Prime office segment ends year on bright note
Singapore’s office property market ended 2013 on a firm footing with rents, occupational rates and capital values on the uptrend, said a report from Colliers International.
As of December, average monthly gross rents of premium and Grade A office space in the CBD increased 2.2 percent quarter-on-quarter to reach S$8.72 psf, the highest level in two years.
On an annual basis it climbed 2.9 percent, reversing a 6.9 percent contraction seen in 2012.
The report noted that “the average occupancy rate of Grade A office space across the different micro-markets held relatively firm in Q4 2013”, rising by up to 2.2 percentage points quarter-on-quarter.
Marcus Loo, Executive Director of Office Services at Colliers, said while there is continued strong demand for premium grade office space driven by tenants’ flight to quality, secondary office space in older buildings is also recording good take-up.
“The absorption of such office space was driven by both existing tenants expanding their space requirements within the building and new tenants relocating to the locality.”
Overall, the average occupancy rate of premium and Grade A office space in the CBD went up 0.4 percentage points in Q4 to 93.9 percent.
Meanwhile, average capital values of premium and Grade A office space in the Raffles Place/New Downtown micro-marketclimbed 1.0 and 0.2 percent in the quarter to S$2,667 and S$2,395 psf respectively.
This is the first time that average capital values in that segment’s micro-market witnessed positive growth since Q4 2011.
According to Chia Siew Chuin, Director of Research & Advisory at Colliers, the near-term outlook for office leasing is bright as most economic and market indicators seem positive.
There is potential for rents to grow another 10 to 15 percent in 2014, while office capital values will likely remain stable with marginal upsides of up to five percent, she added.