City Hall office rents hit S$9.82 psf in Q2, second to Marina Bay: Savills

OFFICE rents in the City Hall area rose 1.3 per cent quarter-on-quarter to S$9.82 per sq ft (psf), making it the second-highest in rent among Grade A central business district (CBD) micro-markets after Marina Bay, Savills Singapore said in a Wednesday (Aug 3) report.

This comes as average monthly Grade A CBD rents improved by 0.4 per cent from the last quarter to S$9.47 psf in the second quarter.

This is due to net demand for Grade A CBD offices more than doubling, from 59,000 sq ft in the first quarter to 136,000 sq ft in Q2. On a year-on-year basis, the rents were up 1.1 per cent, higher than the 0.3 per cent growth recorded in Q1.

Savills sees robust demand for office assets despite headwinds from geopolitical uncertainties and higher interest rates. Office rents for 2022 are projected to grow 3 per cent year-on-year.

“Although there are economic challenges, with low levels of new supply, rents have been able to rise to offset inflation and future environmental related expenditures,” said Alan Cheong, executive director of research at Savills Singapore.

The tightening of supply and demand balance, alongside high inflation, is pushing landlords to raise gross rents, the consultancy noted.

SEE ALSO

Strata office deals fall 21% in H1; retail up 8.8%: Knight Frank

DECODING ASIA

Navigate Asia in
a new global order

Get the insights delivered to your inbox.

This is to cover rising costs of manpower and service providers, while complying with environmental standards and growing their sinking fund for future environment-related spend.