SINGAPORE (THE BUSINESS TIMES) - Rents of office space in the central region of Singapore appear to have bottomed out as they ticked up 0.9 per cent in the fourth quarter of 2021 over the previous three months, reversing from a 3.5 per cent decline in the previous quarter.
For the whole of 2021, the rental index rose 1.9 per cent after slumping 8.5 per cent in 2020, according to figures released by the Urban Redevelopment Authority (URA) on Friday (Jan 28).
URA's fourth-quarter data also showed that prices of office space in the central region decreased 1.8 per cent, narrowing from a decrease of 2.4 per cent in the previous quarter.
For 2021, prices of office space shrank 5.8 per cent, versus a sharper 10.7 per cent in 2020.
Knight Frank's head of research, Mr Leonard Tay, said he maintains a forecast of 3 per cent to 5 per cent increase in rents for the whole of 2022.
This is as "Singapore becomes more resilient to Covid-19, as new economy enterprises in the information and communications and finance and insurance sectors drive GDP growth, and as the upcoming pipeline of office supply remains limited", he said.
Mr Tay also noted that the drop in the price of office space could entice private wealth and family offices as well as small and medium-sized enterprises looking to right-size their space requirements in a post-pandemic era.
"Demand for strata office units can be expected to grow in 2022 given the lack of new strata office supply in the medium term, together with some spillover investor interest from the private residential market as a result of the cooling measures announced on Dec 15, 2021."
Islandwide, as at the end of the fourth quarter of 2021, there was a total supply of about 786,000 sq m gross floor area of office space in the pipeline, up from the 755,000 sq m in the previous quarter.
The amount of occupied office space decreased by 10,000 sq m of net lettable area (NLA) in fourth quarter of 2021, compared with the decrease of 5,000 sq m in the previous quarter.
The stock of office space decreased by 23,000 sq m NLA in fourth quarter of 2021, versus an increase of 26,000 sq m in the previous quarter.
As a result, the islandwide vacancy rate of office space dipped to 12.8 per cent as at the end of the fourth quarter of 2021, from 12.9 per cent as at the end of the previous quarter.