Singapore office market recovery well underway: Colliers
A workplace report by Colliers for 1Q2022 indicates that the recovery momentum in the Singapore office market is well underway. Premium as well as Grade-A workplace rentals in the CBD rose for a third successive quarter in 1Q2022, increasing 1.5% q-o-q to reach $10.26 psf, supported by healthy and balanced renting need. This marks the fastest pace of growth given that rents rebounded in 3Q2021.
On the back of tight returns as well as interest rate unpredictabilities, investors are advised to focus on energetic asset management or enhancement to attain return targets.
Premium and also Grade-An office complex in the CBD additionally remained to see solid renting demand, with positive net absorption of around 134,000 sq ft in 1Q2022. At the same time, the vacancy price tightened to 3.3%.
Colliers advises tenants take early action on future workplace choices, as the marketplace shifts in favour of landlords. Landlords of workplace assets with out-of-date requirements ought to take into consideration repurposing or redeveloping their properties, to future-proof them.
Leasing purchases throughout 1Q2022 consisted of style merchant Shein using up 21,000 sq ft at Marina Bay Financial Centre Tower 3. German chemical firm BASF will certainly be relocating from its existing premises at Suntec Tower 1 to the upcoming Guoco Midtown.
Moving on, Colliers anticipates office properties in prime areas to continue attracting a variety of resources, underpinned by a healthy leasing market expectation, minimal brand-new supply, and the reopening of Singapore’s borders.
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 area, saw the highest possible growth in rents, raising 2.3% q-o-q to reach $11.96 psf.
The section is expected to continue expanding in the coming months, sustained by a broad-based economic improvement as well as return-to-office momentum. Colliers prepares for rents for CBD premium as well as Grade-A workplaces to expand by 4% to 5% in 2022.
The healthy and balanced leasing demand for the CBD premium and Grade-A workplace segment is backed by corporates’ preference for newer office buildings with top quality specifications, in preparation for employees going back to the office as well as the expected pick-up in business activity.
On the other hand, on the investment front, average resources worths in the sector boosted 5.6% q-o-q in 1Q2022, hitting $2,850 psf. Correspondingly, net returns pressed by 0.1% q-o-q to 3.4%, with cap prices being available in between 3% and also 3.6% in the last quarter.