Prime office rents chart fourth consecutive quarter of increase in 2Q2022

Knight Frank assumes the continual need, combined with the strict supply of good-quality office, will support Singapore office rents in the face of impending headwinds over the following six to 12 months due to worldwide inflation, supply chain disturbances and increasing interest rates. The company is forecasting office rents to expand in between 3% and 5% for the whole of 2022.

Knight Frank says need for prime workplace in Singapore remained to be supported by a flight to safety by private wealth, corporates and also MNCs in other parts of Asia impacted by strict pandemic restrictions. “As a case-in-point, the number of family office spaces was reported to have more than doubled from 203 in 2020 to 453 in 2021, with regarding 143 new family members offices established in Singapore from January to April 2022, according to information from Handshakes,” the report includes.

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Prime office space rentals in Singapore continued to hold firm in the 2nd quarter of the year. According to information assembled by Knight Frank, prime level office space rentals in the Raffles Place and also Marina Bay precinct increased 1.1% q-o-q in 2Q2022, balancing at $10.36 psf monthly. This brought rental growth to 2.3% for 1H2022. It additionally marks a 4th consecutive quarter of rise, with rentals growing 3.8% considering that they bad in 3Q2021.

On top of that, he highlights that the boosting fostering of ESG law among business remains to support leasing task. “Regardless of the trend of relocating towards a crossbreed work plan, we have observed that space take-up continued to exceed workplace decrease, as occupiers seek more recent structures with green qualifications, efficient specs, and also clever functions,” he adds.

Bastiaan van Beijsterveldt, executive director as well as head of occupier services, Singapore, at Colliers indicates that demand for top quality office premises stays underpinned by companies in the systems, monetary solutions and energy industries, along with possession management as well as lawful firms.

On the investment front, Colliers’ report states that the average imputed resources value for Core CBD premium and also Grade-An office spaces remained flat at $3,000 psf in 2Q2022, with yields preserving at around 3.5%. The company anticipates Singapore will stay a hotspot for capitalists seeking value-added actual possibilities in the coming months, backed by beneficial market dynamics as well as the country’s safe-haven status amid geopolitical uncertainties.

However, it also cautions against intensifying macroeconomic risks. “If a recession or an extended period of weakness hits global economic situations, the effect will cause an unpreventable cascade on the overall business condition in Singapore and also subsequently the workplace market,” the report states.

In addition, Knight Frank highlights that while some tech companies – involving Shopee and also – have actually started shrinking headcount in Singapore in action to dropping valuations as well as climbing inflation, other technology heavyweights continue to show indicators of development. “Meta is reported to be in advanced speak to rent as a support occupant, while Amazon is recognized to have actually leased about 369,000 sq ft at the upcoming IOI Central Boulevard Towers,” the record adds.

At the same time, in its 2Q2022 office space market report, Colliers highlights that rising operational expenses may motivate workplace property owners to pass on a few of the expense burden to occupiers in the form of greater service charges, additionally supporting higher rentals. Colliers is forecasting full-year growth for Core CBD premium as well as Grade-An office rents to be in the range of 5% to 7% in 2022.

Tenancy levels in the Raffles Place and Marina Bay district raised 1.5 percentage points in 2Q2022 to reach 95.4%, supported by restricted supply.

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