Office units on the top floors of Singapore skyscrapers are the eighth most expensive in a new global ranking but there is a high risk of a sharp fall.
A looming supply glut and slowing economy sent prime rents here declining 7 per cent over the first six months of the year, while they either climbed or held steady in the 22 other cities surveyed for the twice-yearly index.
The skyscraper index, compiled by Knight Frank and released yesterday, examines the rental performance of commercial buildings over 30 storeys high.
Asia-Pacific cities saw the highest rental growth, with towers in Shanghai recording the strongest growth in the world of 7.6 per cent in the first half, followed by Sydney, Hong Kong and Taipei. But Singapore bucked that trend to sit at the bottom of the chart.
Meanwhile, Hong Kong skyscrapers remained the most expensive in the world by a wide margin, with those in Manhattan, New York, coming in second place.
In Singapore, Knight Frank's forecast is for prime office rents here to dip 14 per cent between the fourth quarter of last year and the fourth quarter of 2019.
WHEN SUPPLY OUTSTRIPS DEMAND
In many ways, the weakest projections come down to supply, with Kuala Lumpur, Beijing and Singapore markets all seeing a significant amount of new supply come to the market that new demand is being challenged to absorb.
MR NICHOLAS HOLT, head of research, Asia Pacific, at Knight Frank Asia Pacific.
Sydney is projected to see the strongest rental growth of 27.5 per cent over the same period, while Kuala Lumpur is expected to experience negative rental growth of -1.1 per cent and Beijing faces a decline of -4.4 per cent.
Mr Nicholas Holt, head of research, Asia Pacific, at Knight Frank Asia Pacific, said: "The weakest projections come down to supply, with Kuala Lumpur, Beijing and Singapore markets all seeing a significant amount of new supply come to the market that new demand is being challenged to absorb."
He added that Sydney, along with Melbourne, is expected to benefit as the Australian economy continues to show resilience despite the slowdown in demand for commodities, while Shanghai has boomed on the back of strong growth from technology-related companies.
Ms Alice Tan, director and head of consultancy and research at Knight Frank Singapore, said: "Singapore's office market continues to be largely impacted by economic headwinds and cautious business sentiment. The high influx of about six million sq ft gross floor area of office space island-wide for 2016 and 2017 are envisaged to weigh on rentals in the short term."
Prime office rents here have fallen for six consecutive quarters.
But Ms Tan was more sanguine about the longer-term rent outlook here: "The office market is expected to improve beyond 2018 as new supply tapers off substantially."