Singapore CBD Grade A office rents chart third consecutive quarter of growth, up 2.3% in 1Q2022
By Nadine Yong
/ EdgeProp Singapore |
Grade A office rents in the CBD saw its fastest pace of growth since rents rebounded in 2Q2021 (Photo: Samuel Isaac Chua/The Edge Singapore)
SINGAPORE (EDGEPROP) - Grade A office rents in the CBD scored a third consecutive quarter of growth in 1Q2022, according to research by JLL Singapore. Average gross effective rents for Grade A CBD office space rose 2.3% q-o-q from $10.23 psf per month (pm) in 4Q2021 to $10.46 psf pm in 1Q2022. This marks the fastest pace of growth since rents rebounded in 2Q2021. It also represents a 6.9% recovery since the market bottomed out at $9.79 psf pm in 1Q2021.
The growth has been “underpinned by strengthening demand for office space as corporates acknowledge the critical role of physical offices in their overall workplace strategy, even as the hybrid-working conversation continues,” says JLL Singapore’s head of research and consultancy Tay Huey Ying.
With the easing of Covid-19 restrictions enabling up to 75% of employees to return to the workplace starting from March 29, companies will also be looking to secure fresh office spaces, adds Tay. “At the same time, we are expecting some companies to abort plans to downsize as business activities pick up and employees start to stream back to the office.”
Much of the demand comes from the technology, consumer and non-bank financial sectors, notes JLL Singapore’s head of office leasing and advisory Andrew Tangye. Major leasing deals in 1Q2022 include KPMG taking up around 100,000 sq ft in Asia Square Tower 2, while the upcoming Guoco Midtown has also signed on more tenants in 1Q2022.
Investors are also positioning themselves in anticipation of continued recovery in the local and global economy. CapitaLand Integrated Commercial Trust and CapitaLand Open End Real Estate Fund jointly acquired 79 Robinson Road for $1.26 billion earlier this month. Meanwhile, SMFL Mirai Partners (a subsidiary of Japanese leasing company Sumitomo Mitsui Finance), real estate asset manager Kenedix and ARA Asset Management recently made a $297 million investment into Capital Square.
JLL is forecasting CBD Grade A office rental rates to double this year from the 4.3% growth recorded last year. “Underpinned by the upbeat leasing market outlook and the latest restrictions on individual strata subdivision, which raises the appeal of office assets in designated zones, the Singapore office investment market looks set to continue to attract a wide range of capital in 2022,” adds JLL Singapore’s head of capital markets Ting Lim.
Check out the latest listings near Asia Square Tower 2, Capital Square
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