JLL: S'pore office-rent growth strongest, home price fall largest in Asia-Pac in 2014

Singapore

SINGAPORE recorded the steepest price decline in the luxury residential market in the Asia-Pacific region last year, according to JLL, even as office rents in the central business district (CBD) made the strongest gains.

Luxury home prices fell 6.1 per cent year on year in Singapore against the backdrop of flat or small price gains and generally subdued sales activities in the rest of Asia.

The strongest gains were seen in Manila (9.7 per cent), Shanghai (6.3 per cent) and Kuala Lumpur (3.4 per cent). Prices in Hong Kong increased 2.3 per cent on the back of pent-up demand arising from policy relaxation. JLL added that weak buyer sentiment and new supply should see an ongoing price correction persist in Singapore.

Meanwhile, Singapore's office rents in the CBD jumped 14.9 per cent year on year, helping the Republic keep its position as the third most expensive locality after Hong Kong and Beijing, ahead of Shanghai and Tokyo. Looking ahead, however, the impending supply is expected to dampen rental growth as early as the second half of 2015, said JLL.

Already, Singapore saw quarter-on-quarter growth slow sharply to 0.9 per cent in Q4, compared with 3.5 per cent in Q3. This will likely be echoed across other major South-east Asian markets, with new supply completions dampening rental growth. On the retail front, Singapore continued to top the charts across South-east Asia, despite average rents in shopping centres declining some 0.3 per cent in 2014.

In general, continued leasing interest from new-to-market brands supported healthy occupancy levels in Singapore. However, weakening demand drivers of retail sales (such as visitor arrivals) and rising operating costs due to continued labour shortage are putting pressure on rents, noted JLL.

Looking ahead, rents should remain stable with possibly a minor rental correction due to higher business costs associated with continuing labour shortage.