Singapore office market recovery well underway: Colliers
The healthy and balanced leasing need for the CBD premium and also Grade-A workplace section is backed by corporates’ preference for more recent office buildings with top quality specifications, in preparation for workers returning to the office as well as the anticipated pick-up in business activity.
On the other hand, on the financial investment front, ordinary funding values in the segment increased 5.6% q-o-q in 1Q2022, hitting $2,850 psf. Alike, net yields compressed by 0.1% q-o-q to 3.4%, with cap prices can be found in between 3% and 3.6% in the last quarter.
Moving forward, Colliers anticipates workplace assets in prime areas to continue attracting a variety of funding, underpinned by a healthy leasing market outlook, restricted new supply, and the resuming of Singapore’s borders.
Leasing transactions throughout 1Q2022 included style merchant Shein taking up 21,000 sq ft at Marina Bay Financial Centre Tower 3. German chemical business BASF will be transferring from its existing facilities at Suntec Tower 1 to the upcoming Guoco Midtown.
Colliers recommends occupiers take very early activity on future workplace decisions, as the market changes in favour of property owners. Landlords of workplace assets with outdated specifications need to think about repurposing or redeveloping their possessions, to future-proof them.
On the back of limited returns as well as rates of interest uncertainties, financiers are recommended to concentrate on active asset management or improvement to attain return targets.
The segment is anticipated to proceed 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 and Grade-An offices to grow by 4% to 5% in 2022.
An office study by Colliers for 1Q2022 shows that the recovery momentum in the Singapore office market is well underway. Premium as well as Grade-An office rents in the CBD rose for a 3rd successive quarter in 1Q2022, enhancing 1.5% q-o-q to get to $10.26 psf, sustained by healthy renting demand. This notes the fastest pace of development since rents recoiled in 3Q2021.
In terms of the CBD micro-markets tracked by Colliers, office complex in the Raffles Place/New Downtown area, as well as the Shenton Way/Tanjong Pagar location, saw the greatest growth in rents, raising 2.3% q-o-q to reach $11.96 psf.
Premium and also Grade-An office complex in the CBD likewise remained to see strong renting demand, with favorable net absorption of around 134,000 sq ft in 1Q2022. At the same time, the job rate tightened up to 3.3%.