Singapore office market recovery well underway: Colliers
The sector is anticipated to proceed growing in the coming months, supported by a broad-based economic improvement as well as return-to-office momentum. Colliers prepares for rents for CBD premium as well as Grade-An offices to grow by 4% to 5% in 2022.
Leasing transactions throughout 1Q2022 consisted of fashion retailer Shein taking up 21,000 sq ft at Marina Bay Financial Centre Tower 3. German chemical business BASF will certainly be transferring from its existing properties at Suntec Tower 1 to the upcoming Guoco Midtown.
Moving forward, Colliers expects workplace assets in prime places to continue attracting a wide variety of resources, underpinned by a healthy leasing market expectation, minimal new supply, as well as the reopening of Singapore’s borders.
Meanwhile, on the financial investment front, average funding worths in the section raised 5.6% q-o-q in 1Q2022, striking $2,850 psf. Correspondingly, net yields compressed by 0.1% q-o-q to 3.4%, with cap rates being available in between 3% and also 3.6% in the last quarter.
In regards to the CBD micro-markets tracked by Colliers, office buildings in the Raffles Place/New Downtown area, in addition to the Shenton Way/Tanjong Pagar location, saw the highest growth in rents, boosting 2.3% q-o-q to reach $11.96 psf.
Colliers recommends occupants take very early action on future workplace decisions, as the market changes in favour of property owners. Landlords of office properties with obsolete specs ought to consider repurposing or redeveloping their properties, to future-proof them.
The healthy leasing demand for the CBD premium and also Grade-An office section is backed by corporates’ choice for more recent office buildings with high-grade requirements, to prepare for employees returning to the workplace as well as the expected pick-up in service activity.
Premium and also Grade-An office complex in the CBD also remained to see strong leasing demand, with favorable net absorption of around 134,000 sq ft in 1Q2022. On the other hand, the vacancy rate tightened to 3.3%.
An office statement by Colliers for 1Q2022 shows that the improvement momentum in the Singapore office market is well underway. Premium and Grade-An office rentals in the CBD climbed for a 3rd consecutive quarter in 1Q2022, enhancing 1.5% q-o-q to reach $10.26 psf, sustained by healthy and balanced renting demand. This marks the fastest speed of growth since rents recoiled in 3Q2021.
On the back of limited yields and interest rate uncertainties, financiers are suggested to concentrate on energetic possession monitoring or improvement to accomplish return targets.