Cushman and Wakefield expects firmer prices, fewer vacancies in 2013
Dec 03, 2012
The office rental market is expected to hit bottom this quarter before a moderate rebound in the next few years, according to real estate firm Cushman and Wakefield.
It said average monthly rents in the Central Business District (CBD) area - comprising Marina Bay, Raffles Place and Shenton Way - are at $9 per sq ft, 1.6 per cent down from the third quarter.
Cushman and Wakefield expects only a moderate supply to hit the market next year, leading to lower vacancy rates and firmer prices.
Office leasing activity is also expected to remain strong, with more demand coming from a more diversified range of businesses.
The firm's report outlines how tenants from legal services, e-commerce, professional services and energy industries are expected to take up significantly more leases next year as demand from the financial sector wanes.
Additional demand is expected to come from displaced tenants of older office buildings that have been slated for redevelopment, such as The Corporate Office building and Cecil Court in Shenton Way.
While this demand, coupled with low vacancy rates, is expected to support rents next year, Cushman and Wakefield remains cautiously optimistic about a recovery.
It said demand is not yet strong enough to support a sharp rental rebound and any sign of a meaningful recovery in rents may emerge only in the second half of 2014.
But Ms Sigrid Zialcita, managing director for Cushman and Wakefield's Asia-Pacific research team, said the outlook for the Singapore office market remains positive.
"While the estimated 7.2 million sq ft of office space expected to come on stream in the CBD over the next five years could restrain rentals, the effect is likely to be positive for the economy as the business cost would be kept manageable."
Meanwhile, the Government's plan to develop suburban commercial centres is also anticipated to bring an estimated 2.4 million sq ft of quality office space, to be delivered during the next two years.
Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)
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