Office rental space in Singapore continues to get more expensive

Rents in Singapore's office leasing market have climbed for the sixth consecutive quarter, as of Q3 2018 research by JLL. Specifically, the gross effective rents of Grade A office space in the CBD edged up 2.3% quarter-on-quarter (q-o-q) in Q3 2018 to average S$9.93 per sq ft per month.

Chris Archibold, head of leasing, JLL Singapore, explained that occupier demand has been coming from a wide spectrum of industries, although co-working operators remained the single most active space seekers.

He added: "On the other hand, good quality office space in the CBD is limited as most new builds are enjoying near full occupancy or commitment rates, while space vacated or to be vacated by relocating tenants has mostly secured replacements. This has continued to put upward pressure on rents."

By the end of Q3, CBD Grade A rents had climbed a steep 18% over six quarters and are 6% below the Q1 2015 peak of S$10.56 per sq ft per month. It is not surprising, therefore, for rent growth to moderate - JLL’s research indicates that the pace of CBD Grade A rent growth has been decelerating for three consecutive quarters.

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Tay Huey Ying, head of research and consultancy for JLL Singapore, opined: "The slowing down of rent growth is a positive, as it makes for a more sustainable growth trajectory. Steady, as against volatile, rent growth will support Singapore’s attractiveness as a corporate location as well as an investment destination for investors seeking stable returns."

The next wave of new supply will enter the market from 2020 onwards, when ASB Tower and Afro-Asia I-Mark are due to complete, followed by the scheduled completion of CapitaSpring and the redevelopment of Hub Synergy Point in 2021.

In 2022, IOI Properties’ development in Marina Bay and GuocoLand’s development on Beach Road should complete.

Photo / StockUnlimited