Office rentals post 2.6% rise q-o-q in Q1, islandwide vacancy eases to 12.5%: URA

THE Urban Redevelopment Authority's rental index of office space in the central region rose 2.6 per cent in the first quarter of this year over the fourth quarter of last year.

This is the same pace of quarter-on-quarter increase as in the fourth quarter of 2017 and marks the third consecutive quarterly rise in the index since it bottomed in the second quarter of 2017.

The prices of office space in the central region rose 1.3 per cent in the first quarter, a slower pace of increase compared with the 2.7 per cent rise in the previous quarter.

As at the end of the first quarter of 2018, there was a total supply of about 791,000 square metres (sq m) gross floor area (GFA) of office space in the pipeline, up 32.5 per cent from the 597,000 sq m GFA of office space in the pipeline in the previous quarter.

URA also said that the amount of occupied office space increased by 14,000 sq m net lettable area (NLA) in Q1 2018, compared with the increase of 55,000 sq m in the previous quarter. The stock of office space rose by 11,000 sq m NLA in first quarter 2018, compared with the decrease of 4,000 sq m in the previous quarter.

As a result, the islandwide vacancy rate of office space at the end of the first quarter of this year dipped to 12.5 per cent from 12.6 per cent at the end of the previous quarter.

Colliers International noted that URA's Q1 2018 office rental index for the central region reflects a cumulative recovery of 7.7 per cent in less than a year since the index bottomed in Q2 2017.

The property consulting group's head of office services, Duncan White, said: "Renewed strength among businesses, especially the services sectors, coupled with a limited stock of upcoming new CBD supply over 2018-2020, likely drove the brisk rental recovery."

JLL's head of research and consultancy, Singapore, Tay Huey Ying, said: "The rapid shift from a tenant-favourable to a landlord-favourable market has fuelled the third consecutive quarter of uptick in URA's rental index for the central region in Q1 2018."

Desmond Sim, head of research for Singapore and South-east Asia at CBRE, said: "Office rents are expected to continue growing till the next supply influx post-2020."