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Singapore’s office rents to see positive growth for 2021

By Charlene Chin

/ EdgeProp Singapore |

June 22, 2021 6:23 PM SGT

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SINGAPORE (EDGEPROP) - Singapore’s office rents are likely to see positive growth for 2021, “potentially culminating in a full-year growth of 2 to 3%”, forecasts JLL. (See also: Singapore’s office market shows recovery in 1Q2021: CBRE)

Grade A CBD office rent recorded its first uptick since the pandemic, with the average monthly gross effective rents of Grade A CBD office space rising 1.2% q-o-q to $9.90 per sq ft in 2Q21, from $9.79 in 1Q2021, it says.

“This follows two consecutive quarters of slowing rent correction and is a positive sign that office rents have embarked on the road to recovery,” it highlights.

Leasing activity has also picked up, with interest stemming from growth sectors such as technology, wealth management, family businesses and healthcare, notes Andrew Tangye, head of office leasing & advisory, JLL Singapore.

Already, 70% or more of the 0.8 million sq ft of office space set to complete in 2021 from new buildings such as Afro-Asia and Capita Spring have already been taken up as of 2Q2021.

“The successful containment of the Covid-19 virus that led to Singapore’s economy reopening in Phase Three on Dec 28, 2020, coupled with the roll-out of the vaccination programme, have improved market sentiment and raised occupier confidence,” says Tay Huey Ying, head of research and consultancy for JLL Singapore.

“This has slowed down business downsizing and emboldened some corporations to consider expansions or set up offices in Singapore. The strengthening demand has provided the impetus for rent growth in 2Q21,” she explains.

“Demand for office space is expected to grow on the back of global economic recovery and Singapore’s attractive offerings,” says Tay.

Grade A CBD office rents fell a moderate 9.5% since peaking at $10.81 psf/month in 4Q2019. However, this is only a “fraction of the 56.5% plunge recorded over six quarters from 2Q2008 to 4Q2009 due to the impact of the Global Financial Crisis (GFC)”, says JLL.

Investors have also injected 270% more capital into the sector in 2020 than during the GFC. Year to date, investors have acquired $1.71 billion worth of Singapore office assets, which is equivalent to 76% of the office sales quantum in 2020.

The record price of $4,050 psf was set for a strata floor in Samsung Hub in June.

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