Singapore Office Landlords May Pass On Higher Costs To Tenants
SINGAPORE – Real estate consultancy Colliers stated that increasing operational costs could compel owners of commercial properties to pass on some of the cost burden to office tenants in the form of higher service charges. In turn, this could further push up Singapore office rents, according to a recent report from The Edge.
As a result, Colliers expects rents of Premium and Grade A office spaces in Singapore’s central business district (CBD) could increase by 5 percent to 7 percent for the whole of 2022.
The property consultancy’s Executive Director & Head of occupier services for Singapore Bastiaan van Beijsterveldt said that demand for quality office space here remains supported by tech firms, financial institutions, and companies from the energy sector, as well as law firms and asset managers.
Aside from that, he noted that the growing adoption of ESG policies (environmental, social, and corporate governance) among businesses continues to support office rental activity.
“Despite the trend of moving towards a hybrid work arrangement, we have observed that space take-up continued to outpace workplace reduction, as occupiers seek newer buildings with green credentials, efficient specifications, and smart features,” he explained
Furthermore, the real estate consultancy’s latest office market report showed that the average imputed capital value for Premium and Grade A office spaces in the core CBD remained flat at S$3,000 psf in the second quarter of the year, with yields maintaining at roughly 3.5 percent.
Looking ahead, Colliers anticipates that Singapore will remain a hotspot for property investors seeking value-added opportunities over the next few months, due to favourable market dynamics and the city-state’s reputation as a safe-haven amidst geopolitical uncertainties.