Singapore Office Vacancy Tightens Further In Q3
SINGAPORE – The vacancy level of Grade A office space in the city-state’s central business district (CBD) that are tracked by Savills continued to edge down for the 2nd straight quarter, according to a report by the property consultancy that was published on Wednesday afternoon (19 October, SGT).
In Q3 2022, the vacancy rate of such office properties dipped by 1.2 percentage points quarter-on-quarter to 5.6 percent following a 0.4 percentage point slide in the prior 3-month period.
Savills said the contraction in vacancy levels was seen across all 3 grades of office buildings, especially in Grade AA offices, where the vacancy rate declined by 2.4 percentage points on a quarterly basis.
In particular, the office submarkets of Orchard Road and Marina Bay registered the two lowest office vacancy levels of 1.7 percent and 2.4 percent respectively.
Meanwhile, overall rents of Grade A office space in Singapore’s CBD edged up by 1.4 percent in Q3 2022 compared to the corresponding period last year – the highest increase in a quarter since 4th quarter of 2019, when office rents rose 2.9 percent on an annual basis.
On a quarterly basis, office rents inched up by 0.3 percent to S$9.50 psf per month. While this marked the 3rd consecutive quarter of rental growth, the figure is marginally lower than the 0.4 percent quarter-on-quarter expansion in Q2 2022.
Among the 7 office submarkets tracked by Savills, Marina Bay saw the largest quarterly rental of 1.1 percent to S$12.31 psf, the highest increase since the 1st quarter of 2019, when office rents climbed by 3.7 percent.
It was followed by Beach Road/Middle Road, where office rents inched up by 0.6 percent quarter-on-quarter to S$7.78 psf, and Raffles Place, where rents climbed 0.3 percent to S$9.68 psf.
Looking ahead, Savills maintained its forecast that Grade A CBD office rents would rise by 3 percent for the entirety of this year, but would moderate to 2 percent by 2023.
“Our research found that had there been no war in Ukraine, no supply chain disruptions arising from that, and hence no change in the interest rate regime, Grade A CBD rents in 2023 could have risen by 11.1 percent year-on-year. For 2022, the overall rental increase would have been 4 percent,” added Alan Cheong, executive director of research at Savills Singapore.