Tuesday, October 03, 2006
[RealEdge] BT : S'pore office rents post highest hike in 10 years
| Published October 3, 2006  | |||
| S'pore office rents post highest hike in 10 years Small space sector for primeGrade A rents up 13% to $7.80 psf
By UMA SHANKARI
OFFICE rents in Singapore have posted their highest quarterly increase in more than a decade, thanks to tightening supply and strong expansion in the financial and business sector, according to data from two property consultancies released yesterday.
A report by DTZ Debenham Tie Leung (DTZ) put islandwide office stock at 56.3 million sq ft, with the bulk (20.2 million sq ft) concentrated in the Central Business District and Marina Bay area. But supply is about to get tighter real soon, with many buildings slated for redevelopment - such as 1 Shenton Way, Natwest Centre, 71 Robinson Road, Asia Chambers as well as Ocean Building. Total termination could go beyond 1.2 million sq ft, said DTZ. 'However, the impact may be mitigated as redevelopment is phased over the next few years,' DTZ explained. But rents are on the way up and are likely to go up further, both DTZ and Jones Lang LaSalle (JLL) believe. In its report, JLL said that in the small space category - 2,000 to 5,000 sq ft - average rents of prime Grade A office space rose 13.0 per cent quarter-on-quarter to $7.80 psf per month (psfpm). This was the highest quarterly increase since the fourth quarter of 1994 and reflected a year-on-year increase of 45.8 per cent, said JLL. Prime Grade A office rents are now only 4.3 per cent off the 2001 peak but still some 25 per cent off the 1996 peak. JLL also said that the upward movement of rents continued to be more broad-based over the third quarter of 2006. Similarly, in the large space category - 10,000 to 20,000 sq ft - landlords have also been bullish in raising their asking rents over the quarter due to the office space supply crunch. Grade A office rents in Raffles Place increased 13.6 per cent over the quarter to reach $7.50 psfpm. Meanwhile, rents in buildings of a similar grade along Orchard Road climbed 11.3 per cent over the quarter to $6.90 psfpm. The highest quarterly growth was witnessed in the Marina Centre submarket, where rents are close to the previous peak in 2001. Current rents for Grade A space in Marina Centre stand at $7.80 psfpm, representing quarter-on-quarter growth of 18.2 per cent. And it's not just office rentals that are going up, according to DTZ's report. 'Demand for industrial space continued to emanate from manufacturing clusters, such as the semiconductor and precision engineering sectors,' said DTZ. In line with this, gross rents for hi-tech space increased by 9.1 per cent during the quarter to average $2.40 psfpm, reflecting a 33 per cent increase since the beginning of the year. And gross rents for first-storey and upper-storey conventional industrial space also rose by 6.7 per cent and 9.1 per cent respectively. 'The shortage of supply in the market over the next few years will continue to support rental growth,' said JLL. 'Healthy occupancy levels in a rising rental market should set the tone for more investment activities.' The sale of SIA Building set a new record price at $1,165 psf in June this year. This is likely to be surpassed by the end of this year, JLL predicted. | |||
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