CBD office rents likely to continue rising this year: consultancy

Office rents in the central business district (CBD) jumped in the second quarter this year and are likely to continue rising for the next 12 months due to limited supply, property consultancy JLL said. -- PHOTO: ST FILE
Office rents in the central business district (CBD) jumped in the second quarter this year and are likely to continue rising for the next 12 months due to limited supply, property consultancy JLL said. -- PHOTO: ST FILE

SINGAPORE - Office rents in the central business district (CBD) jumped in the second quarter this year and are likely to continue rising for the next 12 months due to limited supply, property consultancy JLL said.

Mr Chris Archibold, head of markets at JLL, told The Straits Times on Monday that the growth in rent was "likely to continue through 2014 and the first half of 2015" on the back of a "broad-based economic recovery", he said.

Average office rents in the CBD expanded 4 per cent in April through June from the preceding three months to $9.96 per sq ft (psf) per month, JLL said in a recent report.

This was a slightly faster rate than the 3.9 per cent increase posted in the first quarter this year from the previous quarter.

JLL's head of research for Singapore and South-east Asia, Dr Chua Yang Liang, said that the demand for CBD office space in the second quarter was driven by small firms and expansion by "large-space" firms in the consumer technology industry.

However, Mr Archibold said on Monday that an upcoming surge of supply in the second half of 2016 was likely to dampen growth thereafter.

JLL also noted that even though office rents are growing, office price growth has been lagging behind because investors are also factoring in a potential rise in interest rates.

The average price of CBD office space inched up 0.5 per cent in the second quarter from the three months before to $2,445 psf.