Office, shop rents fall over 8% in 2016, office vacancy rate hits 11.1%: URA

Offices and banks at Raffles Place lit up at night.
Offices and banks at Raffles Place lit up at night.PHOTO: ST FILE

SINGAPORE - Office and shop rents fell by more than 8 per cent in 2016, as their vacancy rates continued to rise, figures from the Urban Redevelopment Authority on Thursday (Jan 26) showed.

The decline in office rents accelerated in the October-December quarter, declining 1.8 per cent and making up an 8.2 per cent drop for the whole year.

Prices of office space dipped 0.6 per cent in the three months to December, more than the 0.4 per cent decline in the previous quarter. For the whole of 2016, prices of office space fell by 2.8 per cent.

The amount of occupied office space increased by a nett 1,000 sq m in the fourth quarter, reversing a decrease of 5,000 sq m in the previous quarter. But the stock of office space increased by 66,000 sq m (nett) in the fourth quarter, after an an increase of 101,000 sq m (nett) in the previous quarter.

As a result, the island-wide vacancy rate of office space at the end of the fourth quarter rose to 11.1 per cent, from 10.4 per cent at the end of the previous quarter.

Office rents might get some relief in time to come, going by supply figures.

There is about 786,000 sq m in gross floor area (GFA) of office space in the pipeline as of end-2016, down from 879,000 sq m GFA three months earlier.

The bulk of this will be completed over the next two years - 367,000 sq m in 2017 and 185,000 sq m in 2018. Supply drops sharply to 20,000 sq m in 2019, up to 138,000 sq m in 2020, before falling sharply again the next two years.

Shops saw rents decline by 1.2 per cent in the fourth quarter, less than the decrease of 1.5 per cent in the previous quarter. For the whole of 2016, shop rents fell 8.3 per cent, roughly double the 4.1 per cent decline in 2015.

But the island-wide vacancy rate of retail space improved a little, dropping to 7.5 per cent at end-2016 from 8.4 per cent at the end of the third quarter.

Prices of retail space inched up 0.2 per cent in fourth quarter, reversing a 0.6 per cent dip in the previous quarter. For the whole of 2016, prices of retail space fell 5.4 per compared with the 0.8 per cent decline in 2015.