Rental growth in secondary office areas outpaces Raffles Place

 

March 30, 2011 

Rental growth for offices in secondary office areas at the fringe of Singapore’s CBD and outskirt areas outpaced those in Raffles Place in the first quarter.

According to DTZ Research, the average gross rent of offices in Raffles Place rose 3.3 per cent quarter-on-quarter to S$9.30 per square foot per month in the first quarter, compared to a 7.5 per cent to 10 per cent increase in other areas.

The average gross rent in the Anson Road – Tanjong Pagar area rose 9.6 per cent on quarter to S$6.85 per square foot per month.

DTZ said the analysis of rents covers only completed buildings.

It was also found that average rents in the Anson Road – Tanjong Pagar area were catching up with those in the Shenton Way – Robinson Road area.

DTZ attributed this to the area’s makeover and addition of new and well-specified good quality buildings like Mapletree Anson and Twenty Anson.

GuocoLand’s mixed use project at Tanjong Pagar would also yield a million square feet of high quality office space, further augmenting the growing prominence of this business precinct.

Outside the CBD, the average rent for office space in the Novena Belt saw an increase of 7.5 per cent on quarter to S$7.20 per square foot per month.

Meanwhile, the average rent at Harbourfront rose 7.7 per cent on quarter S$7.0 per square foot per month in the first quarter. This is similar to the average of S$7.10 per square foot achieved in the Shenton Way – Robinson Road area over the same period.

Source : Channel NewsAsia – 30 Mar 2011

Q1 sees calmer leasing market

Mar 31, 2011 - CommercialGuru.com.sg

 

   

Global real estate services company CB Richard Ellis (CBRE) warns that rental growth will likely slow this year, as occupiers digest the significant expansion space taken up last year.

“Although office rents continued to trend upwards, the pace of rental hike has moderated in line with the less frenetic pace of leasing,” it said.

According to CBRE, the average prime rents in Q1 climbed 3.6 percent quarter-on-quarter to S$8.60 psf per month, down from the 7.2 percent and 12.2 percent quarterly increases in Q3 & Q4 2010 respectively.

Average prime rents stood at S$8.30 psf per month in Q4 last year, while average rents for Grade A office buildings hit S$10.30 psf per month, up 4.0 percent quarter-on-quarter from S$9.90 psf per month in Q4 last year.

In terms of occupancy levels, vacancy rates in the core Central Business District (CBD) and decentralised market also climbed, while those in the Fringe CBD slipped in the first quarter. The completion of OUE Bayfront eased the vacancy rate in the core CBD market, from 4.7 percent in Q4 2010 to 5.6 percent in Q1 2011.

Similarly, vacancy rates in Grade A office buildings also rose to 4.8 percent in the first quarter, from 2.7 percent in the preceding quarter. Take-up for Grade A office space reached 1.03 million sq ft in the first quarter, attributed to the contribution from OUE Bayfront’s and Ocean Financial Centre’s high occupancy levels.

Nearly 8.0 million sq ft of office space is expected to be completed between 2011 and 2015, 75 percent of which is considered Grade A office space. Another 1.7 million sq ft of new schemes will be completed this year, with another 1.4 million expected in 2012. CBRE said that a respective 40 percent and 61 percent of the upcoming 2011 and 2012 supply has been pre-let.

“Greater certainty about supply beyond 2014 has also started to emerge, with the groundbreaking of a number of sites such as South Beach, one-north and Peck Seah / Choon Guan Street in Tanjong Pagar. The market eagerly awaits the unveiling of firm plans for M-S Limited’s sites at Ophir Road and prime Marina Bay,” said Moray Armstrong, Executive Director for Office Services at CBRE.

“We expect a higher volume of secondary space coming onto the market in late 2011 into 2012, when major occupiers relocate to new premises principally at Marina Bay.”

Mr. Armstrong noted that the outlook remains stable, “although it is tinged with an element of uncertainty with events unfolding in Japan.”

“We are expecting a moderate rental growth of between 10.0 percent and 12.0 percent for full year 2011, based on a 4.0 percent to 6.0 percent GDP projection. Rentals are likely to trend upwards over the next three to four year horizon, with a low likelihood of excessive rental spikes or indeed sharp corrections anticipated. The market, to us, appears quite balanced.”