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Singapore and Beijing saw a net effective rental growth of 10.9 percent in the third quarter of the year, outpacing other business centres in the Asia Pacific region in terms of Grade A rental performance, according to a survey on regional office rents conducted by Jones Lang LaSalle (JLL).The Asia Pacific Office Rental Index saw a 1.8 percent growth in Q3, with more markets likely to move to the upturn phase as landlords begin to gain bargaining power across the board, said the survey.
In terms of average Grade A rental values receivable by landlords, Singapore ranks 4th in the Asia Pacific, behind Hong Kong, Tokyo and Mumbai. Singapore beats other Southeast Asian business centres, including Ho Chi Minh City in sixth spot, Kuala Lumpur at 21st, Bangkok at 22nd, Manila at 23rd and Jakarta at 26th.
The average prime Grade A gross effective rent in Q3 hit $8.70 psf of NLA per month. Though it has already exceeded the peak levels seen in 2002, it remains about 16 percent, 23 percent and 52 percent below the peak levels seen in 1991, 1996 and 2008, respectively.
Currently, prime Grade A gross effective rents have risen 12.3 percent year-to-date and are on course for further growth by the end of the year. Upside potential for rents in the next two years also seem achievable given their current levels in relation to earlier peak levels.
Looking ahead, Chris Archibold, Head of Markets at JLL, commented: “Levels of occupier interest in the new developments have been very strong over the last 6 months and we have seen numerous large relocation transactions which have bolstered investor sentiment”.
“2011 will see significant supply coming on line but a fair degree of this is pre-committed and whilst vacancy will increase in H1 2010 we do not foresee this having any adverse effect on rental,” added Mr. Archibold.
Increase demand for Grade A new office space in S’pore
Demand is burgeoning for Grade A new office space in Singapore.
Citibank Singapore has agreed to lease more than 250,000 square feet of office space at Asia Square, which will house the US bank’s new corporate office as well as its largest trading floor in Asia Pacific.
This is the largest leasing transaction in Singapore’s central business district in two years, according to real-estate investment firm MGPA, which owns Asia Square in one of its Asia funds.
Citi, which will become the biggest tenant in Asia Square’s Tower One when it moves there in October next year, expects to spend S$85 million on renovation and relocation.
Asia Square’s Tower 1, which will be completed in June next year, is almost 50 per cent let. Apart from Citi, other secured tenants include law firm White & Case and Swiss private bank Julius Baer.
MGPA said that future tenants of this 1.26-million-square-foot office bloc could include a large IT company and some large insurers.
Meanwhile, Asia Square’s Tower 2, which boasts around 780,000 square feet of office space and will be ready by end-2013 or early 2014, is also enjoying strong interest.
John Saunders, CEO Asia, MGPA, said: “Tower 2 will be the only other building to complete from the last of the buildings that are being finished off now.
“After that this is really the only building till 2015 at the earliest or possibly as late as 2016. So there’s a lot of interest from tenants in terms of pre commitment.”
Source : Channel NewsAsia – 23 Nov 2010
