Singapore Office Rents Up 1.9% In Q1 2022: Knight Frank

SINGAPORE – Knight Frank’s Asia Pacific Prime Office Rental Index showed that prime office rents in Singapore rose by 1.9 percent year-on-year and 1.2 percent quarter-on-quarter in Q1 2022, reported The Business Times on Tuesday afternoon (19 April, SGT).

Singapore’s office rental growth surpassed that of rival financial hub Hong Kong, where prime office rents inched up at a slower pace of 1.1 percent and 0.6 percent on an annual and quarterly basis, respectively.

“Optimism at the start of the year was tempered by multiple resurgences of COVID-19 which resulted in Hong Kong and several tier-1 Chinese mainland markets re-tightening movement restrictions,” commented Tim Armstrong, Global Head of occupier strategy and solutions at Knight Frank.

Overall, the property consultancy’s Asia Pacific Prime Office Rental Index edged up 0.2 percent year-on-year during the first quarter of the year.

Of the 21 out of 23 cities that saw office rental growth, Shanghai registered the highest annual increase in Q1 2022 at 4.2 percent. On the other hand, that in Shenzhen continued to decline, falling 4.5 percent on an annual basis.

On a quarterly basis, the office rental index climbed 0.8 percent in Q1 2022 after inching up by 0.3 percent in the previous quarter. In Q4 2021, only 13 of the 23 cities tracked by the index saw stable or higher office rents.

In terms of office rental costs for Q1, Hong Kong continued to dominate at US$186 psf per year. Singapore was ranked 2nd at US$105 psf per year, followed by Tokyo at US$101.20 psf per year.

“There are still mixed signals particularly in developing countries where office leasing demand is still in a state of flux. As economic recoveries hinge significantly on foreign direct investments, the macroeconomic environment now is making things more unpredictable than ever before,” noted Christine Li, Research Head at Knight Frank Asia Pacific.

However, Knight Frank pointed out that office vacancy level remained elevated at 13.1 percent across the region in Q1 2022, similar to that of Q4 2021. Nonetheless, this is expected to begin falling further as more Asia Pacific markets start to open their economies and tech firms continue to secure premium office space in CBDs at more affordable rents.

“We do not expect supply-side pressure on both rents and occupancies in the coming quarters in Asia Pacific,” Li added.