| SINGAPORE: Property consultant CB Richard Ellis has said prime office rents shot up 20 percent last year, and another 8 percent in the first quarter of this year.
It is forecasting they could breach the previous peak of S$9.90 per square foot a month by 2010 - last seen in the mid-1990s.
Even so, it claims Singapore remains one of the cheaper developed cities in the world to rent an office.
From the sixth most expensive city in the world to rent prime office in the mid 1990s, Singapore fell to 63rd last year.
But it is climbing back up the league table.
"We anticipate we will be somewhere around 40 to 44, 45 in terms of ranking in the survey. This will be as at May 2006. we will still most likely be a notch below Shanghai and Beijing, and most importantly, we are significantly cheaper than key markets in Hong Kong and Tokyo," said Moray Armstrong, executive director of CB Richard Ellis.
Industry players have said that at current levels, Singapore's prime office rents are still below their 10-year historical average.
"Singapore is enjoying a reversal of almost 10-year trend of deflationary real estate price. That trend has turned over the last two years. I think it's very premature to be alarmed about this increase in rent pricing, because Singapore is still very competitively positioned versus the regional comparables," said Mr Armstrong.
Demand for office space in Singapore is underpinned by strong economic growth, a vibrant financial services sector, and the global outsourcing trend.
Property consultants expect prime office rentals could rise another 15, 20 percent by year-end and as much as 60 to 80 per cent, over a three-year period.
Indeed, some industry players believe that, by 2010, prime office rents could revisit all-time highs of $11.50 per square foot, per month.
"Even at $10 to $11, Singapore is not pricing itself out of the market, by any stretch of the imagination. Even at this rental levels, Singapore will still lie outside the top 10 most expensive cities in the world. That's probably quite a nice place to be. I think Singapore can enjoy three, four, maybe five years of sustainable growth without Singapore getting out of kilter, in terms of its competitiveness, " added Mr Armstrong.
By 2009 or 2010, Singapore's new Business and Financial Centre will have come up, adding some 2.5 million square feet of office space, and this should help cushion rents. - CNA /dt
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