S’pore office rents to rise again this year: CapitaCommercial

SINGAPORE — Prime office rents in Singapore are set to extend gains this year as the number of new properties coming onto the market is limited, said CapitaCommercial Trust Management. “The market is looking good as supply is very tight this year, so the rise in rentals will continue,” said Ms Lynette Leong, chief executive officer of CapitaCommercial Trust Management, in an interview yesterday in Singapore.

The company runs the biggest office real estate investment trust (REIT) in Asia outside Japan.

Singapore’s prime office rents are set to post their biggest increase in at least four years for 2014.

The office rent index for prime areas rose 8.7 per cent in the first nine months of last year, heading for its largest gain since 2010, when it was up 12 per cent, data from the Urban Redevelopment Authority showed.

Ms Leong said prime office rents rose 15 per cent last year and would rise again in 2015, although she declined to give a specific prediction.

Companies involved in social media, technology and commodities are taking up space in Singapore’s central business district, offsetting the cutbacks by investment banks, she added.

CapitaCommercial Trust, the listed REIT, reported a net property income for the quarter ended Dec 31 of S$50.6 million, up 3 per cent from a year earlier. The trust’s monthly average office rents rose 5.9 per cent to S$8.61 per sq ft last year.

Ms Leong said the REIT management company has been signing longer leases for commercial properties to prepare for any softening in rents when a large supply of office space comes onto the market from next year.

For example, leases on the trust’s new CapitaGreen tower in the central business district are for four years, rather than the usual three, she said.

About 1.15 million sq ft of new office space will come on stream this year, rising to 1.6 million sq ft in 2016 and 4.7 million in 2017, said real estate broker Knight Frank.

About 69 per cent of the CapitaGreen tower has been leased at rents ranging from S$9.8 to S$16 per sq ft, said Ms Leong.

CapitaCommercial Trust is partly owned by CapitaLand, South-east Asia’s biggest developer.

It is the biggest office REIT in Asia by market value after Japan’s Nippon Building Fund and Japan Real Estate Investment Corp, data compiled by Bloomberg showed. BLOOMBERG