Singapore office market recovery well underway: Colliers
The sector is expected to proceed expanding in the coming months, supported by a broad-based economic improvement and also return-to-office momentum. Colliers anticipates rentals for CBD premium as well as Grade-A workplaces to expand by 4% to 5% in 2022.
The healthy and balanced leasing need for the CBD premium and also Grade-An office sector is backed by corporates’ preference for more recent office complex with high-quality specs, in preparation for workers going back to the workplace and the anticipated pick-up in company activity.
Leasing deals throughout 1Q2022 consisted of fashion merchant Shein using up 21,000 sq ft at Marina Bay Financial Centre Tower 3. German chemical business BASF will certainly be moving from its existing premises at Suntec Tower 1 to the upcoming Guoco Midtown.
On the back of tight returns as well as interest rate unpredictabilities, financiers are recommended to concentrate on active asset management or improvement to accomplish return targets.
Colliers suggests occupants take very early activity on future workplace choices, as the market changes in favour of proprietors. Landlords of office properties with outdated specifications must consider repurposing or redeveloping their properties, to future-proof them.
In terms of the CBD micro-markets tracked by Colliers, office complex in the Raffles Place/New Downtown location, along with the Shenton Way/Tanjong Pagar location, saw the highest possible growth in rents, raising 2.3% q-o-q to reach $11.96 psf.
A workplace statement by Colliers for 1Q2022 indicates that the improvement momentum in the Singapore office market is well in progress. Premium as well as Grade-An office rentals in the CBD increased for a 3rd successive quarter in 1Q2022, boosting 1.5% q-o-q to reach $10.26 psf, supported by healthy renting need. This notes the fastest rate of development considering that rents recoiled in 3Q2021.
Moving on, Colliers anticipates workplace assets in prime areas to proceed attracting a vast array of funding, underpinned by a healthy leasing market expectation, minimal brand-new supply, as well as the resuming of Singapore’s borders.
Premium as well as Grade-An office complex in the CBD likewise continued to see solid renting need, with positive net absorption of around 134,000 sq ft in 1Q2022. On the other hand, the openings price tightened up to 3.3%.
At the same time, on the investment front, average resources values in the section enhanced 5.6% q-o-q in 1Q2022, hitting $2,850 psf. Likewise, 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.