Office Rents In Singapore

Office Rents In Singapore Expected To Do Better This Year

SINGAPORE – Thanks to a tight supply and an improving economy, property experts expects office rents in the city-state’s Central Region expected to improve further in 2022 after hitting rock-bottom last year, according to a report from The Business Times that was updated on Friday evening (28 January, SGT).

In fact, data from Urban Redevelopment Authority (URA) shows that office rents rose 0.9 percent quarter-on-quarter in Q4 2021 and 1.9 percent for the whole of last year.

“The gradual reopening of the economy, positive sentiment, coupled by a tight supply situation, led to an overall increase in office rents islandwide,” commented Tricia Song, Research Head for Southeast Asia at CBRE.

Market watchers also pointed out that demand for Singapore office space is being supported by tech firms and financial institutions, as well as by former occupants of office buildings undergoing redevelopment. This is particularly good for quality workspace.

According to Cushman & Wakefield’s (C&W) Research Head Wong Xian Yang, median rents of Category 1 office space here edged up by 0.6 percent quarter-on-quarter in Q4 2021 and this marks the 3rd straight quarterly growth.

“Notably, Category 2 office spaces grew 0.4 percent quarter-on-quarter as well, suggesting a broad-based recovery in Singapore’s office market.”

Looking ahead, Jones Lang LaSalle (JLL) anticipates rents of office space in Singapore’s Central Region to increase by 3 to 5 percent for the whole of 2022, with Grade A offices likely seeing a higher growth.

“Should market normalization stay on course, 2022 CBD Grade A rent growth could more than double the 4.2 per cent achieved for 2021,” forecasted JLL’s Research Head Tay Huey Ying.

“We are also observing an increase in enquiries by companies looking to expand their real estate footprint into Singapore to accommodate the re-allocation of some headcount from Hong Kong to Singapore as they position themselves for growth in Southeast Asia. These include investment banks, fund managers and firms in the consumer goods sector,” she added.

Meanwhile, URA data revealed that office prices dropped 1.8 percent quarter-on-quarter in Q4 2021 and fell 5.8 percent for the whole of last year.

Knight Frank’s Research Head Leonard Tay thinks the decline in office prices could spur private wealth and family offices, as well as small-and-medium enterprises (SMEs) to consider to right-size their office space needs post pandemic.
“Demand for strata office units can be expected to grow in 2022 given the lack of new strata office supply in the medium-term, together with some spillover investor interest from the private residential market as a result of the cooling measures announced on 15 December 2021,” he added.

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