Singapore office market recovery well underway: Colliers

Colliers suggests occupants take early action on future workplace choices, as the market shifts in favour of property owners. Landlords of workplace possessions with out-of-date specifications need to think about repurposing or redeveloping their possessions, to future-proof them.

Moving on, Colliers expects workplace possessions in prime locations to proceed drawing in a large range of capital, underpinned by a healthy leasing market outlook, minimal new supply, and the reopening of Singapore’s borders.

Leasing transactions during 1Q2022 consisted of fashion merchant Shein taking up 21,000 sq ft at Marina Bay Financial Centre Tower 3. German chemical business BASF will be moving from its existing properties at Suntec Tower 1 to the upcoming Guoco Midtown.

Premium as well as Grade-An office complex in the CBD additionally continued to see strong renting 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%.

On the back of limited returns as well as rate of interest uncertainties, investors are encouraged to focus on energetic asset management or enhancement to accomplish return targets.

A workplace study by Colliers for 1Q2022 indicates that the improvement momentum in the Singapore workplace market is well in progress. Premium and Grade-An office rentals in the CBD climbed for a third consecutive quarter in 1Q2022, raising 1.5% q-o-q to reach $10.26 psf, sustained by healthy and balanced renting demand. This notes the fastest rate of development considering that rents rebounded in 3Q2021.

Avenir Condo Singapore

In terms of the CBD micro-markets tracked by Colliers, office complex in the Raffles Place/New Downtown area, in addition to the Shenton Way/Tanjong Pagar location, saw the highest possible development in rents, increasing 2.3% q-o-q to reach $11.96 psf.

The healthy and balanced leasing need for the CBD premium as well as Grade-A workplace section is backed by corporates’ choice for newer office complex with high-grade requirements, to prepare for workers going back to the office and the expected pick-up in service activity.

Meanwhile, on the financial investment front, average capital worths in the section boosted 5.6% q-o-q in 1Q2022, hitting $2,850 psf. Alike, net yields 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.

The sector is expected to continue expanding in the coming months, sustained by a broad-based economic recovery and return-to-office momentum. Colliers expects rents for CBD premium as well as Grade-An offices to expand by 4% to 5% in 2022.

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