Singapore office market recovery well underway: Colliers
The healthy and balanced leasing demand for the CBD premium as well as Grade-An office sector is backed by corporates’ choice for more recent office complex with premium specifications, in preparation for workers returning to the office and the expected pick-up in service task.
Colliers suggests occupants take early action on future office decisions, as the marketplace shifts in favour of proprietors. Landlords of office properties with obsolete requirements ought to take into consideration repurposing or redeveloping their assets, to future-proof them.
On the other hand, on the investment front, average resources worths in the segment raised 5.6% q-o-q in 1Q2022, striking $2,850 psf. Alike, net yields pressed by 0.1% q-o-q to 3.4%, with cap rates being available in between 3% as well as 3.6% in the last quarter.
The sector is expected to proceed growing in the coming months, supported by a broad-based financial improvement and also return-to-office momentum. Colliers prepares for rentals for CBD premium and Grade-A workplaces to expand by 4% to 5% in 2022.
In regards to the CBD micro-markets tracked by Colliers, office buildings in the Raffles Place/New Downtown location, as well as the Shenton Way/Tanjong Pagar area, saw the greatest development in rents, enhancing 2.3% q-o-q to get to $11.96 psf.
Moving forward, Colliers expects workplace possessions in prime locations to proceed bring in a wide variety of resources, underpinned by a healthy leasing market outlook, limited brand-new supply, as well as the reopening of Singapore’s borders.
Leasing purchases during 1Q2022 consisted of fashion seller Shein occupying 21,000 sq ft at Marina Bay Financial Centre Tower 3. German chemical firm BASF will be transferring from its existing premises at Suntec Tower 1 to the upcoming Guoco Midtown.
Premium and also Grade-An office buildings in the CBD likewise continued to see solid leasing need, with positive net absorption of around 134,000 sq ft in 1Q2022. On the other hand, the openings rate tightened to 3.3%.
An office statement by Colliers for 1Q2022 shows that the improvement momentum in the Singapore office market is well in progress. Premium as well as Grade-An office rents in the CBD increased for a 3rd successive quarter in 1Q2022, enhancing 1.5% q-o-q to reach $10.26 psf, supported by healthy leasing need. This notes the fastest pace of growth since rents rebounded in 3Q2021.
On the back of limited yields and rate of interest uncertainties, financiers are encouraged to focus on energetic possession maintenance or improvement to accomplish return targets.
