larger decline if the economic situation continues to deteriorate,” said the report.
And as the government shuts down all workplaces except for essential services for a month, Cushman and Wakefield expects occupiers “to further delay their decision-making in new leases up until the end of the second quarter”.
“Office leasing demand could take a further hit if the US and Europe-headquartered MNCs take a step-back on the appetite for expansion space, due to the lockdowns in their respective countries which in turn slow down the business activities significantly,” it said.
“Nevertheless, with Covid-19 cases easing in China, we are beginning to see renewed inquiry by Chinese firms, which may be an indicator that activity levels may resume over the remaining quarters of 2020.”
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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg
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