Office Rents In Singapore Could Grow By 5% This Year
SINGAPORE – Market watchers from Knight Frank and Edmund Tie expect office rents in the city-state to rise by 3 to 5 percent in 2022 thanks to limited new stock, improved rental sentiment, and a larger portion of staff returning to their offices, reported Mingtiandi on Friday (4 February, SGT).
As the workforce return to their brick-and-mortar workplace as the COVID-19 pandemic subsides, property experts think that office rents had reached its trough, and a sustained recovery is ongoing this year thanks to growing demand for quality office space, particularly from technology companies.
“With rents having bottomed out and on track to improve further in 2022, corporates have shifted from a wait-and-see stance to actively rationalising their space requirements,” said Leonard Tay, Research Head at Knight Frank Singapore.
“Fintech and technology players as well as international professional services will continue to fill good quality spaces in Singapore’s central business district (CBD).”
According to Edmund Tie’s Research Head, the forecasted rental growth for 2022 will be driven by lessees that relocated from office properties undergoing redevelopment, on top of the relatively tight supply pipeline for this year.
“Additionally, sectors such as technology, financial services, and healthcare-related industries continue to experience robust growth and will be the key sectors driving demand.”
Similarly, CBRE’s Research Head for Southeast Asia Tricia Song predicts that office rents in Singapore would continue to increase over the next 3 years on the back of robust demand and tight stock of new office space.
The property consultancy projected that 1.2 million sq ft of new office supply will become available this year. Among the most-anticipated new office developments is the Guoco Midtown mixed project in the CBD that offers more than 700,000 sq ft of new office space.
Notably, only 839,585 of new office space is expected to be finished in 2022, which is really tight amidst the forecasted rising demand.
Furthermore, there is an ongoing “fight to quality” trend among tenants that has compelled office landlords to reconfigure a portion of their office space to include more collaborative and flexible workspaces, in a bid to gain an advantage over rival office lessors, added Knight Frank’s Tay.