Singapore office market recovery well underway: Colliers

Leasing transactions throughout 1Q2022 included fashion merchant Shein using up 21,000 sq ft at Marina Bay Financial Centre Tower 3. German chemical business BASF will certainly be relocating from its existing facilities at Suntec Tower 1 to the upcoming Guoco Midtown.

On the back of limited returns and rate of interest uncertainties, investors are advised to concentrate on energetic asset monitoring or enhancement to accomplish return targets.

A workplace study by Colliers for 1Q2022 indicates that the improvement momentum in the Singapore office market is well in progress. Premium and also Grade-An office rentals in the CBD climbed for a 3rd consecutive quarter in 1Q2022, increasing 1.5% q-o-q to get to $10.26 psf, sustained by healthy and balanced leasing need. This marks the fastest speed of growth because rentals rebounded in 3Q2021.

The section is expected to continue expanding in the coming months, sustained by a broad-based financial 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.

Moving on, Colliers expects office assets in prime areas to proceed drawing in a variety of resources, underpinned by a healthy leasing market outlook, minimal new supply, and the resuming of Singapore’s borders.

Premium and Grade-An office complex in the CBD also continued to see solid leasing need, with positive net absorption of around 134,000 sq ft in 1Q2022. On the other hand, the vacancy rate tightened up to 3.3%.

Colliers suggests tenants take early action on future workplace choices, as the market changes in favour of landlords. Landlords of workplace properties with out-of-date specs should consider repurposing or redeveloping their assets, to future-proof them.

The healthy and balanced leasing demand for the CBD premium as well as Grade-An office sector is backed by corporates’ choice for newer office buildings with premium requirements, to prepare for workers returning to the workplace as well as the expected pick-up in organization activity.

At the same time, on the investment front, typical capital values in the section boosted 5.6% q-o-q in 1Q2022, striking $2,850 psf. Correspondingly, net returns compressed by 0.1% q-o-q to 3.4%, with cap prices can be found in between 3% and also 3.6% in the last quarter.

Mori Condo Singapore

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

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