Central region's Q2 office rents up a slower 1.6%

Office rents in the central region of Singapore rose 1.6 per cent in the second quarter of the year over the previous three months, according to data from the Urban Redevelopment Authority (URA).

This is a smaller gain than the 2.6 per cent increase registered in the previous quarter and also marks the fourth consecutive quarter-on-quarter rise in the index since it last bottomed in the second quarter of last year. The index is up 9.4 per cent from that trough.

On the other hand, prices of office space in the central region increased by 1.9 per cent in the second quarter, a faster clip than the 1.3 per cent increase in the previous quarter.

"Besides the two whole-building deals involving MYP Plaza in Cecil Street and Twenty Anson, which were transacted at almost $3,000 and $2,503 per square foot of net lettable area, respectively, record unit prices were set during the second quarter in at least three strata-titled office buildings in the CBD - The Octagon, Springleaf Tower and Samsung Hub," said Ms Tay Huey Ying, head of research and consultancy, Singapore, at JLL.

"Investors' optimism has been underpinned by the strong market fundamentals of steady demand and limited new supply, which should support the continued growth in office rents into the medium term. Occupiers across a broad range of industries have been active in seeking space for expansion as they scale up on the back of the robust economic growth," she added.

As at the end of the second quarter, there was a total supply of about 725,000 square metres gross floor area (GFA) of office space in the pipeline, compared with the 791,000 sq m GFA in the previous quarter. The amount of occupied office space expanded by 74,000 sq m net lettable area (NLA), compared with the increase of 14,000 sq m NLA in the previous quarter.

Cushman & Wakefield senior director of research Christine Li noted that net demand islandwide for the first half of this year totalled 88,000 sq m - exceeding the 60,000 sq m for the whole of 2017.

Prices of office space in the central region increased by 1.9 per cent in the second quarter, a faster clip than the 1.3 per cent increase in the previous quarter.

The stock of office space rose 60,000 sq m NLA , compared with the increase of 11,000 sq m NLA in the previous quarter. As a result, the islandwide vacancy rate of office space fell slightly to 12.2 per cent as at the end of the second quarter, from 12.5 per cent at the end of the previous quarter.

A version of this article appeared in the print edition of The Straits Times on July 28, 2018, with the headline 'Central region's Q2 office rents up a slower 1.6%'. Print Edition | Subscribe