Look beyond reported rates to get true picture of rental market for CBD offices

DEMAND trends for office property in the central business district (CBD) are shifting, with implications for property groups and real estate investment trusts (Reits) with high exposure to the Singapore office market. Investors should keep their eyes peeled for signs of just how sustainable CBD office rents are.

Keppel Reit, a proxy for the sector, last month said that its average signing rent for Singapore office leases concluded in the first nine months of 2021 was S$10.49 per square foot (psf) per month.

This was down 2.2 per cent from the S$10.73 psf per month for first-half 2021, "which implies to us Q3 FY21 average rent declined 4.6 per cent quarter on quarter (qoq) to S$10.31 psf, compared to spot rental increase of 1.4 per cent", said Citi analyst Brandon Lee in a report dated Oct 25.