Office rents inched up 0.6% in Q2

SINGAPORE — Office rental rates in Singapore are showing signs of recovery after continued declines in the past year, as companies move to secure additional space because of improving local and global economic outlook.

Tier 1 office rents inched up 0.6 per cent quarter-on-quarter in the three months ended June 30, the first increase since the third quarter of 2011, property consultancy Jones Lang LaSalle said in its Asia-Pacific Office Index report released yesterday. The average Grade A rent at Raffles Place for the quarter was US$720 (S$921) per square metre per year on a net effective basis, it said.

“The increase signals greater confidence in the market. A full recovery is not quite there yet, but it has picked up a little,” said Mr Chris Archibold, Head of Markets for Singapore at Jones Lang LaSalle.

He noted that vacancy rates had dropped to an average of 6 per cent last quarter, compared with 8 per cent previously, driven by more demand from non-financial companies.

IHS, a company specialising in data provision and consulting, took up more than 30,000 square feet of space at Asia Square Tower 1 last quarter, according to property firm Cushman & Wakefield. Increased leasing activity resulted in reduced vacancy rates across the Central Business District sub-markets, such as Marina Bay, Raffles Place and Shenton Way, it noted.

With a limited supply coming on-stream in the remainder of the year and the improving economic environment, the modest uptrend in office rents is expected to persist. “There are positive signs that the rents could improve in the second half … This is underpinned by the continuous initiatives by the Government to grow Singapore as a hub,” said Ms Chia Siew Chuin, Director of Research and Advisory at Colliers International. She expects demand to come from financial institutions, legal and private equity firms. LEE YEN NEE