Singapore office market recovery well underway: Colliers

On the back of tight yields as well as rate of interest uncertainties, capitalists are advised to focus on energetic asset monitoring or enhancement to attain return targets.

Moving forward, Colliers expects office assets in prime places to continue bring in a variety of capital, underpinned by a healthy and balanced leasing market expectation, limited brand-new supply, as well as the reopening of Singapore’s borders.

The healthy leasing need for the CBD premium as well as Grade-An office sector is backed by corporates’ preference for newer office complex with top notch specs, in preparation for staff members returning to the office as well as the expected pick-up in service task.

The sector is anticipated to proceed growing in the coming months, supported by a broad-based economic recovery and return-to-office momentum. Colliers expects rentals for CBD premium and also Grade-An offices to expand by 4% to 5% in 2022.

In regards to the CBD micro-markets tracked by Colliers, office buildings in the Raffles Place/New Downtown location, along with the Shenton Way/Tanjong Pagar area, saw the greatest development in rentals, raising 2.3% q-o-q to reach $11.96 psf.

An office study by Colliers for 1Q2022 shows that the improvement momentum in the Singapore workplace market is well in progress. Premium and also Grade-An office rentals in the CBD increased for a third successive quarter in 1Q2022, enhancing 1.5% q-o-q to get to $10.26 psf, supported by healthy leasing demand. This notes the fastest speed of growth since rents rebounded in 3Q2021.

At the same time, on the financial investment front, average resources values in the sector boosted 5.6% q-o-q in 1Q2022, hitting $2,850 psf. Similarly, net returns pressed by 0.1% q-o-q to 3.4%, with cap prices can be found in between 3% and 3.6% in the last quarter.

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Colliers suggests occupiers take very early activity on future workplace decisions, as the marketplace shifts in favour of proprietors. Landlords of workplace assets with obsolete specs need to think about repurposing or redeveloping their assets, to future-proof them.

Leasing transactions during 1Q2022 included fashion store Shein occupying 21,000 sq ft at Marina Bay Financial Centre Tower 3. German chemical company BASF will certainly be moving from its existing properties at Suntec Tower 1 to the upcoming Guoco Midtown.

Premium as well as Grade-An office buildings in the CBD also remained to see strong renting need, with positive net absorption of around 134,000 sq ft in 1Q2022. At the same time, the vacancy price tightened to 3.3%.