Outlook On Singapore Office Market

Experts Share Outlook On Singapore Office Market

SINGAPORE – Some veteran real estate market watchers shared their take on the city-state’s office sector, reported The Business Times on Thursday morning (29 December, SGT).

Asked about major office investment activity next year, Jones Lang LaSalle’s (JLL) Research Head in Singapore Tay Huey Ying said would-be buyers of Singapore office properties costing at least S$10 million will likely become very discerning, and deals that won’t fall through are those that involve prime office space or those in good locations.

“We expect investors to be increasingly selective and cautious, resulting in the conclusion of deals for only very prime and strategic assets as well as those with reasonable asking prices.”

On the other hand, Cushman & Wakefield’s (C&W) Research Head in Singapore Wong Xian Yang advises potential buyers of office assets to take advantage of a possible correction in prices.

“Buy the dip. The office fundamentals remain compelling with an expected shortage of central business district (CBD) office space in the next few years. Also, interest rates will normalise in the next 12 to 24 months, so high interest rates are an aberration.”

“We are cautiously optimistic that office investment sales volume could recover in the later part of 2023 with potentially more clarity on interest rate trajectory, with the pace of US interest rate hikes expected to slow in the year. This would aid price discovery and facilitate deals,” he added.

Meanwhile, Savills Singapore’s Managing Director of investment sales & capital markets Jeremy Lake counsels would-be sellers of local office properties to “either KIV sell until 2024 and beyond, or accept that the price has dropped by not less than 10 percent”.

As for CBRE Singapore’s Head of capital markets Michael Tay, he thinks that the impact on office rental demand by the tech sector’s mass layoffs could be offset to some extent by other demand drivers, as well as occupants displaced from office buildings that are poised to be redeveloped.

“Any downward pressure on rent from potential shadow office space (arising from the mass layoffs) may also be less profound in an environment where new office supply will remain tight through the next 3 to 4 years,” he added.

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