OUE Commercial REIT Sees Dip In Office Rent, Occupancy

SINGAPORE – The committed occupancy of OUE Commercial REIT’s office portfolio in the city-state slid to 96.1 percent at the end of Q2 2023, down from 96.7 percent during the previous quarter, according to a local bourse filing published on Wednesday evening (26 July, SGT).

Over the same period, the average passing rent of its Singapore office properties marginally fell by 0.4 percent quarter-on-quarter to S$10.22 psf.

Nonetheless, the Singapore-listed real estate investment trust (REIT) recorded a positive rental reversion of 8.1 percent for office lease renewals during the second quarter.

Office “leasing demand remained healthy in Q2 2023, contributed by non-banking financial institutions and flexible workspace operators, supported by tight vacancies,” noted the manager of OUE Commercial REIT in the filing with the Singapore Exchange (SGX).

Another positive result is that OUE Commercial REIT registered higher revenue and net property income (NPI) from its commercial property portfolio (office and retail) in the city-state.

In particular, revenue from this segment rose 13.3 percent year-on-year to S$93.0 million during the first half of 2023, while NPI increased 16.4 percent year-on-year to S$72.3 million.

“These results reflected the better performance of the Singapore portfolio,” stated OUE Commercial REIT’s manager.

Looking ahead, the REIT expects rents of Grade A office properties in Singapore’s central business district (CBD) to remain unchanged through the end of the year despite the weakening economy, rising shadow space, and a sizable office building due for completion in the coming quarters. It noted that OUE C-REIT’s core Grade A office assets are well-positioned to weather market uncertainties this year thanks to their well-diversified tenant mix and prime locations.

It added that between 2024 to 2026, limited new office completions will support rents in the longer term.