Wednesday, March 27, 2013

Grade A office rents in Singapore to rise 10% in 2014

Singapore Business Review
COMMERCIAL PROPERTY | Staff Reporter, Singapore
Published: 22 Mar 2013

After bottoming out in the next 2-3 quarters.

According to UOB Kay Hian, grade-A rentals to rise 6-10% in 2014 after bottoming out in 2013, with an estimated 3-5 % fall over the next 2-3 quarters. This follows a 12.9% yoy fall in Grade-A office rentals in 2012 to S$9.58psf pm.

Here's more:

Given that Grade-A office rentals are only 20% off their 2010 lows (S$8psf pm) and are at a 49% discount to their 2007 highs (S$18.80psf pm), we believe there is greater upside potential for office rentals.

We continue to see less downside risk for Grade-A office rentals as the differentials between Grade-A and Grade-B office rentals have compressed. Grade-A office rentals are at a 34.7% premium to Grade-B office rentals, which is 5ppt higher than the five-year average differential of 40%. We anticipate that 2013 will mark a flight to quality for occupiers.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)

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