Prime office rents chart fourth consecutive quarter of increase in 2Q2022
Prime office rentals in Singapore continued to hold firm in the second quarter of the year. According to data compiled by Knight Frank, prime level office rentals in the Raffles Place and Marina Bay precinct increased 1.1% q-o-q in 2Q2022, averaging at $10.36 psf each month. This brought rental improvement to 2.3% for 1H2022. It also notes a 4th successive quarter of rise, with rents expanding 3.8% since they bottomed out in 3Q2021.
Furthermore, Knight Frank highlights that while some technology companies – involving Shopee as well as Crypto.com – have begun reducing headcount in Singapore in action to dropping appraisals and rising inflation, various other technology heavyweights keep on show signs of growth. “Meta is reported to be in innovative talk with lease as a support lessee, while Amazon is understood to have leased about 369,000 sq ft at the upcoming IOI Central Boulevard Towers,” the record adds.
Knight Frank believes the continual demand, coupled with the strict supply of good-quality office space, will certainly sustain Singapore office rents despite impending headwinds over the following 6 to 12 months as a result of worldwide inflation, supply chain disturbances and increasing interest rates. The firm is forecasting workplace rents to grow between 3% and 5% for the whole of 2022.
On the venture front, Colliers’ record states that the typical imputed capital worth for Core CBD rates and Grade-An offices continued to be flat at $3,000 psf in 2Q2022, with yields keeping at around 3.5%. The firm anticipates Singapore will certainly stay a hotspot for investors looking for value-added actual possibilities in the coming months, backed by favourable market characteristics and also the nation’s safe-haven standing amidst geopolitical uncertainties.
Nevertheless, it also cautions against aggravating macroeconomic risks. “If an economic crisis or a prolonged period of weak point strikes international economic situations, the impact will certainly result in an unpreventable cascade on the general service climate in Singapore and subsequently the workplace market,” the report states.
Additionally, he highlights that the increasing adoption of ESG law amongst business remains to sustain leasing activity. “Despite the pattern of moving in the direction of a crossbreed work plan, we have actually observed that area take-up remained to outmatch workplace decrease, as inhabitants look for newer buildings with environment-friendly credentials, efficient specifications, as well as wise attributes,” he adds.
Knight Frank says need for prime workplace space in Singapore remained to be sustained by a flight to security by personal wealth, corporates and also MNCs in additional parts of Asia affected by rigorous pandemic limitations. “As a case-in-point, the number of family members offices was reported to have greater than doubled from 203 in 2020 to 453 in 2021, with concerning 143 brand-new household offices established in Singapore from January to April 2022, according to data from Handshakes,” the report adds.
At the same time, in its 2Q2022 office space market record, Colliers highlights that increasing functional prices may prompt office space property managers to hand down a few of the cost load to occupiers in the form of greater service fee, even more supporting higher rentals. Colliers is forecasting full-year buildup for Core CBD costs and Grade-An office space rents to be in the series of 5% to 7% in 2022.
Occupancy levels in the Raffles Place as well as Marina Bay district raised 1.5 percent points in 2Q2022 to get to 95.4%, sustained by limited supply.
Bastiaan van Beijsterveldt, executive chief and head of inhabitant services, Singapore, at Colliers notes that demand for top quality workplace property stays underpinned by companies in the solutions, monetary services and also power industries, along with property management as well as lawful firms.