Singapore office capital values resilient despite challenges

SINGAPORE (May 15): Capital values for offices in Singapore have remained resilient despite declining rents and an influx in supply, according to Cushman & Wakefield.

And the global property services firm believes investor demand should remain healthy over the long-term, given Singapore’s political stability and safe-haven status of its market.

“Singapore’s competitive leasing environment has also made it an attractive alternative to its traditional rival Hong Kong for companies looking to house their regional Asian headquarters,” Cushman & Wakefield says in a press release on Monday.

This is even more so as the rent differential between the two gateway cities has almost tripled in recent years, it adds.

For the premium-grade office sector in Singapore, the worst could be almost over.

New premium development projects have seen healthy pre-commitment rates as tenants last year swooped in to lock in long leases at attractive rental rates.

Rents for older buildings, however, are expected to come under pressure as companies flock to the new developments.

But following a supply influx of 2.3 million sq ft from the completion of Marina One and UIC Building this year, supply pressures are expected to “ease significantly”.

Post-2017, less than 1 million sq ft of office supply is expected to be completed annually.

“We observe a structural shift in the office leasing market due to reduced demand from banks, one of the largest occupiers of prime CBD space,” says June Chua, Cushman & Wakefield Singapore’s executive director and head of leasing.

“However, we remain confident that leasing demand will gain momentum this year due to growth in other sectors such as technology, insurance, professional services and co-working,” she adds. — theedgemarkets.com.sg

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