Singapore Office Rents Up

Singapore Office Rents Up 0.2% In Q2

SINGAPORE – Data from Jones Lang LaSalle (JLL) showed that average gross effective monthly rents of office space in the city-state’s central business district (CBD) rose marginally by just 0.2 percent to S$11.33 psf in Q2 2023 from S$11.33 in the preceding quarter, reported Mingtiandi on Monday evening (3 July, SGT).

This marks the 3rd consecutive quarter of declining office rental growth from the 1.1 percent quarter-on-quarter uptick in Q1 and the 1.2 percent gain in the last quarter of 2022.

JLL Singapore’s Head of office leasing and advisory Andrew Tangye disclosed that office rental activity in Singapore for the first six months of the year was dominated by enquiries that originated in 2022, driven by trends like more staff returning to their workplaces, business growth after the city-state’s reopening, and the transfer of company regional headquarters to Singapore.

“However, the number of new leasing enquiries, particularly from large space users, has been notably scarce in 2023,” he noted. “Given the limited pipeline of leasing transactions and the longer business approval process, we can expect demand for office space to be subdued in the second half of 2023.”

Although some office occupant remained cautious and continued to renew or reduce their office footprint, some financially sound tenants took a longer-term view and secured better workspaces.

Earlier this month, Morgan Stanley defied the trend in the slowing office market: It agreed to lease slightly over 100,000 sq ft across five levels at the highly-anticipated IOI Central Boulevard Towers in Marina Bay.

In mid-June, advertising behemoth Publicis Groupe announced that it has agreed to occupy 55,000 sq ft of office space in the Guoco Midtown project, consisting of more than one floor and a part of the conserved Midtown House structure.

Meanwhile, institutional property investors have largely retreated to the sidelines of the capital market due to the unfavourable gap between office yields and borrowing costs, while deal-making has been hampered by a mismatch in price expectations between sellers and buyers.

Nonetheless, there is still strong demand for investment-grade strata-titled offices. In fact, a local firm recently bought three office floors at Solitaire on Cecil for a total of S$162.8 million and set a new record price for one of the floors.

“The office investment sales market is anticipated to stay muted in the second half as investors will likely stay cautious given the uncertain interest rate climate and the wary leasing activity,” forecasted JLL Singapore’s Head of capital markets Ting Lim.
“However, we are observing strong interest for rare freehold acquisition opportunities below the S$500 million ticket size which have recently become available in the market.”

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