Prime office rents chart fourth consecutive quarter of increase in 2Q2022
Prime workplace rentals in Singapore continued to hold firm in the second quarter of the year. According to records assembled by Knight Frank, prime grade workplace rents in the Raffles Place as well as Marina Bay precinct raised 1.1% q-o-q in 2Q2022, averaging at $10.36 psf per month. This brought rental growth to 2.3% for 1H2022. It also notes a 4th constant quarter of rise, with rentals expanding 3.8% since they bottomed out in 3Q2021.
On the investment front, Colliers’ report states that the ordinary imputed resources worth for Core CBD premium and also Grade-A workplaces continued to be flat at $3,000 psf in 2Q2022, with turnouts maintaining at around 3.5%. The company anticipates Singapore will remain a hotspot for investors looking for value-added actual possibilities in the coming months, backed by beneficial market characteristics and also the country’s safe-haven condition amidst geopolitical uncertainties.
Knight Frank believes the continual demand, coupled with the tight supply of good-quality office, will support Singapore office space rents when faced with looming headwinds over the following 6 to 12 months because of global rising cost of living, supply chain interruptions and also increasing interest rates. The company is forecasting office rentals to expand between 3% and also 5% for the whole of 2022.
However, it likewise cautions against intensifying macroeconomic risks. “If an economic downturn or an extensive period of weakness hits global economies, the impact will cause an unpreventable cascade on the general business condition in Singapore and subsequently the office space market,” the report states.
Bastiaan van Beijsterveldt, executive chief and also head of inhabitant solutions, Singapore, at Colliers indicates that need for high quality workplace premises stays underpinned by companies in the technology, economic services and energy fields, as well as property administration and also lawful companies.
Knight Frank claims need for prime workplace in Singapore continued to be supported by a flight to protection by exclusive wealth, corporates and also MNCs in various parts of Asia impacted by strict pandemic limitations. “As a case-in-point, the variety of family members office spaces was reported to have actually greater than doubled from 203 in 2020 to 453 in 2021, with about 143 brand-new family members offices established in Singapore from January to April 2022, according to data from Handshakes,” the record adds.
On the other hand, in its 2Q2022 office space market report, Colliers highlights that climbing functional expenses might prompt office space landlords to pass on a few of the cost burden to occupiers in the form of greater service fee, even more supporting higher rents. Colliers is anticipating full-year growth for Core CBD costs as well as Grade-An office rents to be in the series of 5% to 7% in 2022.
In addition, Knight Frank highlights that while some technology companies – involving Shopee and Crypto.com – have started diminishing head count in Singapore in action to dropping evaluations and also increasing inflation, other tech heavyweights remain to show indicators of development. “Meta is reported to be in advanced talks to rent as an anchor occupant, while Amazon is recognized to have actually leased regarding 369,000 sq ft at the upcoming IOI Central Boulevard Towers,” the report includes.
Furthermore, he highlights that the raising adoption of ESG regulation among business continues to sustain leasing task. “In spite of the pattern of moving towards a hybrid work plan, we have actually observed that room take-up continued to outpace workplace decrease, as occupiers seek more recent structures with environment-friendly qualifications, efficient specs, as well as wise functions,” he includes.
Occupancy levels in the Raffles Place and Marina Bay precinct enhanced 1.5 portion levels in 2Q2022 to get to 95.4%, maintained by restricted supply.