Singapore Sees 3rd Highest Prime Office Rental Growth In Asia Pacific

ASIA PACIFIC – Data from Knight Frank showed that Singapore recorded the third highest quarter-on-quarter prime office rental growth in the region in Q4 2022, reported The Business Times on Tuesday afternoon (17 January, SGT).

According to the real estate consultancy’s Prime Office Rental Index for Asia Pacific, rents of such commercial properties edged up by 1.7 percent on a quarterly basis and 5.5 percent year-on-year during the last three months of 2022.

Consequently, Singapore prime office rents reached S$10.69 psf per month during the period under review. At the same time, the office vacancy rate in the city-state slid from 5.2 percent to 5 percent.

Looking ahead, Knight Frank expects prime office rents in Singapore will continue to increase over the next 12 months ending in December 2023 amidst falling office vacancy levels.

Meanwhile, prime office rents in Auckland increased in Q4 2022 by 4.9 percent quarter-on-quarter – the highest among the Asia Pacific cities tracked by the property consultancy. Coming at second place is Bangkok, where prime office rents rose by 3.3 percent on a quarterly basis.

In general, 16 out of 23 cities posted stable or higher prime office rents. But one of the exceptions is Hong Kong, which witnessed a quarter-on-quarter contraction of 4.8 percent. Prime office rents in Beijing and Shanghai also dipped by 0.3 percent and 0.5 percent, respectively.

In terms of prime office occupancy costs, Singapore emerged as the second most expensive city in the region at US$109.8 psf per. Rival commercial hub Hong Kong topped the list at US$174.3 psf per year, while Tokyo took the third spot at US$92.8 psf per year.

Moving forward, Asia Pacific’s overall prime office market is forecasted to remain favourable to office tenants over the next 12 months. Office supply is also projected to increase by 15 percent by 2025, with new, Grade A office stock hitting 26.2 million sq m.

While the preceding quarter did not see a quarterly increase in the region’s overall prime office rents, office rents inched up by 0.8 percent year-on-year for the whole of 2022, noted Knight Frank Asia Pacific’s Research Head Christine Li.

“This marks a reversal of the negative growth seen during the pandemic years, demonstrating the sector’s resilience as it vigilantly navigates through a macroeconomic slowdown,” she said, adding China’s reopening this year is expected to stimulate growth in the region’s office sector.